We all know that when you start on a journey, it’s important to have a plan of action, a destination, a purpose, and a way of measuring whether or not you are getting there. Of course the same applies in business – but when venturing into the digital arena many businesses have only a vague idea of what they’re doing, why they’re doing it, or where they want to end up. There are some simple tools that can help enormously with this – but first, you need to understand four related terms: objectives, goals, KPIs and targets.
Objectives answer the question of why your brand, website or campaign exists. First and foremost, ensure that you have DUMB (doable, understandable, manageable and beneficial) business objectives. An example of a business objective would be to generate sales – your business exists to sell stuff. From this, you can develop digital objectives following the same reasoning – why does this website, profile or campaign exist? For example, your Facebook profile is there to build a community of fans and customers, who should eventually buy your products online or in-store.
According to web analytics guru, Avinash Kaushik, a goal refers to the “strategies you will leverage to accomplish your business or digital objectives”. These include specific things you will do to work toward and achieve your objectives. If your business objective was to generate sales, your goals could be to capture sales leads or to sell products and increase order value online. Goals are more specific and help make objectives seem more achievable and less abstract. Please don’t mistake goals with targets, as we’ll explain later.
Key performance indicators (KPIs) are metrics or measures that help you understand how you are doing against your goals and objectives. KPIs for a “capture sales leads” goal would be conversions (i.e. successful completion of a “call me back” form), and for an “increase order value” goal they would be total revenue or average order value.
KPIs make it easy to see how you are doing, without any guessing or gut. Without them, achieving and measuring the success of your business becomes more subjective, and a lot more difficult to control.
Targets are pre-determined numerical values you choose for your KPIs to draw the line between success and failure in your goals.
The importance of targets is very often undervalued. Without setting them up, there’s no knowing whether 50 registrations in a month is good, bad or awful. If you’re concerned that targets will be too hard or too easy, look to your historical performance – perhaps last month you had 80 registrations and the month prior to that you had 73.
It’s vital to invest time and effort into defining these terms for your business upfront. When you have defined them, you will end up with what we call a Measurement Model (see an example from Avinash Kaushik below). This model allows you to measure the success of a strategic business objective based on something as simple as the number of registrations.
Starting at the top:
First, define what your business and web presence wants to achieve – these will be your business and digital objectives.
Then, think about the strategies and tactics you can use to achieve your objectives – these are your goals, which provide direction for what needs to be done.
Now, identify your KPIs, essential to understanding how you are performing against your goals and objectives.
Lastly, set your targets. Being able to differentiate between successful and unsuccessful goals will help in allocating resources both offline and online.
Remember that each of these feed into each other – business objectives define goals, which in turn help with KPIs and targets. Targets then feed directly back into goals, allowing you to assess success or failure, which in turn feeds back into your business objectives.
What are the objectives for your business? How do you plan to use these to define your business goals, KPIs and targets?