What are sales objectives and key results (OKRs): And why are they important?
This is a guest blog from our friends at Dialpad on sales objectives and key results (OKRs).
In sales, it’s easy to feel overwhelmed with numbers and unattainable targets. Sales objectives and key results (OKR) is a goal-setting approach that enables organizations, and individuals to reach their potential.
This article will explain everything you need to know about OKRs and why they’re important. We’ll also show you some simple examples to illustrate how sales OKRs work.
Try QuotaPath for 30-days
Try the most collaborative solution to manage, track and payout variable compensation. Calculate commissions and pay your team accurately, and on time.
What are sales OKRs?
OKR is a dynamic management approach made up of ‘objectives’ – measurable goals, and ‘sales results’ – a series of smaller aims to help brick-and-mortar stores and eCommerce firms reach their objectives. It creates alignment within teams by helping members engage better.
OKRs encourage a team-focused approach because working towards your own key results will often cross over with other team members’ key results. This also encourages accountability as team members work on individual key results that will help the whole team reach the objective.
The purpose of OKRs is to track your sales goals in real-time. They are objectives, usually set quarterly, with a set plan (the key results) of how to work towards them. But these aren’t just targets that need to be hit. They are also ambitious objectives that encourage teams to develop and learn. In fact, if you find you are ticking off your list of objectives easily, you probably aren’t challenging your team enough.
For example, if a team leader wants to decrease the time taken for sales reps to pick up parked calls within a call center, they could set the goal of decreasing call waiting times by 50%. But this doesn’t look at core problems and encourages short-term fixes.
Using the OKR approach of goal-setting, the team would look into why response times are down. Measurable goals would be set, such as decreasing call waiting times by 50%. But key results could also include categorizing calls and prioritizing callers. This would mean results are long-term, and the teams would be discovering new ways to work.
OKRs encourage transparency within a business. Team members working towards the same objectives should be kept in the loop about what each other is doing. Their individual goals (key results) are often tied in together.
OKRs should also promote ambition and growth within your team. It’s not only effective when working in sales. This approach can also be used in any line of business. It’s a framework that is split into two sections: sales objectives and key results.
Create Compensation Plans with confidence
RevOps, sales leaders, and finance teams use our free tool to ensure reps’ on-target earnings and quotas line up with industry standards. Customize plans with accelerators, bonuses, and more, by adjusting 9 variables.
The “objective” part of your OKR is the overall goal and motivation for your key results. It should set out what you aim to achieve and why this is important for your business and employees. You must create a concise objective that explains what you need to do to reach your end goal.
Objectives can be either qualitative or quantitative. OKRs should be measurable. But you don’t have to get straight into numbers in your objectives. You specify these in your key results.
You can choose an objective, such as ‘Integrate our online sales channels using an e-commerce integration platform.’ Then your key results could set out how you would do this. Alternatively, you could set something more specific, such as ‘Increase productivity of sales channels by 25%.’
Key results are measurable goals that help you track your progress toward your main objective. They are basically steps created to allow you to reach your main objective. There are always multiple key results, some of which will tie in together. It’s also important to create a hierarchy to establish which results are more important, which help others, and which can be left until later.
For example, if you’re trialing a new call forwarding service within your sales department, you will want to track its functionality. So an example objective could be – “Use new call forwarding service to decrease the hang up rate of customers by 10%”.
- Have all sales team trained on new tool within week 1
- Create a call-forwarding strategy using peak call times
- Decrease call-waiting times by 25%
Streamline commissions for your RevOps, Finance, and Sales teams
Design, track, and manage variable incentives with QuotaPath. Give your RevOps, finance, and sales teams transparency into sales compensation.
The difference between OKRs and KPIs
OKRs are sometimes confused with KPIs (key performance indicators). Here are the main differences between the two:
- OKRs are created to boost engagement and are team-focused. KPIs evaluate business activities, projects, or products.
- OKRs tend to change quarterly, depending on the business. KPIs are long-term goals.
- OKRs tend to have a hierarchy and are connected. The key results are created to help achieve the objective. KPIs are of equal priority and usually separate.
- OKRs encourage ambition and development within a team. KPIs are more about hitting targets.
Let’s say a Google Analytics agency, Dubai, is having trouble getting repeat customers.
KPI: Increase the number of repeat customers by 50%.
This could be done by offering a discount to repeat customers. The company would hit its targets, but the results would be temporary while the deal is offered.
OKR Objective: Encourage repeat customers.
- Increase customer satisfaction by 20%
- Improve communication with current clients
- Ask for feedback once projects are completed
These are goals that tie in together, making them more efficient. They are also in order, so the team knows what to prioritize. The results encourage communication, so the teams are learning new skills, such as using the perfect talk-listen ratio. Even if customer satisfaction is only improved by 15%, the current results are sustainable and leave room for growth in the future.
Why are OKRs important?
For example, if customer journey optimization is one of your priorities, your main objective would be to improve your customers’ experiences. But your key results would bring your team together to reach this objective.
For example, the first key result could focus on tracking the current customer journey, while the second could involve gathering feedback from customers. The final key result would focus on creating a new customer journey using the information gathered from the first two key results. With team members working towards your main objective using individual key results, you are creating a more well-rounded team who can work together.
Track progress in real-time
Setting long-term goals is important. But once you reach them you want to know how you got there. What problems did your team face along the way? What did they learn?
Also, if your team failed to meet its goals, you need to know why. What stopped your team from achieving its objectives? What progress did they make?
We see teams create OKRs most frequently on a quarterly basis. But do what works best for your team. Key results are measurable, so you can see exactly how your business is progressing. But it’s not just about your figures, it’s also about your team’s development. Transparency and ambition are key. You don’t just want to track your sales, you want to look at how your team has progressed. This can be as simple as finding out what they have learned while working on their key results. It could also include discussions on how the team can improve in the future.
With OKRs, your sales team is all working towards the same objective. Even if team members have individual goals, they all crossover and benefit each other. Weekly meetings mean that team members can look at problems together and work out how to solve them. Communication within a team is very important.
How to set good OKRs
- Look at problems within your business – what isn’t working? What can be improved?
- Be clear and concise when setting objectives – you need to know exactly what you aim to achieve from this goal.
- Set measurable goals – how will you know you’ve been successful?
- Make goals achievable – don’t look at goals completely out of reach, shelve them for later.
- Don’t make goals too easy – remember this isn’t a checklist, it should promote ambition.
- Look at how your OKRs can improve your KPIs – don’t just duplicate them.
- Look at past objectives – were they successful? Can they be built on?
Measuring your success with OKRs
We have talked about your OKRs being measurable, but how exactly do you measure your success? One of the main ways to do this is by analyzing the sales metrics. But this isn’t all of the information. You also want to review team learnings, gained advantages, and how the team collaborated.
For example, if a sales manager doesn’t think that their teams are properly utilizing their call logs they may set the objective: ‘Increase productivity of sales calls by 10% using received calls list.’ One of the key results could be: ‘Use call logs to determine the best times for sales calls.’
Measuring your success, in this case, would come from comparing the previous period’s sales figures with this period’s. This would determine whether this key result had helped the team to achieve the overall objective. However, even if your team has not met the objective’s target, the information you gather throughout the process is helpful. For instance, team members could compare data on the best times for sales calls. This can help them increase the likelihood of meeting the objective next period.
Start creating your sales objectives and key results
Now you understand the importance of OKRs and how they work, it’s time to get your team together and set up some objectives. Don’t expect to get it right straight away. This management approach evolves over time while you tweak objectives and key results.
Remember, having too many objectives will be counterproductive to your team. Don’t create more than 3 or 4 at once. If you have more than this you’re spreading your team too thin. This can lead to them creating quick fixes to quickly complete objectives. The whole point of OKRs is to set goals to improve sales effectiveness long-term. Think quality over quantity.
About the author:
Jenna Bunnell is the Senior Manager for Content Marketing at Dialpad, an AI-incorporated cloud-hosted unified communications system that provides valuable call details for business owners and sales representatives through features like Dialpad call waiting. She is driven and passionate about communicating a brand’s design sensibility and visualizing how content can be presented in creative and comprehensive ways. Check out her LinkedIn profile.