CFOs should test strategies against a balanced KPI scorecard approach when C-suite leaders are advocating pursuing one path over another, one executive’s experience suggests. 

A marketing program that appears to be a success might look different if it’s assessed on the basis of other key performance indicators (KPIs), which is an argument for looking at initiatives from many data points, says Rob Israch, general manager of the European operations of automated payables software-as-a-service (SaaS) company Tipalti.

“Let’s say marketing runs a program that actually shows it generated leads and opps [opportunities],” Israch said in a SaaStr webcast. “The cost-per-opps is good. Maybe the opps-to-sale-conversion rate ROI is satisfactory.”

But different KPIs can paint a different picture, he said. 

Looking at the program from, say, a cost of acquisition (CAC) perspective, the data might show that the initiative works best with companies of at least 50 employees. Anything less than that would fall short of the company’s ROI target threshold. 

“When you look back, that test looked ROI positive from that one measurement system, but now it conflicts with [CAC], because when you actually look into these data points, most of these companies [in the program] were 30 employees or such,” he said.

The lesson is to make sure executive-level decisions aren’t isolated in one department and only based on the data that one department has.

“I’m a big advocate of a balanced scorecard philosophy,” he said. “I don’t often think that one data point leads you in the right direction; use a balance of a few key metrics.”

KPI alignment

Taking an approach like this makes it crucial there’s alignment among all of the KPIs with the company’s strategic goals. 

“You have to constantly realign, testing alignment with business strategy,” he said. “The world changes. A decision was made at a point in time, so you have to revisit [KPIs] to make sure they’re still valid.”

For years Tiplati was generating data showing that 20% of its customers were from outside the United States even though the company did no foreign marketing.

“From that perspective, you look at the data and literally the demand from the world is telling you you should be in that market,” he said. “That was a compelling data point.”

Before it embarked on an expansion strategy outside the U.S., though, it refined its analysis by looking at a range of data points. 

“Creating an international unit is complex and can create distractions and complexity for the business, so we had to find the right time to turn that button on,” he said. “The other data points we had you can cut within [the main data point]: where the customers are coming in from, where the opps are coming in from and where the leads are coming in from geographically. You go down the funnel and say, 'Which markets within that 20% should be the most effective, most easy?' and not just turn the go-to-market engine on. You have to do things right from a product, compliance and back office [standpoint], and then you should be set up for success.”

Data vs. intuition

Although executive intuition is a key part of any decision to make a big change in the business, whether it’s to pursue certain types of companies by size or to move into a new geographic market, laying a balanced data approach on top of one’s insight is the best way to improve the chances of success. 

Even if you don’t have all the data you want, supplementing the decision with what data you have is best, Israch said.

That’s the case even if the data is at odds with the intuition of front-line people. 

“As long as the data is accurate and you’re measuring the right thing, data trumps opinions,” he said. “If you consistently listen to the front lines without data, it will lead you astray eventually. This [view] has treated me well throughout the course of my career and the companies I’ve worked for in terms of growth.”