How to set actionable KPI targets
Every key performance indicator (KPI) you define must have a target or goal associated with it. Setting actionable KPI targets is a bit like chemistry: you start with the right ingredients, then add them in the precise quantities to facilitate the chemical reaction you desire.
A well-defined KPI acts like a guidepost. As you travel the winding roads of your business’s growth, your KPIs will help you navigate crossroads and keep you on the path to success. Learn how to define your organization's KPIs.
Sadly, this isn’t the road most traveled. Many KPIs fail because they lack proper definition, an internal champion, or, as I’ll discuss here, actionable targets.
Your KPIs should never be seen as a single guidepost. If you were on a big road trip, you’d check your map every few hours to make sure you’re on the right path. Likewise with KPIs, the frequency of review often illuminates new and possibly more efficient paths to the same destination.
KPI targets are the guideposts (plural) your team should use to stay on track. Smart targets can help you dictate your pace, too. Like running a race, you want to pick a pace that is challenging and will help you reach your goal time, but that won’t burn you out by the halfway point.
How to set actionable KPI targets
The operative word is actionable. You want to establish actionable KPI targets that are tangible and immediately relevant. Aim too high with your targets, and you risk deflating your team before you start. Aim at a target that doesn’t exist today, and you’ve created noise without any signal.
Here’s a process for setting actionable KPI targets:
- Review business objectives
- Analyze your current performance
- Set short and long term KPI targets
- Review targets with your team
- Review progress and readjust
Review your business objectives
A KPI is a metric with a target that is core to your business’s performance. Every business has objectives, which are typically goals in regards to revenue, customer success, marketing mindshare, and productivity.
I suggest making a pit stop and learning a bit more about how to define your KPIs.
Now, I believe that most of us aren’t C-level executives plotting the big strategic moves for our business. My role, and yours, is likely more operational. We work for a specific department, be it sales, marketing, finance, or customer success.
Which means our goal is to reverse engineer the big strategic move and understand how our department plays a role in achieving that business objective.
As a customer support leader, you may not be able to directly impact annual revenue targets. However, you can focus on maintaining a healthy, happy customer base by hitting your support team’s Service-Level Agreements (SLAs).
I believe that one of the biggest failings in defining KPIs is ignoring the human element. We naturally assume data speaks for itself, but it’s merely the messenger. Do yourself a favour: check your assumptions with stakeholders, particularly department heads and managers.
Analyze your current performance
You can’t get from point A to point B without understanding point A, your starting point. Dig into the data, allow yourself time for discovery, and provide an honest reckoning of your performance. This will give you the basis of setting your KPI targets.
At all costs, avoid qualifying your numbers. Be honest with yourself and your team. I know it seems like rudimentary advice, but it’s surprisingly easy (and natural) to feel like your numbers are inferior.
Hey, we wouldn’t need to set KPI targets if you were exceeding all your goals. You’d be on vacation or celebrating with your team, no?
By evaluating your current performance, you get a dose of reality. Nothing kills KPIs or motivation like impossible stretch goals. Doubling your numbers sounds great, but is it realistic next month? Maybe, maybe not. This is a common challenge when setting targets for sales KPI
Set short and long term targets
You’ve interrogated the data, and now know the truth behind your numbers. It’s time to start plotting your way forward. I like to start by setting a long term KPI target. This gives an overall vision to your strategy, and a goal to work backwards from.
So let’s say your long term marketing KPI target is 2500 monthly MQLs, and you’re aiming to achieve that by Q1 2018. Great. That’s specific, time-bound, and relevant. More MQLs = more revenue, which is good for business.
From here, you can start to figure out short term KPI targets. Based on your data analysis, let’s say you currently generate 1500 MQLs a month. You have 6 months to achieve your target. That means you need to figure out how to generate an additional 166 MQLs each month.
Right away, you’ll have a sense if this is possible or not. By setting a short-term goal to increase your monthly MQLs, you can start to work your way to achieving a big KPI target.
The real benefit of setting short term KPI targets is that it gives you almost immediate feedback on your processes and ability to execute. Unachievable objectives deflate teams and drain morale. KPI targets must motivate and reward hard work.
So let’s say that you set out to generate those additional 166 MQLs in July, but come up short, only generating 100. It doesn’t mean you should scrap your long term objective, though it is cause for discussion.
As a general rule, I reevaluate long term targets if I miss 3 months or 1 quarter’s worth of short term KPI targets.
Review targets with your team
Success is not created in a vacuum. Leading businesses and growth experts are democratic in the way they rally their team. Data transparency is a success factor.
In other words, take your KPI targets to your team and review them in an open, honest environment. Encourage feedback and act on it. If you’re a sales director, and your frontline team is telling you that there’s no way they can hit your new targets, then you must listen to them.
Does that mean acquiescence? Not necessarily. KPI targets ought to be challenging and, as a wise executive once told me, they ought to make you a bit uncomfortable.
We aspire to achieve KPI targets because we want to push ourselves to do better and improve. If the targets you’ve suggested instantly deflate your team, identify root causes. Are they feeling a crunch because you’re using an outdated CRM? Or maybe you need better Salesforce dashboards? Are they lacking visibility into the processes that influence positive outcomes?
The journey towards achieving KPI targets will have you innovating and auditing current processes. You can be firm on your targets, yet still empathize with the challenges in execution. As a manager, your job is to remove obstacles.
Review progress and readjust
The business world would be much simpler if you could just set KPI targets and automagically achieve them. It’s not. Business is complex, and growth is challenging.
You need to continually evaluate your performance at regular intervals. The monthly reporting cadence is natural and an ideal starting point. It allows time for your projects to take hold and influence your numbers.
I caution you against skipping regular reviews of your KPIs. These meetings serve two purposes:
First, they can provide an opportunity to celebrate success. Momentum is a worthy objective in and of itself, and positivity breeds success.
Second, they provide a forum for discussing the projects behind the numbers and evaluating how they contribute to the bottom-line.
By creating an open dialogue, you can foster independence and leadership within your team, and ensure that every KPI you define has a champion.
Sometimes, you’ll need to make a hard decision like adjust your targets. In my experience, communicating a missed target can, well, suck. But it’s not the end of the world. Show your team that you’re on top of your numbers, aware of the challenges in achieving the KPI target, and have a plan for how to solve complex problems.
No one ever got a raise for hiding from their performance. The reverse may be true: being open and forthcoming about performance can give you an opportunity to pitch solutions and contribute.
How to make KPI targets actionable
By following the process I’ve outlined, you’ve got a solid framework for discussing KPIs within your team. The key to it all is communication. Be bold in your transparency and you’ll be rewarded with input and contributions from unexpected places.
Part of communication is championing the continuous review of your KPI targets. Keeping a direct line of sight on your performance and talking about it openly helps everyone stay on track.
Originally published July 5, 2017, updated Jun, 13 2019