5 KPI Tracking Methods for Optimizing SaaS Growth Performance

Your Key Performance Indicators (KPIs) just aren’t working.

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You just started a new management role at a scaling SaaS business. Or maybe you’ve been in the role for a while, and your efforts are falling short. Maybe it’s a new year or quarter, and you want to start on the right foot. Whatever situation you find yourself in, tracking KPIs more effectively will help you and your business grow predictably.

5 Key Steps to Improve KPI Tracking

1. Set the Right KPIs
2. Track Everything Else
3. Help your Team Understand KPIs
4. Track KPIs Consistently
5. Turn KPI Insights into Growth

1. The Foundation: Set the Right KPIs 

The first step to tracking KPIs effectively is making sure you’re tracking the right metrics. This will lay the foundation for effective tracking and management of company performance. 

When setting KPIs, make sure they have these critical characteristics:

1. Manageable: Track a few things for performance. Three per owner is the upper limit. Prioritize. This means you have to pick and choose.
2. Strategy-Driven: Tie your KPIs to strategic SMART goals. Typically, this will involve metrics that drive revenue and growth.
3. Controllable: Connect your KPIs to activities that you own. If you can perform an experiment where a given action results in a change in the metric, it’s worth tracking. 

For example, your team is probably prioritizing increased sales-led revenue (who isn’t?). So you might set three KPIs:

1. 500 Sales Qualified Leads (SQLs)
2. $25M in Qualified Pipeline
3. $5M in Contracted Annual Recurring Revenue (ARR)

These KPIs set you up for success because there’s a manageable number, they tie to a strategic company goal, and you have a good amount of control over the levers that drive the outcomes.

When I was building the sales function at eVisit, my first enterprise SaaS venture, we started with the wrong KPI. We focused on holding as many demos as we could. We learned that this activity didn’t actually drive progress to our strategic goal, closing more revenue. We hadn’t thought about our ideal customer, so we were just giving a demo to anyone who would say yes. 

We set a new KPI: qualified demos. The new goal got the team to surface more important information in discovery, which made sure that more qualified leads moved down the pipe to the demo phase.

2. Coverage: Track Everything Else 

While you and your team should focus on a small, critical set of metrics for performance, it’s a good idea to track every other metric you can think of too. The difference between these numbers and your KPIs is that you’ll only use these metrics for diagnosis. The next time you have a fire drill from one of your primary KPIs dipping, dive into these additional numbers. This will help you identify and address the problem more quickly.

Set Metric Thresholds

If you have a good idea of what would indicate a serious problem, you can even set thresholds for some of these metrics. Check in on them periodically and ring the alarm bell when these numbers leave the normal range. Then diagnose and resolve the issue.

One time at eVisit, we saw a huge drop in product usage. We panicked a little, but then we dived deeper into the data. We discovered that the usage had dropped on a Monday, and that it happened to be Memorial Day. The usage dropped because people weren’t using the product on a holiday. In this case, we fortunately found there wasn’t a problem to solve after all.

3. Communication: Help Your Team Understand the KPIs

Setting the right KPIs, while essential, is not even half the battle. You need to communicate them to your team.

Here are a few KPI communication tips I’ve seen work:

1. Start with Why. Help the team understand why they’re tracking the KPIs, and what they can do to manage performance. This helps the KPIs stick and motivates the team to improve performance.
2. Frame the Purpose. Let the team know that the numbers will not be used as a stick to beat them into submission; instead they will be used to share performance insights with other team members, ultimately lifting everyone’s work. This creates psychological safety and encourages two-way transparency.
3. Make It Relatable. Use your team’s language and speak in terms that they will understand. This helps them connect with what you’re saying and learn it faster.
4. Tell a Story. Tell your team a story about where tracking and managing the KPI will take them. It helps them understand why you’re tracking the KPIs, what they’ll be used for, and what the KPIs mean for them personally.

For example, for the 500 SQL goal we used earlier, you could explain why you need that number of SQLs to reach revenue goals. You could even show your calculations. You’d then tell them that you’re focusing their efforts on the SQL goal to know when and where they need support. And you can tell them how tracking the KPI will lead the entire company to success, since everyone relies on the sales team selling the product.

One metaphor that has worked well when I tell teams a KPI story: working without tracking performance is like playing a sport without keeping score. It’s impossible to know you’re winning—or how to play better—without that feedback. Try asking Lebron or Serena if they want to stop keeping score. I bet I know what they’d say.

4. Alignment: Track KPIs Consistently

Now that we’ve covered the basics of setting things up for KPI tracking success, let’s get into the nitty gritty of actually doing the work. I recommend following these three principles for consistent KPI tracking:

Keep It Regular

To make sure everyone in your team stays oriented toward company goals, regularly record and report on your KPIs. This could take multiple forms:

1. A Slack channel dedicated to KPI updates 
2. An emailed report that goes out to the entire team
3. Weekly, monthly, and quarterly review meetings

The form of reporting doesn’t matter; consistency counts more than anything. This makes it easier to track and keeps all oars rowing in the same direction.

Say you decide to hold weekly KPI reporting meetings. Your team attends the meetings and discusses KPI progress. Because they understand they will be held accountable for the KPI numbers, they focus on activities that directly affect it. You and the team see and diagnose problems before they can spin out of control. All of this makes it much more likely you’ll achieve your objectives.

Keep It Transparent

To effectively track KPIs, you need a single source of truth for everyone’s reference. Follow these guidelines to ensure transparent KPI tracking: 

1. Utilize dashboards or spreadsheets to track and display KPIs
2. Ensure everyone has access to KPI data
3. Update KPI metrics regularly 

Tracking KPIs in a simple spreadsheet can drastically improve internal visibility. This approach makes sure everyone pays attention to the KPIs. Eventually, your team could grow to a point where a spreadsheet is inefficient. There are many KPI tracking tools you can use for this purpose as well. The important thing is that everyone has access to the single source of truth and pays attention to it on a regular basis.

What does this look like in practice? I’ve seen companies broadcast their KPI dashboards on big monitors in their workspace. This encourages the team to keep their metrics top of mind, which makes them more accountable and focused on their goals.

Keep It Contextual 

Data without context is just numbers. It’s your job to bring those numbers to life in a way that resonates with your team. These tips have helped me place KPIs in their relevant context:

1. Track Trends: Focusing on a week to week, or even month-to-month change can give you tunnel vision and lead you to work on the wrong areas of your systems and processes. Effective visualizations help illustrate performance trends over time.
2. Connect to the Bigger Picture: Whenever possible, show the team how KPIs are contributing to broader business objectives. Without this context, it’s easy to forget the why behind the numbers. 

Let’s say you’re in a reporting meeting, and the team sees that pipeline value is down from last month. You could start a fire drill and put all hands on deck to attack the number and make it go back up. Or you could put the data into context. You ask why the number has gone down, whether it’s part of a trend, or whether the previous peak was an anomaly. You discover that the pipeline went down because of a common seasonal trend that repeats every year. Instead of throwing solutions at the wall, your team can stay focused on activities that move the needle.

5. Action: Turn KPI Insights into Growth

Whatever you do to set effective KPIs, cover your bases, communicate the KPIs, and track them, you need to turn insights from these activities into action. That’s the whole point of tracking the number in the first place. This is why it’s so critical to start on the right foot.  

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If you start with a clear idea of the levers you can pull to change outcomes, you don’t have to make reactive decisions every time a number changes. Instead, you can make a plan, put it into play, track the results, and measure the impact. 

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Don’t let bad KPIs or bad KPI tracking prevent you from committing to actions that will grow your business. 

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Chief’s predictive operations platform can help you track KPIs and predict problems before they emerge. Contact us to learn how we can help you improve your SaaS operations.