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Inputs vs. Outputs Metrics

Definition

A framework for evaluating sourcing team performance by distinguishing between input metrics (activities the team performs) and output metrics (results those activities produce). Dan Herr argues that most PE firms default to measuring inputs — total outreach volume, emails sent, coverage compliance — which incentivizes box-checking behavior. The shift to output-focused measurement redirects effort toward high-impact, creative work that actually moves top prospects through the funnel.

Origin

Introduced by Dan Herr in Ep. 6: How to Generate Predictable, Repeatable, and Scalable Deal Flow. Dan draws the parallel to portfolio companies: PE firms routinely push sales and marketing metrics on their portfolio companies but fail to apply those same disciplines internally — "for some reason, we don't dogfood that inside of the firms." (Ep. 6)

Input Metrics (Activity-Based)

  • Total volume of outreach (calls, emails)
  • Coverage compliance (percentage of assigned prospects contacted)
  • Prospect tiering compliance (A/B/C coverage)

Dan notes these are easy to measure but create a perverse incentive: "My team members start thinking, well, gosh, like Dan just wants me to hit that number of 50 calls today... I'm just going to go leave five more BS voicemails or blast off 10 more emails to maybe even low-ranked prospects just so I can make sure and hit that number." (Ep. 6)

Output Metrics (Results-Based)

  • Percentage of top prospects engaged in a given quarter
  • Quality interactions and face-to-face meetings (especially with top-tier prospects)
  • Investment committee presentations
  • Management meetings held
  • IOIs and LOIs submitted and signed
  • Capital deployed
  • Proprietary vs. banked deal mix

The key test Dan proposes: "What percentage of your top prospects have you engaged in the last quarter?" This measures the result of outreach rather than the outreach itself. (Ep. 6)

Application

Output metrics work best when paired with Granular Pipeline Stages that track prospect progression, and cross-sectionalized by prospect tier — so managers can see how quickly top prospects (not just any prospects) move through the funnel. The metrics should also be tied to firm strategy: buy-and-build firms may emphasize add-on volume, traditional LBO shops may focus on two to three quality deals per year, and growth equity firms may prioritize capital deployment velocity. (Ep. 6)