OKR’s (Objectives and Key Results), the acronym to rule all acronyms, or at least the acronym to enable you to deliver and manage all the other TLAs that marketing has on its plate today. Jeff Clark explains…
OKRs, KPIs, ROI … OMG
The modern CMO and their leadership team can get lost in the acronym soup and definitions of goals, objectives, and metrics. It can be a waste of time. Any business school approach to measuring your effectiveness can work, as long as we first ground ourselves in the three questions that haunt most CMOs.
- How do we make marketing relevant?
- How do we make marketing accountable?
- How do we make our goals and objectives measurable?
Relevance comes from making sure marketing’s goals align with your its contribution to the business’s long-term strategy and annual objectives. Are we trying to contribute to the business growing organically, becoming more profitable, or some other strategy?
Accountability comes from honestly reporting on your progress toward those contributions. We must develop a set of objectives that we feel comfortable briefing the executive team on a regular basis; monthly, quarterly, and annually.
Measurability is a challenge to work on with your marketing operations and leadership team. Some objectives are hard to measure (e.g., short-term changes in brand awareness). I believe there is always a way to measure progress, but you must convince the audience (i.e., the executive team) that it is valid and accurate.
Five Fundamentals of Setting OKRs
Let’s look at this challenge using the OKR (Objectives and Key Results) methodology. It is a collaborative goal-setting process in which your team can set challenging, ambitious goals with measurable results. In the process, you create alignment both within your team and with your audience (i.e., the executive team).
#1 – OKRs Are Measurable by Definition.
We can debate the subtle difference between a goal and objective, but the key with the OKR is that you’re setting a goal/objective that delivers results, and those results are something you can measure.
If our key objective is to contribute to revenue, so you can measure revenue marketing sources or influences via an attribution methodology. If our key objective is to raise brand awareness, we can conduct pulse awareness surveys to track movement over time.
We’ve discussed the subtle difference between contribution vs. attribution on the RockstarCMO podcast. The key is defining and agreeing on marketing’s contribution and its metric with the executive team.
#2 – Set OKRs within the Context of Company Strategy.
Company strategy is set on a three-to-five-year time horizon. Your marketing strategy may parallel that, but you’re typically asked to set goals and report on annual activity. So, make sure that your OKRs are set in the context of the strategy. Company growth strategies may focus on organic revenue from new markets, growing share of wallet from existing customers, Improving profitability or efficiency, or acquisition; or perhaps your working with an exit strategy. Make sure you’re working to contribute to the strategy to prove your relevance to the business.
Likewise, don’t set marketing OKRs that are in opposition to the company’s strategy, like going after new accounts when focusing on current accounts is the strategy.
#3 – Align Your Annual OKRs with Company Goals
As opposed to “being in context”, annual OKRs that you report to the executive team should align directly to the annual goals of the company. In our examples above, I mention goals related to revenue growth and brand development, typical priorities that appear on a company’s stated goals. However, there may be others:
- Improving customer satisfaction. Can marketing commit to measurable engagement goals that can be correlated to CSat?
- Enabling Sales Productivity. Can marketing develop internal materials or sales tools that improve the selling process? What is the engagement or satisfaction with those?
- Enhancing Customer experience. Is there online or in-person engagement that marketing can improve? Online behavioral metrics can be easily tracked.
#4 – Set 1-2 OKRs Focused on Marketing’s Priorities.
Marketing may have priorities that don’t neatly tie to company goals, but support company strategy and are relevant to the executive team. For example, you may see the need to improve efficiency. Perhaps, the creative services team is viewed as slow and has arcane processes. Or field marketing is seen as inept or lacks business savvy.
Set objectives to correct the situation and establish a relevant metric, e.g., creative services’ turn-time for delivering assets or sales satisfaction with field marketing colleagues.
#5 – If everything is a priority, nothing is a priority.
Keep your OKR list short. I’ve worked with clients who are trying to define their OKRs, and their challenge is that their company has over two dozen goals. What’s a priority? If there’s no grouping or hierarchy or goals, it’s just a laundry list.
In most cases, we were able to select a half dozen company goals that marketing could impact, often consolidating some goals that, such as ability to develop resources for sales and other functions. Then we defined how to measure them and the sources of data that marketing could leverage. The metric selection and draft dashboard was reviewed with the execs, and they approved their methodology for tracking marketing’s progress.
Bonus #6 – Watch Out for the Unintended Consequences
When you rigorously manage to OKRs or really any methodology, you may inadvertently cause something else to break. For example, if your creative team is trying to become more efficient, it may cause friction with internal customers who are used to numerous review cycles and last-minute changes. Efficiency goes up, but satisfaction goes down. Or marketing is focusing on sourcing revenue opportunities and gets into turf wars with salespeople who are also goaled on sourcing opportunities.
This is where alignment within marketing and with your collaborators is critical. Define rules of engagement, prepare for the consequences, watch for issues, and manage the resolution.
After all, as a CMO or member of the leadership team, that’s your job.
Listen to Jeff
Jeff shared his framework for creating OKRs in episode 159 of the podcast, listen below.
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