On October 5, 2016 I published an article in Cognition entitled Deciphering goals and objectives. In that article I described how clients use goals and objectives interchangeably in Request for Proposals (RFPs). I also offered one solution for how to clarify goals from objectives to ensure a proper project approach. Once the goals and objectives of the project are understood, the next step is to identify key performance indicators (KPIs). If you are unsure how to identify and connect KPIs to goals and objectives, here is one method to consider that’s been used successfully at Happy Cog.
What is a Key Performance Indicator?
A key performance indicator, or KPI, is a measurement used by business folks to show value in something – a task, process, person, business unit, or company. When aligned properly with goals and objectives, a KPI can illustrate how well that “something” is performing.
A key performance indicator may be a number or a ratio. It should also meet the SMART principals (as defined by Doran, G. T. (1981). “There’s a S.M.A.R.T. Way to Write Management’s Goals and Objectives“, Management Review, Vol. 70, Issue 11, pp. 35-36.):
- Specific – it is clearly defined, and targets a specific area of improvement
- Measurable – it can be quantified
- Assignable/Attainable – it is someone’s responsibility, it is realistic and achievable
- Realistic – it is based on practical, not theoretical considerations
- Time-related – it can be measured over time
Clients measure the success of their digital projects through key performance indicators. But KPIs are more than just a barometer for project success. They offer real time insight into the business’ performance as it relates to the business’ strategy, and a chance to course correct if the business isn’t seeing the results it wants.
Identifying Key Performance Indicators?
KPIs may be included in a Request for Proposal, but most of the time you will need to query a prospective client about them during the sales cycle, with one exception being a scoping engagement. If you are engaging the prospective client in a scoping exercise the need to identify KPIs during your sales cycle is less critical. In either case, the first step is to decipher project goals and objectives. Once those are clear and understood, arrange a call with your client. Set an agenda to review goals and objectives and the manner in which the client would like to measure them. We encourage our prospects to share their initial list of KPIs with us prior to the call, but in some cases, if they aren’t sure which measurements are best-suited for their particular business, we’ll plan to identify them during our meeting.
To prepare for the KPI meeting here is your main task:
- Create a list of the project’s goals and show their related objectives, and associated KPI
- Spreadsheets or tables are useful for displaying information in columnar fashion and is easy to scan, left to right, as you discuss the relationship of goals to objectives to key performance indicators in real time,/li>
- If you didn’t receive a list from the client consider what KPIs may be best and be prepared to offer your reasons for selecting them
This is where your knowledge of digital projects and the tools used to quantify your work converge with your client’s business goals and knowledge. This is also a valuable step for assessing if the client’s appetite for what can be accomplished in the project is realistic. You don’t want to identify 100 KPIs. Too many measurements dilutes the results. There is no hard and fast rule that states every goal and objective must be tied to a measurement. Remember these are key performance indicators. Identify a manageable number of KPIs, could be as few as 1 to 3 for the entire project, maybe 5 if you really want to push it. Just be sure the KPIs you settle on meet the aforementioned SMART principles.
The following exercise can be used during your meeting to connect client goals and objectives to key measurements. Talk through the goal and it’s related objective, then discuss measurement options. The outcome of the meeting should result in identifying KPIs for select goal and objectives, as well as a clear designation of who is responsible for monitoring the measurement.
Goal: Leverage key integration with social media, email, and other digital platforms to expand our reach to a younger demographic who doesn’t know we’re here, so we can sell them things they will love.
Objective: Create a four week marketing campaign (email) for target demographic (ages 18 to 34) to push new site content through clear and compelling value propositions that compel users to visit key site pages and purchase product.
The goal and objective here are connected to outreach. There are a number of different KPIs that can be applied for measuring outreach. And here is where the discussion begins. Be sure to include in your discussion the tools you foresee being used to gather the data needed for measuring progress. For example, outreach for the objective noted above may be best suited for a tool like Mail Chimp, or Constant Contact, or something like Unbounce if you want to track traffic to a landing page. Google analytics or a comparable analytics product may also be used. To measure outreach the following measurements are worth consideration and should be the focus of your discussion.
- Delivery rate – the number of emails delivered (number of emails sent – number of bounces) / number of emails sent (measured as a percentage)
This measurement can be tracked through marketing campaign tools, i.e. Mail Chimp, but generally carry a cost. If your client doesn’t have a confirmed email list and has shown a high bounce rate on past campaigns this may be an indicator to avoid. It’s worth investigating, particularly with respect to click to delivery rate measurement, which could have greater value to the client.
- Open rate – number of emails opened / number of emails delivered (measured as a percentage)
This measurement is useful if we’re measuring the strength of the email subject line. In this particular case it is worthwhile to investigate how much campaign experience the client has and who (the A in SMART) is responsible for the campaign itself. Based on the goal and objective this measurement may not be the best fit.
- Click to delivery rate – the number of clicks in the email / number of emails delivered (measured as a percentage)
This measurement allows you to discuss what content may be used in the emails. Will there be active links included in the email’s content? If yes, this measurement is worth considering. If no, a different measurement may be more suitable. Consider click to delivery rate if the objective is to test the strength of your email content based on the actions of the user – which is to drive the target audience to the site to buy great products. This sets up to be a good measurement, however, if the email list is not confirmed (delivery rate), the results of this could be skewed.
- Response rate – Total number of first time responses / total number of emails opened (measured as a percentage)
This is an important metric. Himanshu Sharma, a certified web analyst, calls it “a micro conversion of your outreach campaigns.” Essentially this measurement assesses strength of the mailing list, and content. If your response rate is low it may be an indication that your campaign is targeting the wrong users or that your email content isn’t compelling people to take the action you seek.
- Conversion rate of outreach – the total number of links earned through outreach / total number of emails opened (measured as a percentage)
For the stated goal and objective the conversion rate of outreach is a complete measurement. The client wants to sell more product. Successful outreach drives targeted users to key pages on the website. The strength of the web pages themselves – content priority, the content itself, and clear pathways to purchase – ensures that the conversion happens. It also shows the value of your agency’s work and from a project perspective that makes this measurement a win-win.
Key Performance Indicator: Conversion rate of outreach (client)
The process of aligning goals, objectives, and key performance indicators acts as a microcosm of the overall project experience. It requires communication, effort, understanding, and a willingness to work toward a common objective. Our example exercise used five different measures to drive conversation about an outreach goal and objective. Although there is no hard and fast number of measures to consider, the measure you do select should align with the project goal, and objective. There are many KPIs to choose from so save your sanity and follow these steps:
- Define the project goals and objectives
- Identify the KPI category(ies) that align with project goals and objectives – (reference The 75 KPIs Every Manager Needs to Know for categorical breakdown of KPIs that will help you get started)
- Select KPIs that meet the SMART criteria and align with the stated goals and objectives
- Discuss goals, objectives, and KPIs with your client and identify and agree on the measurements you’ll use for the project
If you, and your client, find this process results in a good experience, you’re getting a glimpse of how working together on the actual project might go, and that may be the best indicator of all.