When we refer to KPIs and objectives, we often use both concepts interchangeably to describe what we need and determine whether or not we have achieved what we wanted.
However, KPIs and objectives are not the same thing; objectives or the result we want to achieve. KPIs are metrics that allow us to analyze whether we are doing well towards our main goal.
Therefore, improving metrics should not be considered a goal, as they are mere markers in any field of activity.
For example, a primary school teacher relies on a series of indicators to track a student’s progress. He evaluates whether he is learning enough language or science, whether he is socializing with other children, or whether he is communicating at an age-appropriate level. It looks at the family environment and the impact it may have. Its goal is for the child to develop as well as possible.
If we choose only one of these indicators and turn it into an objective in itself, we can work to improve it. However, this could be to the detriment of the others.
Thus, our teacher could advise parents to enroll their child in math tutoring classes, to buy support books and to give him/her triple the amount of homework. In this way, the child will probably finish the course passing the subject. But it is likely that his overall development will not have improved. He will have played fewer hours with his friends and will continue to commit the same spelling mistakes.
KPIs and businesses
In the business context, an e-commerce may want to increase its turnover. Since SEM is the main sales channel, they decide to increase the volume of actions. It seems logical and correlative. So the whole team gets to work. More campaigns are opened. New ones are created.
Because they are good professionals, the campaigns pull and the total cost is controlled. Volume is improving. Everyone seems satisfied.
But it turns out that the sales coming from those campaigns have a lower AOV (Average Order Value or cart value) than usual.
By opening campaigns that are usually closed (there would be more than one good reason for this), the overall conversion rate drops, although in the usual ones it remains the same or even rises slightly. So, in the end, more transactions are achieved. The cost does not increase in the same proportion, but revenue does not grow in parallel. ROI goes down.
The question is: what was the real goal? If it had been to capture more customers and add them to the database with a CPA similar to the usual one, for example, then all well and good. But, clearly, here you have confused KPI with goal.
In this case, the team should have considered the following:
- Objective. The goal or purpose, i.e., what you want to achieve: to increase turnover.
- Target. Target baseline figures, provided according to the SMART method. Specific, measurable, achievable, relevant and time-bound. To increase turnover by 5% in a specific product line during the two months of the Christmas campaign, for example.
- Main KPI. The main indicator or metric that will help us know if we are on the right track. Achieving our objective and meeting the target. In this example, ROI would have been perhaps the most appropriate.
Do we apply the different concepts correctly?
If not, it is necessary to have the collaboration of an analyst or marketing consultant with experience in data-driven performance.