Okay. So now we’re going to move on to setting objectives. It is easy to set loose objectives and to kid ourselves that we’re doing a good job, particularly in our marketing, but the skill is to set challenging and yet achievable objectives and then hit them. That’s also one way that management can inspire and incentivize the marketing team. There is a balance to be found between a stretch goal and an impossible pie-in-the-sky objective, which can never be achieved and is itself demotivating, because people work out that it can’t be achieved. So let’s go through the characteristics of good objectives.
We are thinking about successful outcomes. Specifically, we would be talking about SMART objectives, which are specific, measurable, achievable or actionable, relevant, and time bound. In other words, there’s a detail here so that we know if we’ve achieved it, and we can measure that. In other words, this is an objective, which we will know whether we’ve achieved or not, because we’re going to be able to measure it. Actionable or achievable, relevant, in other words, relevant to our business and something that’s useful to achieve. It’s not like just an interesting number, it’s something that would actually move the needle on our business success. And lastly, timed, in other words, time bound. There is a limit, there’s a deadline. We have to have achieved this by a certain date. So in theory, we can have a meeting the next day and we can say, well, okay, how did we do? And there’s going to be nowhere to hide.
These are good SMART objectives. They could be about ROI, which is the ultimate. The ultimate KPI is ROI. In other words, what do we spend on marketing and what do we get back, and you subtract the former from the latter and hopefully get a positive number. In other words, you’re actually achieving something. We’re getting somewhere. The marketing is paying for itself and then some. However, there may be sub-objectives, which are not quite as good as measuring ROI, but which are still helpful. So click-through rates, conversion rates, social media shares, a whole lot of different metrics which are proxies for ROI. And none of them is as good, but they’re a lot better than nothing.
Of course, we need to make assumptions about the market size and about conversion rates, which will be guided by our experience and also by results. And the good thing is, if we keep on measuring, keep on keeping records, next year is going to be easier. So let us remain positive and let us develop a test and learn strategy, which I really believe in very fundamentally.
The business objectives would be the first sort of metrics. You might ask, how do these different metrics, all the terminologies on the different objectives, how do they all stack up alongside each other? Well, this smiling guy is called Avinash Kaushik. He’s an evangelist for analytics. He has at times worked for Google. He also has his own blog, and he’s written several books, Avinash Kaushik. He’s in this situation talking about business objectives and goals and metrics and KPIs. And if you read the blog post that this was based on, he talks about metrics being a number. So before that it’s business objectives, it’s broad brush, high level stuff. KPIs are of course, special metrics, key performance indicators. And to quote Avinash Kaushik directly, he says, “Sell more stuff is a business objective, but that means we have to do X, improve Y, reduce Z, and they’re all goals.”
In all these cases, our resources are limited, so we have to focus. And it’s easy to say focus, but of course the key factor is to try and spend our money in ways that will generate a positive return on investment. In other words, the activity more than pays for itself. If we are fortunate enough to have a variety of positive KPI outcomes, in other words, the ROI will be positive in a number of different ways, we must choose the long term most profitable for our business. And we continuously test and learn, because we’re always thinking of the future.
For instance, there are web marketers, online digital marketers, whose focus is on driving more and more traffic to the website, but is that necessarily the best course of action? Maybe we don’t even need more traffic. Perhaps we need the traffic that we’re already sending to the website to convert better. So maybe the same amount of traffic, but better quality.
How can we achieve that? Well, I didn’t tell you where the traffic is coming from, did I? Perhaps it’s pay-per-click Google ads. In other words, maybe we are attracting people to our website and paying Google for them, and they’re not converting and they’re never going to convert. Maybe the problem is that we are bidding on search terms which are too general, so we get a lot of wastage. We get time-wasters, people who are not really looking to buy a product like we sell at all. So perhaps we can change our keyword strategy. Perhaps we should.
What about the ad which attracted them? Maybe it’s too attractive, so we’re getting people coming to the website who again are not going to buy from us. They’re more attracted to our free gift or our persuasive copy. So maybe we need to tone that down a bit. And it could just be that getting fewer visitors to the website, which still convert at a good rate, is more profitable than the current situation. So let us not be too dominated by the need to generate traffic to our website. It’s more about quality than quantity.
Once they’re on the website, what do we want? Well, we clearly want them to buy from us. That may or may not be possible directly from the site, but ultimately we want more successful outcomes. We want more people taking the actions that we require. Guess what? People only do what they want to do, and that’s true of ourselves as customers, as well as true of our customers when we’re marketers. In other words, we’ve got to help them to do what they want to do, and we’ve also got to make sure that that is what we want them to do.
Think of it like a shop. You own a brick and mortar store, you invite people in, you smile at them, they walk around and they pick items up. Some of them put the items back again and walk out of the shop with another smile, and they didn’t buy. And you think oh dear, well, maybe next time. But some of them pick things up, like them, talk to you. You tell them the price, they say fine, and they buy the item and walk out with it full of smiles, because they are happy. And of course, you are happy as well. And I think the latter situation is what the e-commerce retailer is looking for. In other words, happy customers who are happy to spend their money and feel they’ve got good value, a good deal.
Then we come to our objectives, which as we said before, should be SMART, specific, measurable, achievable, realistic, and time bound. And the R could be relevant as well. Actually, I prefer relevant, because achievable and relevant are different concepts. Achievable means you can literally do it. It may not be easy, but it’s possible. And relevant means that if you did do it, that would be a good thing. There are plenty of objectives which we can achieve, which maybe are making very little difference to our business. We’ve got to be very careful not to waste time with metrics that don’t actually move the needle. Specific, measurable, achievable, relevant, and time bound would be my favourite version of SMART objectives.
And as the Spice Girls once said, we’ve got to think what do we really, really want? What are we trying to achieve which would really make a difference? There may be lots of things which would be nice. You know, we’ve got more customers, we’ve spread to a different region, we’ve opened new outlets, we’re getting more engagement, people are seeing more pages on our website, people are spending longer. None of that might be the real thing. We’ve got to focus on what really, really matters, which generally in a commercial business will be profitability. In other words, getting more people to buy more things.
The very good video, which you can access for yourself, which is about the different KPIs which we could choose. For instance, raw numbers, progress metrics, and lastly on this video, we have change metrics. The idea is that we know where we are now, position A, and for that particular metric we want to get to a different place, position B. For instance, one such metric would be unique monthly visitors to our website. At the moment it’s 12,000, and we want to get it to 15,000 by the 1st of July, X year.
Secondly, number of pages viewed. Maybe we’re seeing three page views at the moment on average, customers are seeing three pages. We want to get that to at least five pages by the end of June next year. Okay, so again, we’re setting ourselves a time deadline. And then lastly, perhaps our conversion rate, which is always a good KPI, isn’t it? Because by definition, a conversion is something which is important to our business. It could be a purchase, it could be a qualified lead, it could be registering for our email newsletter, it could be watching three videos in their entirety. It could be a number of things, but whatever we define as a successful outcome. So these can be our KPIs.
Of the three on this video, I would say that change metrics are generally going to be the most important for us in what we’re talking about here. We’re at position A, we want to get to position B. We need to define both very clearly so that we know when we’ve achieved our KPIs. They help us to monitor progress towards a predefined goal. They’ve got to be metric-based, for instance, revenue, number of customers, and some of them are easier to measure than others. Brand awareness is difficult to measure, customer engagement, whereas digital marketing metrics that you can count, such as conversion rates, are obviously much easier to measure.
We’ve said that ROI is the ultimate KPI. In other words, the return on investment is the real thing that we need to be able to measure as closely as possible. It may be difficult, and we may be asking our finance colleagues for a leap of faith, but the less you do that the better and the more chance they can agree. In other words, go with data to the finance director, the CFO, and hope that she or he will look at your figures and understand what you’ve achieved and have enough confidence to give you more budget to do more marketing. And that is good marketing and it’s also good finance directorship. In other words, custodian of the company’s valuable marketing budget, which could always be spent on something else. So you’ve got to make a business case, and that’s as it should be.
Let’s just talk a little about CLV, customer lifetime value. It’s the total dollar value or pound value or Euro value of all the purchases from that customer throughout their whole relationship with your business. The problem with CLV as a metric is that it involves forecasting the future. It’s easiest to calculate in retrospect, isn’t it? We did all this stuff to recruit the customer. We kept them for four and a half years. They spent this amount of money with us all that time. And then you can evaluate the effectiveness of that whole relationship. In other words, what did you get back from them? What did it cost you to acquire them and keep them? And we hope that that subtraction is a positive number.
Crucially, that helps us in the future, because if we know that sort of customer, we can find more people like them. We can recruit matches to those individuals. And the beauty of that, of course, is that then we can fine tune our acquisition strategy. So in terms of effectiveness of our content, we can measure the popularity of our content, how much it gets shared, so how fast does our content move, what is our content value, and what are the costs of creating that content? Because very little content comes to you for free. It’s got to come from someone who you either employ or you buy it in from this organisation. And generally there’s a price tag attached to that.
It is possible to group your KPIs by type, and we’re going through the SMART insights model here of reach, act, convert, engage. We can look at brand measures, content performance measures, and commercial measures, all of which are useful, but these are three different sorts of KPI. And you can see on the chart that, for instance, for brand measures, we can look at unique visitors, new visitors, brand-direct visits, audience share. On the act dimension, volume of leads, percentage of product service interactions, and number of pages viewed per visit, et cetera, et cetera. So in other words, these three different types of KPIs can each be mapped against the reach, act, convert, engage, the RACE framework. And I think this is a very useful slide here.
In terms of KPIs, we can go to Jay Baer’s measurement, and he’s got an interesting take on this. He looks at consumption metrics, sharing metrics, lead generation metrics, and sales metrics. In other words, four different types of KPIs, according to the metric. So in other words, consumption can just be about page views, downloads, somehow interacting with our web property. Then we can look at sharing, in other words, retweeting, social sharing, sending a video to our friends, sending a link to this particular content.
Then we get into lead generation, for instance, goals, registrations, and qualified leads in B2B, for instance. And then lastly sales, which of course is ultimately what it’s all about. We can look at page value, goal value, revenue per visit, conversion rate, and indeed raw sales itself. So this is Jay Baer talking about KPIs and talking about the different categories that we can look at. And I think this is a useful slide to bear in mind as well.