What is OKR? How this Goal Framework Can Help You Smash Your Sales Targets

Struggling to reach your sales goals? Or maybe you’re just barely scraping by. If so, OKRs could be the secret weapon you’ve been looking for. 

This goal-setting framework will help you close more deals, drive more revenue, and enjoy more success. If you manage a sales team, you’ll boost employee engagement, too. #winning 

Before you can do those things, though, you have to understand what the OKR methodology is, how OKRs differ from KPIs and SMART goals, the essential components of the system, and how to use the OKR framework to make sales. 

Great news: I have the answers for you! This guide digs deep into what OKR is and how it works specifically for sales teams. 

What is OKR?

Grove based his methodology on Peter Drucker’s Management by Objectives (MBO) theory. He shared these ideas with John Doerr, who eventually wrote the book Measure What Matters around this same methodology. Today, teams that use Agile or Waterfall for project management often use OKRs to measure what matters and win big. 

And best of all—OKRs can be customized to your team.

Some teams use a top-down approach, with leadership choosing company objectives and key results and then relaying that to their employees. Others do the opposite and go bottom-up. You can even split the difference, with leadership choosing objectives and individual contributors choosing the key results they’ll use to achieve those aims.

The real wins that teams see with OKRs include:

• Rallying team members around specific desired outcomes
• Improving cross-functional collaboration
• Boosting employee engagement (and, in turn, improving employee retention rate)

What’s the Difference Between OKRs and KPIs?

KPIs (key performance indicators) are metrics used to track performance. Popular sales KPIs include:

• Monthly sales growth
• Llamadas y correos electrónicos por representante
• Customer acquisition cost (CAC)
• Lead conversion rate

OKRs, on the other hand, are a methodology you and your sales team can use to set and achieve overarching company goals—even the most aspirational ones.

OKRs are not better than KPIs, or vice versa. Rather, they are different tools that should be used to accomplish different things. Use OKRs to direct your sales career and/or sales team, and use KPIs to evaluate your progress toward your measurable goals.

(Note: KPIs often make good key results, i.e., the second half of the OKR equation. We’ll talk more about this in a later section about the components of the OKR Framework.)

What’s the Difference Between OKRs and SMART Goals?

If you’re serious about your career, you’re probably familiar with the concept of SMART goals. SMART is an acronym for Specific, Measurable, Attainable, Relevant, and Time-Bound.

The idea is every goal you set for yourself or your sales team should be clear and realistically achievable, help you reach your overarching mission, and include a deadline and KPI.

SMART goals are awesome, but they aren’t a goal-setting framework. Why not? Because they only help you verbalize the things you want to achieve, not plan a path to victory.

Think about it this way: SMART goals are a pin on a map, telling you which direction to drive your car. OKRs are step-by-step directions you follow to reach your final destination.

Do OKRs Work in Sales?

The short answer is... Absolutely!

It doesn’t matter what field you’re in—marketing, customer service, project management, or sales—OKRs help you accomplish more.

Hell, you can even use OKRs to achieve things in your personal life! 

Since OKRs are simply a combination of objectives and key results, it’s a framework that shows you the goals you want to reach, and the specific metrics you’ll monitor to make sure you’re on track.

Here’s one word of caution: always separate company objectives in OKRs from employee compensation plans.

In other words, don’t require your sales reps to achieve specific team-level or overarching business goals before they get paid. The reason is simple: OKRs encourage your team to chase ambitious goals. But if they’re only compensated when they reach the top of the mountain, so to speak, team morale can be put in serious danger.

What are the Components of the OKR Framework?

This management framework has three core components: objectives, key results, and initiatives. Let’s dig into what those components really mean.

• Objectives: The measurable outcomes you want to accomplish. These should be aspiration and easy to understand. For example: Hit $50M in annual recurring revenue.
• Key results: The metrics you’ll use to track progress towards your measurable outcomes. Key metrics will help you determine if you’re on track to reach your goals. For example: Reduce customer churn by 15 percent, or boost our annual renewal rate by 20 percent.
• Initiatives: The specific tasks you’ll complete to achieve your key results. For example: Contact 50 potential customers a day, create and test new email templates, or dedicate time to customer service-related tasks.

You might be wondering, “How many objectives, key results, and initiatives should I set?”

Great question! Generally speaking, try to set no more than 10 objectives at a time. Then, set between three and five key results per objective and as many initiatives as needed.

One last thought about objectives: make them BIG GOALS. So big, in fact, that you and your sales team are only able to accomplish 60 to 70 percent of them per OKR cycle. By setting ambitious goals, your team will be motivated to push harder and will likely accomplish more than anyone thought possible.

How to Implement the OKR Methodology in Sales

Now you know how the OKR framework works in theory—here’s how to implement it in practice.

Get Team Members to Buy In

Your OKR initiative will fail if you don’t get buy-in.

First, you need your leadership team to approve of this goal-setting framework. If they don’t, you’ll have a hard time connecting your department’s objectives to company goals.

Second, you need to get your sales team to buy in. If your reps aren’t sold on the idea of OKRs, they won’t collaborate with you when it’s time to choose objectives, key results, and initiatives. As we’ll talk about in the next section, collaboration is key to a strong OKR process.

Fortunately, you don’t need a degree in aerospace engineering to understand and succeed with OKRs. If you simply introduce the concept to your salespeople and then educate them on how the OKR framework operates, you should be able to get buy-in without much effort.

Set OKRs for Your Department

Is the rest of your company onboard with your OKR methodology?

Great! Now, you can set good OKRs for your department that lead to the desired outcomes you want to achieve—on both a team and a company level.

That last bit is important. The objectives you set for your sales team should relate to the overarching direction of your entire organization. If they don't, you'll be at odds with other departments, and your business won't get where it wants to go.

Look for ways to improve your company’s sales process. Study your CRM software as well, to pinpoint leaks in your sales funnel, or otherwise address team weaknesses. Then, choose objectives and measurable key results to address during your OKR cycles.

And remember, you don’t have to set OKRs by yourself. In fact, you probably shouldn’t. Check in with your reps, then collaborate with them to create goals and milestones, together. This will boost employee engagement and ensure you choose realistic sales targets.

Give Your Reps Clear Directions

Once you’ve chosen objectives, key results, and initiatives for your sales team, communicate with each of the individual sales reps you manage. This will keep you all on the same page and help your reps achieve desired outcomes throughout every OKR cycle they participate in.

If your main objective is to drive more company revenue, for example, one of your key results might be, "Boost our average order value (AOV) by 10 percent." If so, communicate this fact to team members. Then, sit down with them to implement a plan. You might coach reps to seek additional upsell and cross-sell opportunities, for instance.

Whatever the case may be, prepare your sales team for success by giving your reps clear directions that they can follow to success. Your company’s strategy depends on it.

Track Progress and Realign

Next, meet with your team throughout the OKR cycle. That way, you can measure progress towards your goals and learn which sales activities produce the best results.

When you successfully reach a goal, take time to celebrate. You and your department have achieved something meaningful. Recognition of this achievement will boost team morale and motivate reps to continue giving max effort. Ignoring it could have the opposite effect.

OKR software can make goal-setting and tracking processes easier. Simply find the right app, then use it to aid your efforts in this area. Popular options include Profit.Co and Weekdone.

Short on cash? Or maybe you’re just not super pumped about another piece of software. I get it. That’s why I suggest ditching OKR tools and using your CRM instead. Doing so will help you track milestones, as well as the various KPIs and metrics you need to make them a reality.

Avoid Common OKR Mistakes

Finally, avoid a few pitfalls that will drag your sales team down, or keep you from finding success with the OKR framework. Some of the most common OKR mistakes are:

• Aiming for business as usual: Good OKRs will force you to change your sales process. If yours don’t, reconsider the objectives and key results you’ve chosen.
• Setting too many OKRs at one time: As mentioned above, you should never set more than 10 objectives at a time. Each objective should have a maximum of five key results. Focus your energy on your department’s top priorities.
• Forgetting to check in on your OKRs on a regular basis: Your OKR methodology isn’t a “set it and forget it” strategy. You need to track it to see if you’re hitting key milestones. Skip this step and OKRs probably won’t benefit your sales team.

OKR Examples for High-Performance Sales Teams

Want to take this concept a step further? Check these OKR examples, and use them as templates for your own OKRs.

Team OKRs

Team Objective: Improve sales department revenue by 20 percent

• Key Result #1: Double the amount of quality leads we generate every month
• Key Result #2: Boost booked sales meetings from 3 to 5 per week / per rep
• Key Result #3: Increase our team’s close rate from 25 percent to 35 percent

Company Level OKRs

Company Objective: Reach $1M in monthly recurring revenue (MRR)

• Key Result #1: Drive 100k visitors to the website every month
• Key Result #2: Increase our sales team’s close rate from 20 percent to 30 percent
• Key Result #3: Increase our annual renewal rate from 70 percent to 80 percent
• Key Result #4: Reduce customer churn by 15 percent or more this year

Close More Deals With an OKR Process

The OKR framework is a fantastic management methodology that helps teams prioritize ambitious goals, track progress towards them, and propel you and/or your sales team towards success. It will also help you generate employee engagement, if you happen to be a sales manager.

The best part is, implementing an OKR process is easy. Simply collaborate with your team, decide what you want to accomplish, and choose key results to help you get there.

Once you do, you’ll enjoy all of the benefits of OKRs that I explained in this article. And put you and your team in position to help achieve overarching business goals for your company.

Know what else will help you achieve business goals? A reliable, easy-to-use, feature-packed CRM. Sign up for a free 14-day trial of Close today to get your hands on one ASAP.