Re: Guidance for building KM in Hi-tech startup #startup

Stephen Bounds

Hi Jay,

Sounds like you have a perfect case for undertaking a RROI (relative return on investment) evaluation.

From what you have said, you've already identified three key metrics to target, each of which is a clear proxy for an ultimate business goal:

  • Increased customer retention (proxy metric for increased revenue)
  • Higher sales conversion rate (proxy metric for increased revenue)
  • Decreased onboarding time for sales team (proxy metric for decreased cost of sales)

To complete an RROI evaluation, the basic stages are:

  1. Identify ultimate goals and create a method for valuing goal outcomes. This can be skipped, since it looks like you have a direct revenue goal. Some organisations (eg governments) need to assign a nominal dollar value another way, perhaps by looking at calculating lost client productivity.
  2. Identify proximate goals and options to target them. You have already identified the proximate goals, so the next step is to brainstorm a range of ways to "shift the needle".
  3. Model impact of options on proximate goals. In other words, what rate of change in proximate goals are you targeting and how much would it cost to implement the option you've identified?
  4. Model change in ultimate goals based on change in proximate goals. For example, if your average retained customer pays $1000 / month, a 1% increase in retention on 1000 new customers annually is worth $120,000 a year.
  5. Compare benefits to costs to find the RROI of each initiative. This is simply dividing the benefit achieved by the cost, similar to a conventional cost-benefit analysis. Use this rank to recommend the highest benefit:cost ratio first!

There's a fully worked example on page 5 of my KM4Dev paper about RROI, which is freely available online.


Stephen Bounds
Executive, Information Management
E: stephen.bounds@...
M: 0401 829 096
On 20/05/2021 11:46 am, Jay Kreshel wrote:

Thanks for the reply. My boss EVP in Customer Success works on the executive staff. His discussions with the head of Marketing and Head of Sales. Their objectives are mostly around: 
  • Decreasing the amount of time our customers take to get value out of the application. 

  • Minimizing the misunderstandings for the sales team

  • Increasing customer retention. If we can get the Customer Success team to know all of the use cases around the products, they can share the whole value around the solution, thus increasing retention.

  • Increasing the ramp time for sales, CS. We will increase the pace of hiring and will need to help them to know about our product & industry in as a short period of time as possible.

We have been working for the past few months on new product releases and enablement for our customer-facing teams. We have technology, software, processes, & people that we have used to "appropriately" spread knowledge to the audiences, But, to your point, we have not been targeted in our approach. And we have not picked that key "Pain Point" that we should start with. 

Any thoughts as to which would be the highest reward with ease of implementation? to get that Bang for our early buck?


On Wed, May 19, 2021 at 6:15 PM Tom Short <tshortconsulting@...> wrote:

Who’s asking you to do it? Depending on where it’s coming from, it could reduce the emphasis placed on developing a complete value proposition for exec staff, at least in terms of a heavily quantifiable one. 

As for your approach, I’d start by trying to understand where the biggest gaps are that KM-type approaches might be able to bridge. Where are places where there is the most variance in performance among people doing similar types of work? Which processes have high variance of outcome? Which processes leverage the most amount of resource, either in terms of inputs or outcomes? 

By understanding this a bit more you’ll be in a good place to identify potential pain points that KM can address, and where the bang for KM buck is the greatest. 

If you’d like to read more about his type of approach check out this chapter I wrote on KM Lessons Learned:

(PS - after 20 years as a KM practitioner I retired and now work with tech startups in the Bay Area through an accelerator and via referrals). 

Good luck.

Tom Short Consulting
+1 415 300 7457

All of my previous SIKM Posts

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