For many business owners, marketing is a superfluous expense; they spend money only when they have the budget. This is because marketing return on investment (ROI) is seen as unpredictable. Your ad could be a resounding hit; flooding you with thousands of new customers. Or it could be a flop; wasting your time and money.
But measurement makes marketing a science, rather than a superstition. And this powerful goal setting method, used by growth successes like Uber and Zynga, can help.
Typically, when measuring marketing ROI, most approaches only track financial metrics. A basic equation of "How much did we make?" minus "How much did we spend?"
But, successful marketing should be held accountable to financial and strategic business goals. For example, moving the needle to increase market share is a strategic win. Likewise, if marketing manages to increase the value of a customer.
So when picking which metrics count, they should first meet some basic requirements.
Businesses are twice as likely to hit their targets if they set and track key metrics. If you don’t set objectives and goals, you’re less likely to grow. It’s that simple. It doesn’t matter how brilliant your team or how revolutionary your product is. You must set clearly defined business objectives if you want to reach your goals as a company.
To measure something, it is necessary that it should be quantifiable. One of the best ways to set goals, and measure performance, is with “Objectives and Key Results” or OKR Methodology.
OKRs (Objectives and Key Results) was invented at Intel and is used by many of the most successful tech startups like Uber, Twitter, and Zynga. It’s powerful goal-setting system methodology designed to:
It also had the side benefit of giving employees meaning to their work. Repeated studies show much greater work satisfaction when staff understands the role their jobs have to achieve big goals. And can see progress towards them. Better yet? OKR is not overly-complex – it’s a simple yet powerful way to set goals.
One of the main reasons that OKRs work so well is because they are specific and measurable.
For example, instead of setting a general goal like “increase revenue” you break the goal down into as many as six “key results”. Some practitioners advise no more than 3 key results per OKR but it depends on how big your goal is, and how big the team is working on them.
Objective: Continue blog regularity and organic traffic growth
Another reason OKRs work so well is because they are time defined. Typically, OKRs are set and reviewed quarterly. Every three months is long enough to see significant results. But it’s not too long to go without needed to change course if necessary. This varies from typical measurement points; like monthly reviews after a one-off ad campaign. Or an annual review of social media strategy.
One of the final key elements to the success of OKRs is making them visible across the organization. When everyone knows and understands the OKRs, the entire company can focus and achieve those goals.
A few years back Google Ventures partner, Rick Klau, gave a presentation on how he’d used OKRs at Google. All OKRs are public including Larry Page’s. Anyone can look up what other employees are working on. He also explains how useful it is to have this information publicly available. For example, people can find out if they share or have complementary OKRs and team together to help them.
Until recently, marketers have tended to concentrate on outputs, the “stuff” we produce, and the ROI on these outputs. Best-in-class marketers are shifting from being output-oriented to outcome-based. To generate any business result, you need to be clear with the result that needs to be accomplished. And clear on where accountability lies.
For example, instead of reporting on the number of people who attended a webinar marketers should report on the number of qualified opportunities against the expected performance target for a webinar. And how many of the possibilities converted into sales worthy prospects.
But in our work we have discovered that many marketing organizations lack the data and tools they need to measure and manage performance.But in our work we have discovered that many marketing organizations lack the data and tools they need to measure and manage performance.
To discover the ‘What’ and ‘How’ of building strong analytics capabilities to improve performance for digital marketers, Watch This Video.