Goals vs. KPIs
In our last article, we walked through what a SMART goal is. As you continue to prepare your business for growth and a new year, another vital notion is understanding the difference between goals and key performance indicators, or KPIs. Each year, as you determine where your business should go, you should also set KPIs so you are able to measure the growth of your company within a certain time period.
While goals, especially SMART goals, help you identify where you want to go as a business and provide a measurable and temporal baseline to allow you to determine how close or how far away you are from your goal, a key performance indicator is a bit more in depth. Key performance indicators help you measure and track the HOW to your overall goal.
“KPIs are measures that help you understand how you are doing against your objectives.”
For example, setting measurable objectives for number of page views, social media followers, emails opened, time on site, even revenue, are considered goals because they do not measure the performance of your business. These and other goals are helpful to measure the engagement or productiveness of your business. Instead, KPIs, inform you of the strength of your business. Another vital aspect of KPIs are that they allow you to measure each specific metric within a set period of time so you are able to track performance within regular time intervals. For example, some sample KPIs would be the percentage of site visitors that convert to sales month over month, the percentage of e-mail registrations every month, and/or the amount of organic web traffic every quarter.
Let’s try it another way. An example of a sales goal would be to “increase retail sales conversions by 10% by end of Q2”. An example of a key performance indicator for sales would be “the amount of retail sales at each location at the end of each month”. While the goal gives you the baseline so you know what you are striving for, the KPI helps you to measure your performance shows you the power of your sales team and marketing efforts.
Another example of a goal versus a KPI would be: SMART Goal – Develop 10 new strategic business partnerships with local hotels and restaurants by October 10th, 2021. Key Performance Indicators – Number of sales calls/meetings with local hotels and restaurants each week, number of strategic business partnerships each month, and percentage of executed contracts versus no contract/no deals to track the sales effectiveness rate.
At the end of the day, as you continue to set stronger goals and KPIs for your business, remember this: If a business metric does not help you understand how well you are achieving your business objective, it is a goal and not a KPI.