Your KPIs Are Only as Good as Your Purpose
A marketer’s day-to-day routine can be compared to swimming in a bowl of alphabet soup. With so many acronyms, you are excused for getting lost amongst all of them, but it is important to understand KPI, one of the most important acronyms in the marketing discipline. Key Performance Indicators measure progress towards objectives and are critical to a marketer’s ability not just to track their own performance, but also prove their work’s worth to management. Because of their importance to the daily function of a business, marketers must understand best practices for determining these measurements.
In order to develop effective and worthy KPIs, marketers must adopt a top-down approach. If marketers employ a bottom-up approach, for example by co-opting KPIs used by competitors, they risk collecting data for data’s sake. The insights they glean from this data may be useless if there is a significant disconnect between the numbers and the purpose at the top of the organization.
To make sure you are not wasting effort, start with why. Simon Sinek is famously quoted as saying, “people don’t buy what you do, they buy why you do it,” in one of his TED talks. Marketers should apply a similar approach, by centering their data collection on their overall purpose, values, or goals. As business influencer Bernard Marr writes, if you neglect to focus on your strategy, you are liable to end up with an unwieldy long list of measurements that may either have nothing to do with your business or worse, can steer you in the wrong direction.
Once a goal is defined, you must then determine the objectives that will help you achieve your goals. In order to be effective, these objectives must be specific, measurable, achievable, reasonable, and timely. Once you have determined these objectives, you can follow them down to KPIs. How can you tell if you are going to meet your objectives? How do you measure if your strategies are working? These kinds of questions will reveal which KPIs you need to listen to in order to ensure your objectives are being met and your purpose is being fulfilled.
Beyond the development of the measurements themselves, Bernard Marr also points out a few points to consider in order to successfully use KPIs: determine ownership of KPIs (i.e., who will be in charge of tracking), determine how to communicate KPIs, and make sure KPIs are understood internally. Ultimately, KPIs are only as valuable as the actions they inspire and how effectively they help you achieve your goals.