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Management | Jul 21
Peter Caputa IV on April 22, 2020 (last modified on May 22, 2020) • 12 minute read
With so much week-to-week uncertainty during COVID-19, company performance is difficult to manage.
The dot-com bust and the 2008 economic recession were no picnic. But, this crisis is different. During this one, the impacts have come fast and from many different angles.
As the COVID-19 crisis began spreading globally, many businesses in industries like tourism, events, physical retail, etc shut down completely and were forced to lay off or furlough staff, while the lucky companies (mostly in professional services, software, etc) sent their employees home to work remotely. Essential businesses like grocery stores, banks and hardware stores, of course, stayed open, but have been consumed with keeping their employees safe and their supply chains functioning.
In week two, as this new normal was settling in, companies that went remote were not actually in work-mode, as evidenced by lower website traffic for most business websites and skyrocketed social and news media website traffic. With no boss looking over our shoulders, kids out-of-school and fear and grief gripping us all, who could blame anyone?
The dashboard embedded below shows how our traffic and signups dropped then started to recover last month. Toggle between “Last Month” and “Last 30 Days” to see both the drop and subsequent recovery.
In week three, the rest of us started to feel the impact of companies in major face-to-face industries cutting their external costs aggressively just to try and survive what is clearly going to be a many-months-long interruption in their businesses.
In week four, as US companies all scrambled to apply for the Paycheck Protection Program Loan, almost all companies seem to be freezing budgets and cutting expenses in order to extend their runway. Of course, none of us are sure how much to cut or how much to invest because none of us know how long this crisis will last.
So, what’s going to happen next? I don’t know. I can’t tell you what’s going to happen next.
But, what I can share with you is 7 ways to effectively predict your company’s performance in an unpredictable time like this. In fact, it’s not that much different than what you should be doing- but didn’t really need to- during great times.
You’ve heard this one before, I’m sure. But, it’s so critical now, it deserves re-stating.
During times of uncertainty, it’s much harder to control outcomes. More specific to COVID-19, government decisions like the mandatory closure of non-essential businesses are both out of your control and could impact your business outcomes greatly.
However, in any business, you can control what you spend and you can control what you do each day. If you’re a manager or owner, you’re hopefully pretty good at influencing what your team does every day too. And if your sales, marketing, and customer service are solid, maybe you can help your clients focus on the right things too.
Where we see most companies fail is that they don’t align their teams around the metrics they should be improving. Without this, it’s impossible to prioritize the activities and initiatives that will improve those metrics. Also, in the absence of organizational alignment around the right metrics to track and prioritize, everyone defaults to outcomes, which, as we stated earlier, are harder to influence during times of economic uncertainty.
Just as it’s important to align your team around the right metrics and goals when things are going well, it’s even more important to do so when they aren’t, as focus often needs to shift and the metrics you prioritize and set goals for may need to shift, too.
But, picking the metrics to focus on is not a trivial exercise for most. We’ve tried to make it easy by pre-configuring thousands of metrics from the most popular software products and by providing free training for your team so you can all agree on the right metrics to track and goals to set.
Below is a free excerpt of Chapter 1 from our Predictable Performance training course all about aligning your team around the right metrics and goals to track.
When focused on the short-term, there are a smaller number of metrics that matter. For many, it might only be two metrics: cash in and cash out. But, for most businesses, it’s a bit more complicated.
For example, our marketing team can’t close deals themselves. But, they can focus on signups instead of traffic growth, and they can focus on content that helps us book meetings and drives product adoption. For marketing, these are the metrics more closely aligned with “cash in.”
To ensure we focus on the metrics that matter and that we can control, we follow a quarterly planning process. And given that COVID-19 started impacting us during our quarterly planning period, many of our initiatives are designed to help us weather this crisis.
To kick off the process, each functional Director works with their teams, their peers, and Databox’s co-founder, Davorin, and I to brainstorm and detail our plans. This includes all of our teams: marketing, sales, support, engineering, product growth, integrations, and human resources. Once we’re all aligned, each director publishes a writeup on our internal wiki for the whole company to read.
Here’s a slightly edited excerpt from our Q2 Marketing plan,“Over the last few years, marketing has primarily focused on growing signups by increasing our organic website traffic by publishing long-form content at a high rate. This quarter, we will focus on converting more of our organic website visitors into signups and then into active users by producing content that encourages greater adoption of our features and integrations.”
The plans also include very specific S.M.A.R.T goals, “As our traffic and signup volume seems to be recovering week-to-week since the week of March 16th when we took a hit due to COVID-19, we plan to be flat in April and are planning to grow signups by 5% in each of May and June and to support our product team’s targets for Weekly Active Users.”
We also detail specific initiatives or deliverables we’ll be prioritizing, such as our plan to increase our case study volume, “As we increase our publication of case studies, we will launch a case study section on our website that houses them.”
The write-ups include much more detail than this and they often link to a full project plan in Asana, our project management tool.
This exercise ensures we are all aligned and that each team’s focus is clear and their impact is measurable. It also creates accountability, as every day, week, and month, each team is holding themselves accountable to their targets and timelines. And perhaps most importantly, it allows us to make 3 months of decisions in two weeks, so we can focus on getting things done during most of the quarter.
Interested in adopting a quarterly planning process? Here’s a simple guide from our friends at Weidert Group or watch Chapter 4 of our Predictable Performance Training to learn how to apply this process in your business.
Two weeks into the crisis, our sales close rate dropped to zero for a full week. While I know that many people and organizations are dealing with life and death decisions and our problems may be simple compared to them, I didn’t sleep much that week.
When we reviewed all our stalled deals to try and find ways to re-engage them, I discovered there wasn’t much we could do as many companies started freezing expenses or even letting our point-person go.
So, what did we do? We focused our sales team on getting more meetings booked.
Salespeople, as much as they’d like to believe otherwise, are not in full control of who they close when. The best ones influence it, but in times like these when buyers are frozen in fear and budgets are literally frozen, it’s not an objection even the best salespeople can overcome most of the time.
The number of meetings we booked was something we could control better. And it is starting to work as shown in the embedded Databoard below.
In marketing, our website traffic and signup volume plunged the week of March 16th. We knew there was little chance we could hit our signup goals for the month, as a result. So, our focus became our output: publishing content and helping sales book more meetings.
What can you control? Make that your focus and your goal.
Another thing that we all control is the quality of our work. In great times, there are abundant opportunities. In times of crisis, not so much.
So, spending more time and effort on the right activities, initiatives, prospects, and customers is the right approach.
An example is our support team’s new focus. Previous targets for support were to maximize the number of customers we helped and minimize our response time. As you might imagine, during busy times, this encouraged them to answer questions and move on to the next customer as quickly as possible. And this worked really well; we grew revenue month-over-month for 36 months in a row.
But, it’s not the right approach when customers really need more help and are desperate to better track performance immediately.
So, in order to shift towards providing this higher-quality customer support, we’ve shifted goals for the support team members. We rolled out a new process where we offer to build one Databoard for users at no charge. We also offer one free call with one of our most senior team members. So, instead of measuring how many chats our support team has and how quickly we respond, we measure the % of chats where we build a Databoard or book a call. This gives us an indication of the quality of the work of our support team.
Obviously, this level of support is better for our customer, especially if they are still learning how to use our product. But, selfishly, we expect to improve our sales close rate and retention rate with this approach.
One team’s results are often leading indicators for another’s. For instance, the number of signups marketing generates for our free product is a leading indicator for how many new trials get started for one of our paid plans. Trials is a leading indicator for how many sales meetings we book and meetings is a leading indicator for how many new customers we acquire.
Our signup and trial volume have grown very predictably and in lockstep, since we rolled out the trial. And unfortunately, when signup volume dropped in mid-March, so did trials.
Then, meetings booked with our sales team dropped and new customers right after it. It took one month to ripple through our business.
But, as signup volume increased, so did trials and meetings. Of course, we did some things (and will do more things) to increase the volume of trials and meetings directly, but by monitoring leading indicators incessantly, we can predict new sales.
Similarly, we have product usage metrics that determine our retention and upgrades. For example, we sell 10 accounts at once to our partners. By monitoring how many client accounts our partners are creating and deleting, I can forecast likely upgrades. Of course, we have 100s of product usage metrics we’re tracking that give us confidence in our future results.
Forecasting techniques vary pretty drastically for different types of businesses. If a company sells big-ticket items or contracts just a few times per year or even a few times per month, your sales and renewals may be all you need to track.
In self-service subscription businesses like ours, there are more variables: new, upgrades, downgrades, cancellations, reactivations, payment term changes, etc.
The key to forecasting both is to understand what these things are and build a model that allows you to test what will happen when certain things change.
Once you do, it’s much easier to see how your leading indicators, quality metrics and the outputs you control will impact your cash in.
In good times when external factors rarely impact our performance, I update our model once per quarter. During the COVID-19 crisis, we’re updating it daily and reviewing it twice per week together as a management team.
What worries me the most about this economic recession is that every day seems like a bit of a roll of the dice. New challenges and trends seem to pop up weekly.
And even though it’s only been five weeks since we started feeling the impacts of this crisis, every week seemed to bring new challenges, making it feel like a year.
At this point, I have no idea what first, second or third-order impacts may impact us. Or you.
And the uncertainty is panic-inducing and almost debilitating.
But there is one more thing that we can control: it’s what we do for our customers.
As for us and as mentioned above, we’re trying to offer better customer support. We’re also increasing some limits on our paid quarterly and annual plans so our customers can track more of their metrics inside Databox. We’ll be launching some inexpensive paid services to help our customers and especially our partners who are all trying to do more with fewer resources too. And we’ll be rolling out a slew of new functionality for our existing customers like custom date ranges, more advanced visualizations capabilities and deeper integrations with middleware tools that allow our users to pull in data from any API– just to name a few.
If there’s something else you think we could do to help you, we want to hear it.
And we’d love to hear what your business is doing too.
Management | Jul 21
Management | Jul 16