How to: Create product OKRs based on the sales funnel
OKRs are the new norm; most tech companies define them to communicate clearly about product goals and expected results. There are different ways to define them, depending on the product's nature and what outcomes need to be achieved.
If you’re not familiar with what OKRs are, they’re short for Objective Key Results. Generally, they are the most important success metrics that your product needs to achieve.
In this article, I will share my approach for defining OKRs based on the marketing and sales funnel. Specifically for a freemium product (offering a free version and getting users to convert to the premium version)
A sales funnel contains all the steps the user goes through before buying your product. Its most simple form contains four stages: awareness of the product, taking an interest in the product, deciding to buy the product, and finally buying the product.
Now we can start defining the OKRs.
STEP1:
Map the metrics that you are tracking or planning to track to the sales funnel. Preferably have one gold metric in each step; otherwise, you might have many vanity metrics that don’t make a lot of sense. Here’s an example of some of the metrics you can use:
STEP2:
For the metrics you identified, find some benchmarks of what success looks like. You might have an internal product that performed well so that you can use it as a benchmark; otherwise, there are many industry benchmarks out there. For example, this article provides conversion rate benchmarks for different industries and platforms.
STEP3:
Identify which parts of the sales funnel you want to focus your efforts on. Check which areas need more work based on the benchmarks; for example, if you don’t have enough users aware of your product, it might be an interesting issue; people are aware of your product. Still, they are not willing to buy it, which means that you need to improve user experience, add more features, give a few features for free (freemium)…etc.
Try to stick to one or two objectives to avoid focusing on too many initiatives. In this step, you will have the O part of your OKRs (e.g. O: increase interest in the product)
STEP4:
Define your product goals for each of the metrics you’ve chosen. You can align to the benchmarks, or you can set more or less ambitious goals. The final result will look something like this:
O: increase interest in the product
KR: have 1000 trials per month by the end of 2021
This simple but effective way of creating OKRs helps identify the areas that need the most focus and is very easy to communicate with teams and stakeholders. I hope this helps and would love some feedback and hearing about other ways of creating OKRs.
