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Two of the most useful measurements availableto set objectives and goals for your business are KPIs (Key Performance Indicators) and OKRs (Objective and Key Results).
Why? Because you need to know your numbers. If you don’t know your numbers, you don’t know what’s working and what’s not working for your business.
That’s money left on the table, whether in terms of time wasted, ad spend misused, or just poor business decisions in general due to a lack of direction and planning.
KPIs and OKRs form a macro view of how your business performed in the past and how your business can improve in the future.
Both measurements provide valuable insight into your business. They also have distinct differences in their value proposition.
In many ways, KPIs measures past performance and OKRs are a roadmap for your future.
What Is A KPI?
A KPI is data used to track various metrics in order to identify efficiencies and laggards in your company strategy.
Basically, KPIs are any measurable data that conveys valuable information about your business.
KPIs should help your business:
- Link data to strategic objectives
- Direct where to focus (more) resources
- Measure against pre-determined targets
What Is An OKR?
OKRs, according to CIO.com, “is a goal-setting framework that helps organizations define goals — or objectives — and then track the outcome. The framework is designed to help organizations establish far-reaching goals in days instead of months.”
Google adopted OKRs in 1999, their first year in business. The world’s preeminent search engine still uses them today.
Over this period, Google blossomed from 40 to 60,000 employees and is now one of the most recognizable (and valuable) brands on the planet.
- “For Key Results (KRs) to be effective, they need to be particular and time-bound.”
- “Objectives are inspirational.”
- “[OKRs] provide organizations with the required focus to triumph by getting rid of confusion.”
- “A proper goal-setting system begins with a disciplined thought process at the highest level of the hierarchy.”
- “[OKRs] serve as a precision communication tool for individual contributors, teams and departments.”
In simplest terms, OKRs align and engage your team around measurable and clear goals over a pre-determined period of time.
As Doer mentions in the video, objectives are what it is your trying to get accomplished and key results are how you are going to get that done. They are a “kind of vaccine against fuzzy thinking and fuzzy execution.”
KPI & OKR Best Practices [With Examples]
KPI Best Practices
As mentioned, KPIs are metrics that you can measure objectively.
These help to identify the performance of a specific business action or campaign.
KPIs measure your marketing efforts, for instance, and provide actionable data on how to achieve improved business results.
Some examples of KPI your company may (or should consider) tracking are available within most marketing suites, including Google Adwords and Meta Business Suite:
- Leads – emails, telephone numbers, and general lead generation
- Conversions – track user actions such as newsletter sign-ups, product purchases, form submits, direct calls, or consultation sign ups
- Reach/Impressions – how many people saw a specific piece of content or page
- Return on Advertising Spend (ROAS) – measures a campaign’s monetary value of money spent against what it earned
- Click-through Rate (CTR) – the percentage of individuals who view a webpage and then click on a specific advertisement that appears on that page
- Cost-Per-Click (CPC) – measures a campaign’s efficiency on the amount you need to spend to drive click-throughs
- And many more examples beyond that!
Some KPIs are more valuable to one organization or company than another.
A local barbershop, for instance, is laser-focused on increasing phone calls. Direct calls are likely their most profitable KPI and what gets customers into the shop.
For a digital media publishing company, direct calls will not be as valuable for their sales funnel.
But increased website traffic allows them to charge advertisers at a set rate.
The better their reach and click-through rate, the more they are able to charge for ad space.
In both cases, these metrics will only provide value or actional insights if you are measuring and paying attention to changes from week to week and quarter to quarter.
You should identify which of these KPIs are most valuable to your business and build a strategy around measuring and improving them.
Beyond digital marketing efforts, there are numerous areas where collecting data is useful for KPIs.
For example, post-purchase customer satisfaction surveys for a B2C business provide actionable insight into where and how a business can improve its customer support service.
Another example would be KPIs healthcare providers often use, such as:
- Average Hospital Stay
- Bed Occupancy Rate
- Treatment Costs
- Operating Cash Flow
- Patient Room Turnover Rate
- Medical Equipment Utilization
OKR Best Practices
As the name states, OKRs have two aspects: the objective and the key results.
Objectives are qualitative descriptions of your goal. Objectives are short, engaging, and motivating. They should provide a challenge to your team to strive towards.
Key Results are measurable data. You measure this en route towards your objective. Each objective should have 3-5 key results, defined with absolute clarity.
If you haven’t already, you should begin outlining this framework for your business.
Defining OKRs will help organize, expedite, and execute to achieve objective goals.
Using this framework, you can set goals with actionable steps to achieve important milestones for your business. If it helps, think of OKRs as a compass for your company.
OKRs are written with an objective. Three to five supporting key results follow the objective. They are forward-looking objectives, written as a statement:
I/we will (objective) as measured by (key results).
While OKRs differ from KPIs, they overlap in many cases. Often an OKR will include a KPI, as seen in this example:
Objective: “We will support the sales team by increasing the number of qualified leads each month by 10%.”
Key Result: Double form submissions with revised copy and new images on ‘X’ squeeze page.
KR: Increase ad spend by $500USD per month to achieve a 15% increase in leads to our sales funnel. (A 15% increase is gleaned from tracking leads – a useful KPI.)
KR: Create a 3-part web series of bitesize video content, linked to ‘X’ landing page, to increase lead conversions by at least 10%. (Conversions are another valuable KPI.)
Starting Measuring, Start Scaling
Collecting and measuring data to create KPIs and OKRs for your business is like taking off the blindfold before swinging at a piñata.
Your odds of cracking it open on that first swing are exponentially higher with a clear view.
For this exact reason, businesses that use KPIs and OKRs will always be one step ahead of the competition.
Brands like Google and Intel – as well as Airbnb, Spotify, Walmart, The Guardian, and these well-known companies – all rely on OKRs to track progress.
They certainly track as much data as possible and use KPIs.
Businesses that don’t measure KPIs or OKRs are not destined to fail. However, they are missing out on invaluable data sets and actional insights that severely stunt their potential growth.
Not sure where to start setting your own KPIs and OKRs?
Get started with a marketing team today and get your business churning at full steam.