Metrics and indicators of success can be a bit of a jungle; it can be overwhelming to know where to start, how key terms differ, what to track exactly and why.
Both Key Performance Indicators (KPIs) and Objective and Key Results (OKRs) are thrown around during conversation a lot, and knowing the difference between the two can be a little mystifying.
But not to worry! In this article, we’ll help you understand the differences between the two and why they’re important.
- What a KPI is
- What an OKR is
- What the differences are, and
- Why these differences matter for customer marketers.
What are KPIs?
KPI literally means ‘Key Performance Indicators’. They’re a set of quantifiable measures used to evaluate the performance of your organization to meet a particular goal over a sustained period.
They’re an indicator of how a business is moving towards larger goals, such as quarterly revenue or new customers per month. They focus on the outcome rather than the process of getting there. KPIs tend to be specific, for example, “improve customer retention by 12%”, or “increase market share by 10%”.
KPIs can be measured using the SMART framework:
S - Is your objective specific?
M - How will you measure your progress?
A - Is the goal realistically attainable?
R - How is the goal relevant to your organization?
T - What is the timeframe to achieve this goal?
KPIs are intended to be attainable and are usually the product of an existing system or process. They’re also best when they use quantitative metrics for success and have a numbered goal.
If KPIs aren’t monitored closely, they can fall by the wayside or become so convoluted that it’s impossible to know what path to take with them. The original intention can get lost without key milestones to keep you in check, especially as KPIs tend to change less frequently than OKRs do.
What are OKRs?
OKRs stands for ‘Objective and Key Results’. Objective refers to a specific company goal you’ve in mind and the Key Results are the metrics or targets you’ll use to achieve it. Put simply, the Objective is the what and the Key Results are the how.
OKRs focus on the process rather than the end result. John Doerr, the pioneer of the OKR, distilled their essence into a simple formula:
“I will [blank] as measured by [blank]”.
An OKR might look like this:
“I will [improve advocate signup processes] as measured by [customer interviews and feedback]”.
The objective is to improve advocate signup processes and the key results to get there are customer interviews. This is typically broken down even further into more tangible steps.
KR 1: conduct 10 face to face interviews,
KR 2: conduct 10 online interviews, and
KR 3: beta testing for process.
It's recommended that there’re no more than five key results for every objective to keep things manageable.
OKRs can be used in a variety of ways:
- Strategic business goals (often set annually, the ‘bigger picture’)
As well as -
- Tactical goals (for teams, lower level)
- Aspirational goals (usually set higher than achievable), and lastly
- Committed goals (those expected to be achieved)
This style of performance monitoring means that you must learn to prioritize. If you have only one objective for each quarter then you have to know what the best objective is for your company as it is.
This may feel too restrictive a way for you to monitor your performance but trying to focus on too many things at once can have big consequences on your strategy of work; if everything is the priority then nothing is.
The difference between OKRs and KPIs - and why it’s important
The difference between OKRs and KPIs is how flexible the frameworks are. KPIs are more flexible and can be a lot harder to pin down. OKRs, on the other hand, are very rigid in structure. Ultimately the difference between OKRs and KPIs begins with how you use them.
It’s the intention behind setting these goals that’s most important, and then how you use them going forward.
Felipe Castro had a brilliant analogy to understanding the difference:
“If you’re going on a trip to somewhere you’ve never been before, you’ll need a map and navigation system to show you how to get there, and a working car to get you there without any trouble.”
If your business is the car then:
- OKRs are the navigation system, and
- KPIs are the dashboard that monitors everything else going right with the car.
The importance of OKRs and KPIs in customer marketing
KPIs and OKRs are both good indicators of success. They provide key information about business processes, are monitored regularly, and are mapped to your programme, project, or team.
KPIs have more reasonable goals, while OKRs are more aggressive and ambitious (but not unattainable). As KPIs work best with quantitative goals, this type of system is trickier to implement in a department such as customer marketing.
Unlike sales, product marketing, or finance, customer marketers don’t have consistent numbers to measure their success against.
As OKRs are reliant on creating sustainable change, this fits into the customer marketing style of working slightly better. OKRs are a good fit for customer marketers because of how volatile the customer market can be. A good navigation system is less about reaching an overall goal and trying to stick to it, but instead a way to keep you and your processes on the right path.
OKRs are about changing behaviors, systems, tools, or processes so that you can maintain new levels of performance. Being prepared to change your common practices allows you the flexibility to adjust to customer needs without being thrown off your intended track.
Using OKRs when setting and achieving goals
Every company aspires to hit the loftiest heights and establish itself as a market leader.
However, to survive your hike to the figurative summit, you’ll need to have a few essentials in place, including Objectives and Key Results (OKRs).
We’re gonna drill home the fundamentals, including:
✏️ Some OKR examples,
🤦♂️ Common OKR mistakes,
📖 How to define your OKRs, and
👩💻 Some OKRs resources.