Spring has arrived and outdoor events and the race season are moving into full swing here in Austin. People are feeling a sense of renewal and whether they’re planning to compete or not, they are honing their workout routines. As I was taking stock of my own training plan, it occurred to me that the three key metrics categories applied in the “sports” arena work just as well for marketing: outcome, performance, and process. As the CEO you may want to motivate your marketing team to integrate these key performance indicator categories into their performance management.
Three Performance Indicator Categories
Before we launch into how to use each category, let’s clarify our definitions.
- Outcome Indicators: An outcome is the RESULT we want to achieve. Examples of business outcomes include things such as ranking in the top three in market share for a particular vertical, or expanding the footprint inside a customer segment by some number of new design wins.
- Performance Indicators: These are metrics that declare what marketing is committing to do and then measuring how well the commitments are met. Performance metrics are always action-oriented. Marketing performance metric examples might include rollout of a new product by a specific date to support entry into a new market resulting in some rate of adoption, or participating in specific tradeshows that results in securing a meeting with at least one key decision maker in the top 10 customers in each vertical before the end of the quarter.
- Process indicators. These are metrics we need to do in order to realize the performance metrics. As an illustration of the idea of process metrics, consider the training world, where a process metric might be a certain cycling cadence rate that you attempt to maintain. Translated to the world of marketing, a process metric might be the development and implementation of a special offer that results in a specific response rate.
However, even if your marketing, team, and product teams do their very best, you cannot always control outcomes. Customers may not have a budget, or they may go through an organizational change that affects buying decisions. And, of course, you cannot control competitors and what they may do in the market.
What you can do is conduct good market, customer and competitive research, and provide excellent customer service and experience. As the CEO, the key is to use quality data and insights to set realistic and achievable targets based on what you know about the situation and your organization’s capabilities.
Although achieving an outcome is not directly within our control, achieving a performance metric is. It may take tremendous work, but hitting performance KPIs is based on your team’s own ability. Performance metrics are extremely important. They dramatically affect the attainment of the outcome.
Formulating Measurable Statements
Besides helping you reach a desired outcome, performance and process metrics help you develop, focus, and set priorities. Whether you are just beginning a performance management journey or you are among the best-in-class, organizations who incorporate all three types of metrics achieve the greatest success because those three metrics work together: Process metrics help us achieve the performance targets; if those targets are set properly, their attainment should enable us to reach our outcome targets.
Regardless of the category, George Doran’s SMART approach (“There’s a S.M.A.R.T. way to write management’s goals and objectives,” Management Review, November 1981) provides a well-used way to craft performance statements:
- Specific: Clarify what exactly is to be accomplished. Example: We will acquire three new customers for the new product this year.
- Measurable: Objectively track your progress. Example: We will generate twelve appointments with new customers to demo the new product by the end of the quarter.
- Action-oriented: Establish the things that must be done, and by whom, to directly affect the outcome. Example: We will execute a three-pronged outreach program to 75 new customers within 1 week of demo release.
- Realistic: Know what you can handle and develop steps along the way to help you get there.
- Time-related: Specify dates for when the results can be achieved. Example: We will contribute 25% of the opportunities to the pipeline quarterly.
For some of you this may seem intuitive and obvious. We challenge you to ask your marketers about their metrics, how they set them, how the performance targets work together, and what their plan of action is. You may find only a few marketers have adequate answers. The recently conducted 2015 Marketing Performance and Management Study revealed only 1 in 5 marketers can actually these questions.
To be successful, you must create and document a plan. Use the planning period to assess all of the areas that need improvement if you want to position your company for success. Your marketing plan is a critical roadmap and should clarify what your company will do to address to support the outcomes, the results you want to achieve—and when.
Your marketing team should also plan for potential setbacks: Performance targets can be affected by any number of external forces, so encourage your marketing team to try to anticipate what might happen so you can plan your response in advance. Doing so will help ensure calmer course adjustments if they are needed.
For example, to learn how to tactically swim in open water, I will need to sign up for a clinic four weeks before my first open-water race. Even all of the best athletes also rely on coaches. Marketers who want to excel should do the same. The performance management journey can be difficult, and if you need help you shouldn’t hesitate to use the knowledge of a specialist to help prepare both you and your organization.