Dan Martell - How To Create a Successful Scorecard For Your SaaS Startup

00:00:00.000 What's up? Dan Martell here, serial entrepreneur, investor

00:00:02.360 and creator of SaaS Academy and in this video I want to talk

00:00:05.400 about creating a killer scorecard for you to hold your

00:00:09.680 team accountable in crushing goals.

00:00:12.520 It's way easier than you think this is going to be the most

00:00:15.780 impactful thing you've ever deployed to your business.

00:00:19.420 It's going to give you clarity.

00:00:20.280 It's going to feel awesome and then be sure to stay at the end

00:00:22.320 where I share my weekly sync strategy to download a framework

00:00:26.720 process, a checklist for you to run your weekly meetings to

00:00:31.420 keep everybody on the same page and what's cool is in there is

00:00:34.900 the scorecard that I'm gonna teach you today.

00:00:37.200 So be sure to stay to the end and I'm gonna tell you how to

00:00:39.100 get a copy of that.

00:00:52.580 So when I was growing my company Spheric we were about 16

00:00:55.220 employees, almost a couple million in revenue and I realized

00:00:59.460 that I was running this company ass backwards.

00:01:02.220 I mean the truth was is that everybody reported to me which 0.50

00:01:05.260 meant that their to-do list was my to-do list.

00:01:07.600 I spent most of my time trying to grow the business, hiring

00:01:10.660 people, closing new deals, onboarding, training people and

00:01:14.140 at the same time trying to ensure that everybody's work was

00:01:16.640 done at a quality level to not embarrass me as the owner.

00:01:20.040 I mean I would, I remember waking up in the middle of the

00:01:21.820 night trying to remember did I ever send that invoice or did

00:01:24.740 that person ever pay me or did I ever get that

00:01:26.900 employment contract signed and I just felt

00:01:29.040 ridiculously overwhelmed.

00:01:30.280 I mean the truth was is I had to imagine at that point

00:01:33.920 that other companies at scale did not run their business

00:01:37.520 that way.

00:01:38.360 Like it was very ad hoc reactive to the situation and I did

00:01:43.860 like most challenges that came up in my life is I turned

00:01:46.560 to books and I started reading things like the four

00:01:48.440 discipline of execution and balanced scorecards and many

00:01:51.600 other incredible business leaders and their strategies

00:01:54.740 And what I came up with was what I believe to be the most

00:01:58.180 simplified scorecarding system for companies at scale.

00:02:02.680 There's five core principles that I want to share with you

00:02:05.220 that are present in this scorecard format that will help

00:02:09.220 you get clear, hold people accountable and honestly build

00:02:12.420 momentum and growth in your business.

00:02:15.020 Number one, funnel metrics.

00:02:17.360 If you think about the things you're gonna measure, okay,

00:02:20.160 and this could be everything from website visitors to

00:02:24.140 contact form completions, to sales calls,

00:02:27.280 to eventually deals closed, to customer satisfaction,

00:02:30.680 to all kind of the different numbers

00:02:32.880 that you'd wanna know about your business.

00:02:34.080 Think about it this way, if I went away on a desert island

00:02:36.860 and I could only get a one-page report

00:02:38.880 about my business's health,

00:02:40.560 what would I wanna see on that report?

00:02:42.160 Well, the way I think about that is

00:02:44.860 I look at the funnel of numbers.

00:02:47.520 Cause it's always, you know, if you think about it like

00:02:49.960 top of funnel is kind of like the activity,

00:02:52.100 like social marketing, inbound marketing,

00:02:54.660 traffic to your website, maybe events that you attend

00:02:57.680 if you're a speaker, whatever it is.

00:02:58.840 There's stuff you do to get awareness in the market.

00:03:00.880 Then there's the conversion tool or the sales strategy

00:03:04.880 that you use to take from that awareness or opportunities

00:03:07.140 that show up and convert them into customers.

00:03:09.360 So that's kind of like another step in the funnel.

00:03:11.280 And then after that there's, well, I got the contract,

00:03:13.580 then I gotta do the work and how happy is the customer

00:03:15.860 in monitoring that process.

00:03:17.600 And then finally, at the end of it,

00:03:19.920 how much revenue did I generate?

00:03:21.160 How much did it cost me to generate that revenue

00:03:23.100 and did I make any profit?

00:03:24.120 So if you think about that, it's the bottom of the funnel.

00:03:26.140 Most entrepreneurs, when I ask them if they have a scorecard

00:03:28.840 and they say yes and I say show me the numbers,

00:03:30.700 it's all over the place.

00:03:31.840 There's like 50, either there's like two or there's 50

00:03:36.180 and they're not in any specific order.

00:03:37.540 So the big idea, number one is funnel metrics,

00:03:40.440 meaning lay out your metrics in a spreadsheet.

00:03:43.680 So always put the numbers on the left side

00:03:45.960 and then the date ranges as columns

00:03:48.380 so that you can kind of see how the activity at the top

00:03:51.160 slowly impacts the middle, and at the bottom,

00:03:53.320 and are you making any money?

00:03:54.760 So those are the funnel metrics.

00:03:56.100 It's different for every business, but at a high level,

00:03:58.540 I just want you to order them in that strategy

00:04:01.380 so you can get clarity of how they all kind of roll down

00:04:04.880 to the bottom of profit.

00:04:06.440 Number two, weekly measurement.

00:04:08.480 Every week, we sit down and we review our scorecard as a team.

00:04:12.540 That means that no matter what data point we're measuring,

00:04:15.320 we wanna get the current number for that week and that data.

00:04:19.260 So we wanna see it, we plot it on the spreadsheet.

00:04:22.200 This is not fancy scorecards on a TV screen.

00:04:25.460 This is literally a spreadsheet and we update it

00:04:29.000 and that way we have a cadence of every week

00:04:31.980 of measuring our progress.

00:04:33.440 Too often entrepreneurs wait, I mean most of them,

00:04:36.020 98%, they wait till the end of the year,

00:04:38.320 they get a report from their accountant

00:04:39.520 and they decide to go have a drink.

00:04:41.180 They're either gonna drink because they had an incredible

00:04:42.660 year or they're gonna have a drink because they had

00:04:44.180 a crappy year.

00:04:45.520 But what I want you to do is get in the habit

00:04:47.880 of taking 52 shots on goal.

00:04:51.220 That means that every week for every data point

00:04:53.280 that you're measuring your funnel metrics,

00:04:54.820 you're looking if you made progress.

00:04:56.820 And what's great is that if you have crazy aspirations,

00:04:59.500 and you don't, I mean, I don't know how you're gonna hit

00:05:01.000 your numbers, if you wanna, you know, 5X, 10X your growth

00:05:04.260 in the next 12 months, you need to measure weekly

00:05:06.960 to know if you're on track.

00:05:08.640 And that to me is a discipline.

00:05:10.500 As a team, we sit down and we review it so we can make sure

00:05:12.840 we can realign any strategies or tactics that may not be

00:05:16.080 supporting the outcomes that we want to achieve.

00:05:18.480 So weekly measurement is a must.

00:05:20.520 Number three, net new numbers or ratios.

00:05:24.580 Essentially what it is is the numbers you measure

00:05:27.200 on a weekly basis isn't the total volume

00:05:30.400 or the cumulative number.

00:05:31.860 It's the net new created in that seven day window.

00:05:36.140 Meaning, how many people visited our site

00:05:38.260 in the last seven days?

00:05:39.200 How many new leads did we add to our marketing funnel

00:05:43.040 in the last seven days?

00:05:43.980 How many deals did we close in the last seven days?

00:05:45.840 How much revenue did we invoice in the last seven days?

00:05:48.880 It's always the net new number and it's not a total

00:05:51.940 because what happens is it's kind of this psychological

00:05:54.980 effect where we have a thermostat in our mind

00:05:58.580 and if we look at numbers and they're going up

00:06:01.060 as they would every week, you should be doing something.

00:06:03.720 If they feel good, we actually slow down our focus

00:06:08.020 and aggressiveness on fixing the number.

00:06:10.400 But check this out, if you're a sales guy

00:06:12.900 and you're just looking at total sales for the quarter,

00:06:16.440 then at a certain level you're gonna feel

00:06:17.600 pretty good at yourself.

00:06:18.780 But if you actually looked at the effort

00:06:20.680 or the outcome in the last seven days

00:06:22.280 and it's a big goose egg, a donut, a zero,

00:06:25.240 you're gonna go, well, I did a bunch of stuff last week

00:06:27.520 and it didn't show up in anything for my sales number.

00:06:30.420 So as a team, you don't want to measure

00:06:33.920 the total number for a month or a quarter or a year.

00:06:37.000 You wanna track the net new activity

00:06:39.060 or you wanna create a ratio,

00:06:40.300 which might take a couple other data points

00:06:42.900 and looked at that ratio as a data point

00:06:46.500 and how does that look over time.

00:06:48.200 So that is a huge opportunity to clear up the numbers

00:06:52.580 and focus on the right things is only track

00:06:54.580 the net new outcomes of the activity

00:06:56.440 in the previous seven days in your scorecard.

00:06:59.420 Number four, targets and actuals.

00:07:02.460 If you're tracking every week

00:07:04.280 and you don't have a target for the month,

00:07:07.700 then you're missing an incredible opportunity

00:07:10.300 to keep the team accountable.

00:07:11.460 Look, if you do this, if you negotiated,

00:07:13.420 hey, what are we gonna do in the next quarter with your team

00:07:15.740 and they set the targets and then every month

00:07:19.240 you track the target for the month and the actual.

00:07:21.440 So this is the number you set.

00:07:22.640 Every metric, every funnel metric, lead gen,

00:07:25.080 website traffic, sales volume, revenue, profitability,

00:07:28.640 net promoter score.

00:07:29.680 I mean, you can Google the metrics

00:07:31.820 that you wanna monitor for your business

00:07:33.520 but if you have the targets and then you have the actual,

00:07:36.020 okay, which is how are we doing average,

00:07:38.260 so it might be an average, it might be a total,

00:07:40.060 whatever, for the month, then you know if you're two weeks

00:07:42.960 into the month and you only have two weeks left,

00:07:44.340 that you should be at 50% of that number

00:07:45.960 so you can see the difference side by side.

00:07:47.660 It's like if the number's supposed to be 100 for the month

00:07:49.880 and you're at 20 and you're halfway through the month,

00:07:52.440 there's no way unless you change something

00:07:54.480 and you focus on it and you invest in it

00:07:56.200 and you sit down as the CEO with your team and say,

00:07:58.880 hey, this is not on track, what are we gonna do to fix it?

00:08:01.580 Because here's the big idea, okay?

00:08:04.060 If you miss a number on one week

00:08:06.720 and you wanna still hit your target for the month,

00:08:08.580 you gotta make it up the next week.

00:08:10.240 If you miss it for the month,

00:08:11.420 you gotta make it up the next month.

00:08:13.020 Most entrepreneurs set such aggressive goals

00:08:16.020 that if they start to slip,

00:08:17.720 there's no way they're gonna catch up.

00:08:19.660 So you cannot take your eye off of the target

00:08:23.320 or the actual for that period and I'm recommending weekly.

00:08:27.100 Number five, assign ownerships to the funnel metrics.

00:08:31.340 The reason why we wanna do this is if you're the CEO

00:08:34.280 like I was when I was building Sphere

00:08:36.140 and you feel accountable for everything

00:08:38.340 nobody cares about my business and I always have to check on

00:08:40.980 people and all this stuff, it's because you haven't given them

00:08:44.020 the accountability to update the numbers and own the numbers.

00:08:46.580 You might have said, hey, I want you to do this and they're

00:08:48.460 like, that's great, I know what you want but I may not be able

00:08:50.960 to do that, right?

00:08:52.120 Because a lot of people are like, well, how do I compensate or

00:08:54.120 how do I encourage people in sales or customer success when

00:08:56.920 there's no like quota and commission structure?

00:08:59.260 Look, humans are simple.

00:09:01.060 We want to know how the game is played, how do we score a goal

00:09:04.160 and how are we doing in that game?

00:09:05.860 So if you give them the score and you monitor their

00:09:09.260 performance, they will self-adjust.

00:09:11.160 If they said, look, I'm gonna do 100 sales this month and

00:09:15.580 halfway through the month, they're at 30,

00:09:17.900 they will fix their activities to adjust to make sure that they

00:09:22.040 make up the missing numbers to hit the numbers at the end of

00:09:25.880 the month because here's the cool part is everybody on the

00:09:28.480 team knows and what I do is I assign those numbers to the

00:09:32.020 person responsible for updating it.

00:09:33.580 So before our weekly meeting, our weekly sync,

00:09:36.140 which I'll share with you in a second,

00:09:38.420 everybody goes and updates, grabs the numbers

00:09:40.720 from these different systems and updates the spreadsheet

00:09:43.160 so they can see, so that they know their number.

00:09:46.160 So most people don't even know their numbers.

00:09:47.760 And then they're accountable to it

00:09:49.560 because they updated it.

00:09:50.640 And then in team weekly sync, you review them as a group.

00:09:53.740 So you create this beautiful thing

00:09:55.240 called positive peer pressure.

00:09:57.040 Where the peers, their leadership team,

00:09:59.300 their other folks on their team are holding them

00:10:02.940 accountable to their numbers because they reported it.

00:10:05.240 And if they start losing or missing or slipping,

00:10:07.680 then the rest of the team will be like hey, that's not cool

00:10:09.780 because you not hitting your marketing targets is affecting

00:10:12.040 my sales opportunities and we need to adjust that.

00:10:14.420 So make sure you assign ownership of the metrics to

00:10:18.280 individuals that should own those within your company and

00:10:21.500 ideally per category, not individual numbers.

00:10:24.860 So somebody should own customer success,

00:10:26.260 somebody should own sales, somebody should own marketing.

00:10:29.540 So quick recap on creating a killer scorecard.

00:10:32.640 Number one, funnel metrics.

00:10:34.440 Make sure you list the metrics on the left side of your

00:10:37.580 spreadsheet sorted by top of funnel, mid funnel, bottom of

00:10:41.380 the funnel and then operational or finance numbers.

00:10:44.720 Number two, weekly measurement.

00:10:46.720 Every week your team should update those numbers.

00:10:49.720 Three, net new or ratios.

00:10:52.360 Don't put totals or cumulative numbers.

00:10:55.100 Put the new activity for that week.

00:10:57.200 Four, targets and actuals.

00:10:59.700 Know where you're going.

00:11:00.940 How are we measuring on our way there on a monthly and

00:11:03.400 quarterly basis and adjust accordingly?

00:11:05.380 And five, assign ownership.

00:11:08.280 Everybody on your team that's responsible for a project or an

00:11:11.920 outcome should own the number associated to it.

00:11:14.680 And that is how you keep accountability, clarity and a

00:11:17.820 high-performing team executing.

00:11:20.000 So as I mentioned at the beginning of this video,

00:11:21.760 I wanna share with you the weekly sync agenda structure that

00:11:25.500 I use to run my team meetings every week.

00:11:28.900 I mean it is the most comprehensive focus

00:11:32.540 and high output team structure.

00:11:35.180 Every week I have things like customer headlines,

00:11:38.280 we talk about issues, we talk about our scorecard,

00:11:40.880 hence why I wanted to share this framework with you.

00:11:42.840 We talk about the big rocks that we need to execute

00:11:45.180 but we do it in a very structured way

00:11:47.280 that gets us in and out, everybody synced up

00:11:49.860 and executing for the week.

00:11:51.620 So you can click the link below to download your copy today

00:11:55.460 and if you like this video I'd encourage you

00:11:57.220 to click the like button, subscribe to my channel,

00:11:59.920 and be sure to share this video with a friend.

00:12:02.160 And also, leave a comment.

00:12:03.400 Let me know, out of the strategies I mentioned,

00:12:05.820 what one thing, out of the scorecard strategy,

00:12:09.660 were you not doing that you're gonna change

00:12:12.000 in the way you measure today?

00:12:13.200 I'd love to hear from below.

00:12:14.640 In the comments, as per usual, I wanna challenge you

00:12:16.880 to live a bigger life and a bigger business,

00:12:18.680 and I'll see you next Monday.

00:12:20.240 Yes.

00:12:22.480 Perfect, cool.

Dan Martell - September 10, 2018

How To Create a Successful Scorecard For Your SaaS Startup

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