Operating Metrics
Over the years we’ve shared the story of Outsell’s genesis; I was a senior officer working for a software-enabled information company in Minnesota. Circa 1997 (yes, there was software even back then 😊). We were preparing to go public. My job was to draft the market and competitive landscape section for the S-1. Our i-banker from William Blair told me I couldn’t commission my own study to discuss the contours of said landscape. There was only one slight problem: There was no place to go for independent market validation.
The company didn’t go public. Tired of commuting from CA to MN every other week with a husband and two young sons at home, we decided the flier wasn’t going to pan out and it was time to quit and stay home. We had two forks in the road and two business plans in motion: Create a “JD Power for healthcare” or create what was to become Outsell. We chose Outsell, a blog story for another time, and proceeded to fill the gap of providing “the information industry” with the market data it needed and ironically didn’t have.
To this day, when businesses are working on their business plans, and CEOs or boards need market validation for their M&A or public filing docs, we will get the call. Only today, most of this industry is “tech” or “tech enabled” and the sizing job is more robust as software and data/content have become one.
With a database of more than 10,000 companies, and growing each day, we track segment, size, revenue growth, revenue by category, and a lot more. We also began developing operating benchmarks because the CEOs of our leadership community didn’t have fundamentals most industries wouldn’t dream of operating without.
So, one client asked us to build out basic metrics for use within his company. He’s part of a larger conglomerate and all the other divisions (who weren’t info or software, but manufacturing) had data galore for their operating performance. He went to meetings with a dearth of data. And with his help and funding we started a small program that today continues to build.
Here are some of the basic metrics we are gathering once a quarter:
• Revenue Growth
• Gross Margin %
• EBITDA %
• Sales Spend and % of Revenue
• Marketing Spend as % of Revenue
• R&D Spend as % of Revenue
• Data/Content/Spend as % of Revenue
• G&A Spend as % of Revenue
• Finance Spend as % of Revenue
• Legal Spend as % of Revenue
• IT Operating Spend as % of Revenue
• IT Security Spend as % of IT Operating Spend
• Quarterly Bookings (Sales) Growth
• Sales as % of Plan
• Sales Quota
• Quarterly Voluntary Employee Turnover
• FTEs (as % of total):
o Sales — Non Quota Reps (i.e. SDRs, etc.)
o Sales — Quota Carrying Reps
o Client Service & Success Function
o Marketing
o Product Management
o Engineering — Product IT
o Data/Content/Editorial
o Professional Services
o Finance, Legal, & Accounting
o Internal IT
o HR
• Pricing Change Year
• Count of Co Size (ee’s)
Today, we have 30 companies participating and the list is growing. If you are a CEO, COO, President, or MD of a standalone operating company or unit and you and your CFO wish you had some basic operating benchmarks, join the party. As the “n” grows, we will split the data over revenue model, business model, size, and public vs. private. We are providing this dataset on a give-to-get basis for the time being and we invite you to participate. It takes about 15 minutes, and you’ll receive the aggregate findings.
No one in our industry need be shoemaker’s children. And to those who say, “it’s private and we can’t share,” I would say, how can you be in the information industry and not share information? That irony runs too deep. Especially since it’s all confidential.
So, contact us today to get with the crowd that gives and gets and has the metrics they need to run their businesses. Don’t miss out.