34 CHAPTER 4 OPERATIONAL BEST PRACTICES Effective organizations focus operations on few but key metrics tied to core business performance Sales volume Sales cycle Logo retention Conversion rates Churn Your North ACV ARR Star Metric Run rate CAC payback Magic Number LTV/CAC Net retention Note: North star metric is defined to be a measurement that's most predictive of a company's long-term success. Information overload can be a common issue for SaaS companies when it comes to getting value from all of the metrics they track. While it is true that all metrics have a purpose and provide insight into the business, not all metrics are equally applicable or valuable for all parts of the organization. For example, the new sales team might not care as much about net retention figures as the customer success team, and the marketing team might not care as much about the number of tickets that have been closed in customer support. To address this issue, effective organizations limit the information and metrics that each individual needs to consider and care about. For example, some sales metrics might only need to be shared with sales leaders who can then strategize their team around those metrics. And for individual salespeople, only needing to focus on the number of seats sold as their guiding metric can help them stay focused on achieving that specific goal. Guiding an organization with only a few important metrics also makes performance much more easily comparable. This allows organizations to track how the sales team is performing on an individual basis, over time, and when targeting different customer groups or regions. "Focusing on too many metrics can be a distraction. It's therefore important to select a few key metrics that closely relate to the business's performance, so that everyone stays aligned with the company's goals. In our sales team, we found that tracking the number of seats sold was the most important metric for keeping us on track." Therefore, keeping it simple and choosing the right metric to guide the organization can be key to success. The best metric to use will vary from company to company, but it should be something that is closely tied to the core business performance. For sales teams, this could be something related to the volume of sales, such as the number of seats sold or the amount of revenue generated. For customer support teams, it could be something related to the number of tickets closed or customer satisfaction.