One of the biggest challenges that we marketers face is that of aligning our efforts with organizational goals. Another challenge is proving that we succeeded after the effort is finished. Key Performance Indicators (KPIs) are quantitative or qualitative measures that reflect the progress of an organization toward its strategic goals. Like all good goals, they should be smart—specific, measurable, attainable, realistic, and timely.
KPIs play a major role in marketing, as well-planned tactics and strategies result in better metrics, better value, and more revenue for the organization. So ask yourself these important questions:
- Do our KPIs reflect reality?
- How often do we review our KPIs against targets?
- How difficult is our KPI reporting process?
- Do our KPIs provide us with information we use to make decisions about budgets, tactics, and strategies?
So, if your KPIs are not grounded in reality, or if you have KPIs, but never check them, or if your reporting process is sketchy at best, or if you never use KPIs as a guide to optimize your processes, then your KPI process is probably faulty.
All KPIs are metrics, but not all metrics are KPIs.
Let’s get one thing straight. You could have metrics out the wazoo and still not have KPIs. Good KPIs are metrics that measure performance against specific organization goals, but ordinary metrics may indicate the performance of a sub-process, or a process that is not necessarily important in and of itself. In other words, KPIs sit at the big-people table, but other metrics get a pat on the head and are directed to the kiddie table.
Effective, actionable KPIs start with planning.
To create amazing, actionable KPIs, the process leaders need to agree on metrics that accurately reflect reality, so the KPI discussion should start with vision and strategy, and continue down to objectives, success factors, KPIs, and initiatives.
- Corporate Vision: What the organization should look like in the future
(1, 3 & 5 year outlook)
- Strategy: High-level plan to accomplish this vision
- Objective: The goals
- Critical Success Factors: Key dependences
- Key Performance Indicators: Indicators which measure success
- Key Initiatives: Action programs that achieve goals
Each new layer must be laid upon the foundation of the former, so the strategy should map to the vision, the objectives to the strategy, and so on. When done right, this is a beautiful thing that optimizes efforts toward goals, and has the greatest impact on the bottom line.
Getting the most from your KPIs
KPIs should primarily be used for decisions. KPIs should provide the required information to help management decide where to spend money and apply other resources. There are two main ways you can leverage KPIs:
- First, KPIs can be used tactically to identify and fix process problems. If the KPIs are moving in the wrong direction, there are problems to solve.
- The second is to use KPIs to determine how well the tactical plans map to the organizational strategies.
Align your KPIs with CRM and Marketing Automation platforms
You should not have to spend hours pulling reports and manually generating the metrics needed to analyze your business. If reporting is too difficult and error-prone, you might not use those metrics as much as you should.
Investigate the standard reporting that your CRM and Marketing Automation platforms offer to determine the best place to generate your reports. An inefficient and ineffective reporting system will quickly prevent your ability use KPIs.
Marketo customers that have Revenue Cycle Explorer (RCE) are already ahead of the game. RCE provides the capabilities for in-depth analysis of marketing programs and channels.
KPIs are the Mile Markers on the Road to Success
One of the most important parts of the performance measurement cycle is feedback and re-alignment. Information should be collected both within and beyond the walls of your business; it should include feedback from employees, customers, industry trends and competitors. Frequent review and analysis will ensure that your KPIs are kept on track and aligned with your organizational strategy.