Performance Metrics Alignment

STOP! Don’t Change Your Metrics Until You Read This This post is in response to the many questions I got after the video I shared with Dr. Eli Goldratt sharing his insights on how to align financial and operational measurements with a company’s goal. The question I got ... How can we evaluate whether we have good or bad measurements? Here’s my 3 Criteria framework to evaluate any measurement or measurement system — and a recommended metric that meets all 3 criteria. The Three Criteria of a Good Measurement System 1. Accurately Measures System STATUS (Ok/Not?) and TREND (Improving/Not?) Does your metrics accurately show whether the current status/trend is “OK” or “Not” . With accurate status and trend, you know WHEN to act…and WHEN NOT. Mistakes: • Type 1: Reporting system status is “OK” when its NOT • Type 2: Reporting system status is “Not OK” when it is OK. 2. Accurately Predicts Likely CAUSE(S) Does your Metrics accurately diagnose the “why” behind the status? With accurate CAUSE, you know WHAT TO CHANGE … and WHAT NOT. Mistakes: • Type 1: Reporting or Misidentifying a non-issue as a major cause.  • Type 2: Not Reporting or Overlooking a major cause 3. Drives Desired / Discourages Undesired Behaviors  Does your metrics positively influence behavior – to ensures parts do what is best, not for the part, but for the system? Good metrics guide each part on HOW to act…and HOW NOT to act. Mistakes: • Type 1: Incentivizing actions that harm overall performance (local optima). • Type 2: Failing to encourage beneficial behaviors. Example of a Good Measurement: The Cumulative Flow Diagram (CFD) A CFD plots cumulative orders received (demand) against cumulative shipments made (supply) over time. It offers a simple, powerful visual to assess balance vs. imbalance: Criteria 1: Accurate Status & Trend  • Parallel lines indicate a balanced system (“OK”) • Diverging or converging lines signal an imbalanced system (“NOT OK”) Criteria 2: Accurate Cause of Status & Trend  • Diverging Lines: Demand exceeds supply → Supply constraint • Converging Lines: Supply exceeds Demand  → Demand constraint Criteria 3: Incentivize Desired Behavior of Parts Its visual clarity makes it easy to understand and it can to be tied to incentives: • When lines diverge, focus on identifying and reducing excessive demand, and increasing capacity through better constraint exploitation or elevation. • When lines converge, shift your focus to securing more demand, and reducing capacity without compromising service time or quality. The CFD metric can be applied across the organization—from the company level to department level and even down to specific products or services, using either monetary value or unit counts for vertical axis. Remember FEWER measurements is BETTER! What measurements do you use that meet ALL 3 CRITERIA? or More fun… What is the worst measurement in your company that compromise 2 or all 3 criteria? Comments/Questions #goldratt #measurement

Shantanu Narayen didn’t just lead a transformation at Adobe; he rewired the entire system. He didn’t just announce a change. He engineered it. That’s why it worked, while 70% of corporate transformations fail: Most leaders stop at awareness. They make the announcement, send the memo, and hold the town hall. Then nothing changes because the underlying systems still reward the old way. Shantanu understood the real lever was alignment. Within 90 days of Adobe’s shift to Creative Cloud: - Sales comp flipped from 15% upfront to 5% recurring - 4,000 support reps were retrained on subscriptions - Product teams moved from annual releases to monthly drops Customer success earns more by preventing churn than by making sales from closing deals Everything, from incentives to systems, reinforced the new strategy. Contrast that with what happens in most orgs: - Metrics stay tied to outdated goals - Processes still reward the status quo Employees know what to do, but not why it matters or what gets rewarded It’s not a communication failure. It’s a coordination failure. Here’s how to run a quick alignment audit: Look at the last performance review: Is it measuring legacy behaviors or new ones? Examine a top leader’s calendar: Are they prioritizing the transformation or firefighting BAU? Ask a frontline team: What gets rewarded here? If the answers reflect the past, not the future, you’ve got awareness, not alignment. To build real alignment like Adobe did: 1. Change what you measure. Adobe made 12-month subscriber retention the north star. 2. Change what you reward. Commissions shifted from one-time deals to lifetime value. 3. Change what’s easy. Two-click renewals replaced 15-step installs. Transformation isn’t declared. It’s embedded. Shantanu didn’t just update the org chart. He changed the org’s operating system. Stop announcing. Start aligning. That’s how you lead real change. Want more research-backed insights on leadership? Join 11,000+ leaders who get our weekly newsletter: https://lnkd.in/en9vxeNk

A product only scales when its strategy is tied directly to business goals. Otherwise, features become noise, and teams burn months on “nice to have” work that doesn’t move revenue, retention, or efficiency. Business alignment means: ✓ Every feature connects to metrics that matter ✓ Every design decision supports growth or cost optimization ✓ The roadmap speaks the same language as the leadership team. ⸻ Example: Healthcare Case I worked with a medical SaaS platform that had a backlog of 120+ features. Developers pushed new releases every two weeks, but churn was growing and revenue wasn’t scaling. I ran a UX–Business audit: — Mapped every feature to a business KPI — Cut 40% of backlog items that had zero business impact. — Rebuilt the roadmap so that every quarter focused on one clear business lever . Result after 3 months: ✓ Customer support tickets dropped by 22% ✓ Retention improved by 15% because patients were guided better through their journey. ✓ Leadership got visibility: for the first time, the roadmap was linked directly to revenue forecasts. ⸻ Example: Fintech Case In a fintech startup, leadership struggled to raise the next round because their pitch deck showed features, not impact. I restructured the product narrative: — Aligned UX flows with financial metrics: fewer failed transactions, faster onboarding, higher account activation. — Designed a demo around money saved and money earned, not UI screenshots. — Synced the product roadmap with the CFO’s model, so investors could see cause–effect clearly. The outcome: They closed a $7M round. Investors saw a product tied to growth levers, not just design polish. ⸻ My takeaway Business alignment is not paperwork. It’s the discipline of turning UX work into financial outcomes. When I step in, I translate design into numbers the boardroom understands — retention, efficiency, growth. That’s how design stops being a cost center and becomes a driver of business decisions. ⸻ I’ve spent over 8 years in UX and 7 years in branding, marketing, and PR. What I do is not just design — I architect clarity between product and business goals. That’s why my work stabilizes teams, speeds up decision-making, and helps products grow in markets under pressure. 

Does your Product and CS team share the same source of truth? Without aligned metrics, teams will continue speaking different languages—building, supporting, and engaging customers based on inconsistent definitions. One shared definition for key metrics is essential: ✅ Active users ✅ Feature usage ✅ Feature abandonment ✅ Inactive customers ✅ Ideal customer In my previous roles, we built a methodology with clear definitions, dashboards, and insights to measure product usage, feature adoption, and retention across segments. The impact was huge: 🔥 Consistency – No matter what room we were in, we referenced the same numbers and insights. 🔥 Stronger collaboration – Teams and executives felt the synergy, leading to more cross-functional alignment. 🔥 Better decision-making – A data-driven approach gave us the insights needed to influence roadmaps and engagement programs. Now, ask yourself: If you asked 5 people in your company how they define “feature usage,” would you get 5 different answers? If the answer is yes, it’s time to align. How are you tackling this challenge in your org? #customersuccess Sara Bochino

SaaS leaders: stop confusing your Sales Team with the wrong performance goals. Too many SaaS teams still track sales performance using ARR. It sounds intuitive, but it's the wrong metric for sales. ARR is a finance metric. Bookings is a sales metric. ARR is shaped by recognition rules. It can be deferred, prorated, or split across entities or time periods. That makes it great for forecasting and reporting, but not for measuring what your reps actually sold this quarter. Bookings, on the other hand, is about commitment. It reflects the total contracted value of what a customer agreed to purchase, regardless of how revenue is recognized. That makes it the cleanest measure of sales performance, especially for quota tracking, comp plans, and pipeline management. Relying on ARR can hide critical info: -A $120K deal signed in December might only show up in Feb -Ramp deals, usage-based plans, or delayed starts can distort actual rep performance Instead of tracking performance, it becomes an argument between Finance and Sales over who is right. Instead: ✅ Track Bookings for sales velocity, quota attainment, and GTM accountability ✅ Let ARR inform your long-term revenue model, forecasts, and board reporting ✅ Align both, but don’t confuse them Sales closes deals. Finance recognizes revenue. Don’t mix up the scoreboard. #SaaS #Metrics #Finance #Founders #Bootstrapping

Is alignment between the GTM departments of Marketing, Sales, and Customer Success possible? Alignment across marketing, sales, professional services, and customer success, has been a topic of discussion since I started in B2B software… Shared objectives based upon the below top 5 metrics that measure the results of cross-functional processes are a good place to start: #𝟏 𝐆𝐓𝐌 𝐀𝐥𝐢𝐠𝐧𝐦𝐞𝐧𝐭 𝐌𝐞𝐭𝐫𝐢𝐜: 𝐍𝐞𝐭 𝐍𝐞𝐰 𝐀𝐑𝐑 Nothing says cross-functional alignment like a metric that includes four different inputs across acquisition, retention, and expansion motions: Net New ARR = New ARR + Expansion ARR + Churn ARR + Down-sell ARR #𝟐 𝐆𝐓𝐌 𝐀𝐥𝐢𝐠𝐧𝐦𝐞𝐧𝐭 𝐌𝐞𝐭𝐫𝐢𝐜: 𝐂𝐀𝐂 𝐑𝐚𝐭𝐢𝐨 The CAC Ratio has three versions and all are materially impacted by each of the three primary GTM departments: Blended CAC Ratio = Marketing + Sales Expenses / New + Expansion ARR New CAC Ratio = Marketing +Sales Expenses / New Logo ARR Expansion CAC Ratio = Marketing + Sales +CS Expenses / Expansion ARR #𝟑 𝐆𝐓𝐌 𝐀𝐥𝐢𝐠𝐧𝐦𝐞𝐧𝐭 𝐌𝐞𝐭𝐫𝐢𝐜: 𝐍𝐞𝐭 𝐑𝐞𝐯𝐞𝐧𝐮𝐞 𝐑𝐞𝐭𝐞𝐧𝐭𝐢𝐨𝐧 (𝐍𝐑𝐑) NRR requires input from all three GTM departments, including: Customer Success is well-positioned to identify up-sell and cross-sell opportunities and create Customer Success Qualified Leads (CSQLs) CEs or AMs work on the CSQLs that CS identified, resulting in expansion ARR Marketing often underinvests in “customer marketing,” which is key to increasing customer awareness of new use cases and/or new products #𝟒 𝐆𝐓𝐌 𝐀𝐥𝐢𝐠𝐧𝐦𝐞𝐧𝐭 𝐌𝐞𝐭𝐫𝐢𝐜: 𝐂𝐮𝐬𝐭𝐨𝐦𝐞𝐫 𝐋𝐢𝐟𝐞𝐭𝐢𝐦𝐞 𝐕𝐚𝐥𝐮𝐞 (𝐋𝐓𝐕) Customer Lifetime Value is an example of a “compound metric” that requires cross-functional alignment and is calculated using the below formula:                    LTV = (Average Revenue per Account*Gross Margin)/ ARR Churn Rate #𝟓 𝐆𝐓𝐌 𝐀𝐥𝐢𝐠𝐧𝐦𝐞𝐧𝐭 𝐌𝐞𝐭𝐫𝐢𝐜𝐬: 𝐈𝐧𝐭𝐞𝐫-𝐃𝐞𝐩𝐚𝐫𝐭𝐦𝐞𝐧𝐭𝐚𝐥 𝐒𝐚𝐭𝐢𝐬𝐟𝐚𝐜𝐭𝐢𝐨𝐧 This might be the most underused, yet most important measurement to facilitate alignment between Marketing, Sales, and Customer Success Some potential satisfaction criteria to measure quarterly via a survey include: Marketing Sales Satisfaction Criteria - Qualified Leads that become Qualified Opportunities - Marketing content that engages middle-of-funnel opportunities - Percent of New ARR generated from Inbound Handraisers Sales Marketing Satisfaction Criteria - Qualified Lead response time - Inbound Lead response time - Win/Loss Feedback Customer Success Sales - Customer Success Qualified Leads Generated - CSQL win rate - Customer Validated Outcomes shared with Sales Marketing Customer Success - Customer Use Cases Published - Customer Events Conducted - Product Content for Education and Engagement If this topic resonates with you and you would like to dive deeper into the details based upon the above Top 5 alignment metrics - this weekend's SaaS Barometer Newsletter might be an interesting read!

I wish someone taught me this in my first year as a PM. It would’ve saved years of chasing the wrong goals and wasting my team's time: "Choosing the right metric is more important than choosing the right feature." Here are 4 metrics mistakes even billion-dollar companies have made and what to do instead with Ron Kohavi: 1. Vanity Metrics They look good. Until they don’t. A social platform he worked with kept showing rising page views… While revenue quietly declined. The dashboard looked great. The business? Not so much. Always track active usage tied to user value, not surface-level vanity. 2. Insensitive Metrics They move too slowly to be useful. At Microsoft, Ronny Kohavi’s team tried using LTV in experiments. but saw zero significant movement for over 9 months. The problem is you can’t build momentum on data that’s stuck in the future. So, use proxy metrics that respond faster but still reflect long-term value. 3. Lagging Indicators They confirm success after it’s too late to act. At a subscription company, churn finally spiked… but by then, 30% of impacted users were already gone. Great for storytelling but let's be honest, it's useless for decision-making. You can solve it by pairing lagging indicators with predictive signals. (Things you can act on now.) 4. Misaligned Incentives They push teams in the wrong direction. One media outlet optimized for clicks and everything was looking good until it wasn't. They watched their trust drop as clickbait headlines took over. The metric had worked. They might had "more MRR". But the product suffered in the long run. It's cliche but use metrics that align user value with business success. Because Here's The Real Cost of Bad Metrics - 80% of team energy wasted optimizing what doesn’t matter - Companies with mature metrics see 3–4× stronger alignment between experiments and outcomes - High-performing teams run more tests but measure fewer, better things Before you trust any metric, ask: - Can it detect meaningful change in faster? - Does it map to real user or business value? - Is it sensitive enough for experimentation? - Can my team interpret and act on it? - Does it balance short-term momentum and long-term goals? If the answer is no, it’s not a metric worth using. — If you liked this, you’ll love the deep dive: https://lnkd.in/ea8sWSsS

How metrics help you align your teams across the organization. Did this happen to your team before: You worked on improving a metric, were successful doing so, but got backlash from other functions, stakeholders, or product teams? Because something went south on their end? This happened because you where not aligned on your goals and the mechanisms how your goals and metrics influence each other. Ladies & gentlemen, let's hug trees 🤗🌲 More concrete: Metrics trees. 3 Trees to help you align business goal with team goals as well as align goals of different (functional or cross-functional) teams: 1️⃣ KPI-Trees in combination with the User Journey: When you break down how your product with its business model generates revenue, you understand how different KPIs drive revenue growth. On this level, you can find business goals for setting the strategic direction. When you map your user's journey and add conversion and engagement metrics along the tree (not funnel!!!), you can find different leading indicators to improve your product. Now when you find all those connection points between user journey and KPI-tree, you can create a big tree that shows how you can drive business growth through product improvement, and which leading indicator on the product side will help you move which business KPI. It will also help all teams understand the effect of moving their metric on the other metrics. 2️⃣ North Star Metric (NSM): Because high-level business KPIs are not actionable for product teams, we need something more tangible. A NSM is a proxy for business success. It tells us "improving our NSM will lead to improving our business target" which typically is revenue. The NSM is a leading indicator for revenue, but it's a lagging indicator for product success. Therefore, we break it down into its input metrics which are the leading indicators for the NSM. Here's an article by Itamar Gilad that explains this connection very well: https://lnkd.in/eU8g2ziz 3️⃣ Driver Trees: As a general term it describes how different input metrics (drivers) influence your goal. Or how to break down a goal/ outcome 🤷🏻♀️ Some forms: . Cascade outcomes/ metrics through WHYs or HOWs . use helpful frameworks like Goals-Questions-Metrics . or Critical-to-Quality type of trees . or any other method that helps you break down your higher level measurable goal into its input metrics in a structured way. 🔗 Connecting the dots: Technically, each of them serves a different purpose. But all of them create visibility on how metrics and goals influence each other so that teams can visually see the effects. And this helps aligning cross-team efforts towards the same goal for a specific time period. Are you using metrics trees already? Share your experience from PRACTICE. What works for you, what doesn't, how did you make it work? 👇

CS Metrics Don’t Matter If They Don’t Move the Business 📊🔥 Let’s talk truth for a second. Most Customer Success teams are measuring the wrong things. 📉 Engagement scores 📊 Health dashboards 📈 Internal KPIs that look great in a slide deck but never show up on the company’s P&L Here’s the reality 👇 💰 If your metrics don’t connect to growth, profitability, or shareholder value, they don’t matter. 💰 If your goals aren’t tied to business outcomes, you’re tracking activity, not impact. CS isn’t a department. It’s a bridge. 🌉 And bridges don’t exist for themselves. They exist to connect. As Customer Success leaders and CCOs, our job isn’t to chase perfect internal metrics. It’s to create cross-functional alignment that drives real business results. At DISQO, we’ve learned something powerful: Alignment isn’t about agreement, it’s about clarity. ✨ Clarity across Product, Sales, Marketing, and CS ✨ Clarity on what the CEO and the full Exec team actually care about ✨ Clarity that every initiative ties back to the same scorecard and business success metrics 🚀 My Friday Challenge to Every CS/Post-Sales/Next-Sales Leader: 1️⃣ Stop celebrating team metrics. Start owning business metrics. Make NRR, GRR, and adoption your proof, not your purpose. 2️⃣ Stop optimizing in a silo. If Product, Sales, and Marketing aren’t aligned with your goals, you’re running the wrong race. 🏁 3️⃣ Stop chasing internal wins. Lead the integration. Be the connector. Drive conversations that unite the company around what matters most. Customer Success has always been about impact, but now it’s time to prove it in the language of the business. 💥 CS metrics don’t matter if they don’t move the business forward. #Leadership #CustomerSuccess #Alignment #Growth #Revenue #CreateTheFuture #DISQO

Alignment is where L&D earns its credibility. It’s easy to say “𝘸𝘦 𝘢𝘭𝘪𝘨𝘯 𝘭𝘦𝘢𝘳𝘯𝘪𝘯𝘨 𝘸𝘪𝘵𝘩 𝘣𝘶𝘴𝘪𝘯𝘦𝘴𝘴 𝘨𝘰𝘢𝘭𝘴.” It’s harder to prove it. Because alignment isn’t about matching a course title to a business metric. It’s about understanding the real work, the real friction points and the outcomes that matter most to the organisation. Too often, training is built around topics and modalities: “Should it be eLearning or classroom?” “Should we focus on delegation or coaching?” Those questions miss the point. Because the moment theory collides with the messy ACTUAL reality of the job, the gaps stick out like a sore thumb. Alignment means digging deeper: What challenges derail people in their day-to-day? Where do managers see performance nose-diving? Which KPIs signal whether the job is being done well? How does culture shape the way work actually gets done? When you answer those questions, you move from training for topics → to supporting performance. From completions → to capability. From “cost centre” → to true strategic driver. What’s the toughest part for you: defining the right KPIs, or uncovering the real challenges of the job? ________________ High functioning ≠ high capacity. I consult with L&D teams to turn busyness into business impact.