“What gets measured, gets managed”
- Peter Drucker
…until you realize everything is being over-managed, over-analyzed, and you’re making changes daily based on knee-jerk reactions.
The cause?
Organizational inability to separate goals from metrics
What’s the difference between a goal and a metric?
A goal is a desired outcome you’re looking to achieve.
A metric is an indicator that determines your progress toward a goal.
Metrics inform if you’re on track to achieving a goal and should not be set as goals themselves.
“Alright Sam, you’ve officially confused me with that last sentence”
If it’s confusing to you, imagine being one of tens, hundreds, or thousands of employees at a company where lists of goals are determined every year.
And this is where the problem lies:
When you make a metric a “goal”, you shift the focus from the original goal to the “metric goal”. As a result, the likelihood of missing the original increases as how you optimize towards the metric, not the goal.
Example: B2B Marketing
If you’re reading this newsletter, chances are you’re a marketer, or interested in B2B marketing. Get ready for this example to hit home.
Most company annual planning includes setting goals for certain things: new revenue, revenue retention, net promoter score, etc. Each of those goals are then given a figure. Let’s pull the new revenue thread since that’s the one most of us are working towards.
In this fictitious scenario, a company determines they need to drive $100 million in new revenue for the upcoming year. This is the goal.
So the CEO passes this goal down to the marketing leader, who then wants to make this goal relevant to their team. And this is where the mistake happens - the marketing leader breaks the revenue goal down into the metrics that help drive the desired result (i.e. leads, pipeline, etc.) and sets goals for each of those metrics.
Raise your hand if the below scenario sounds familiar.
You’re sitting in a quarterly review meeting going over last quarter’s results. The VP of Sales shares that the revenue target was missed. Meanwhile, the CMO shares a slide 5 minutes later showing how they’ve hit their “lead goals” each of the past 3 quarters. The CEO asks, “So what happened?”
^^ everyone in the room, ready to answer until they realize they don’t know how to explain what happened
Real talk: what happened is that metrics became goals, and the team focused on hitting those “goals” without keeping the ACTUAL goal in mind.
This happens with leads all the time in marketing. You look at your funnel and start working backwards to understand what you need to produce moving forward.
You see that you have a 25% win rate from stage 2 opportunities. You see that you have a 33% conversion rate from lead to stage 2 opportunity. So you did the math.
For every 1 won deal, we need 4 stage 2 opportunities.
For every stage 2 opportunity, we need 3 leads.
So we multiply 4 by 3 and proclaim, “We need 12 leads to drive 1 won deal”
So that metric of 12 leads is passed down to the team, but as a goal. Nobody wants to miss a goal, so we think of new or creative ways to drive more leads. And this is where lead gen forms, webinar sign ups, ebook downloads, and more were jumped upon as “lead sources”.
Marketing teams started blowing their lead “goals” out of the water by 150-300%. Meanwhile, conversion rates from lead to stage 2 opportunities and win rates from those opportunities were dropping quarter over quarter. All because metrics became goals.
How to determine what should be a goal vs. a metric
I usually keep it simple here. A department should rarely have more than 1-2 goals. Everything else is a metric driving towards achieving those goals.
Here’s an example of a question you can ask to see if something should be a goal or metric.
Show your CEO two slides:
The first slide has a graph on the left showing a lead “goal” being hit and a revenue “goal” being missed
The second slide has a graph on the left showing a lead “goal” being missed and a revenue “goal” being hit
Which slide are they happy about? That’s the one with the goal being achieved on it. (side note - if the CEO is happy about the lead goal being hit and revenue goal being missed, you need to run…fast)
One LinkedIn post I bookmarked this week
Ever come across a post on LinkedIn that just has you wanting to shout “THANK YOU!”?? That was Dave Gerhardt’s post this week about measurement in marketing. There’s been an obsession with needing to attribute and calculate the value of every. single. marketing. activity. And it’s ruining overall marketing programs.
To put it simply, doing that is the B2B equivalent of asking a personal trainer the ROI of a single rep during one workout that's part of a larger program. Investments compound and TAKE TIME. Results come from the culmination of multiple things working together, not adding up every single activity. This is why I will forever be a proponent of marketing ECOSYSTEMS, not marketing funnels.
One podcast episode I enjoyed this week
This podcast episode between Devin + Mark is easily in my top 5 listens this year, it’s that good. Loved getting to hear about Mark’s background, how he’s gotten to where he is, the lessons learned along the way, and more. I also really enjoyed this episode because I found the more I listened, the more similarities I kept finding between Mark + myself, so the relevance of this episode was off the charts for me.
Mark’s great-grandfather emigrated here from Germany, so did one of mine
Mark’s dad is a third-generation small business owner, inheriting the business from his father + his father before him. My dad was a third-generation small business owner, inheriting the business from his father + his father before him.
Mark knew his path wasn’t in continuing the family business, and his family fully supported that decision. When the time came for my parents + I to have the conversation about me continuing the family business , I knew my path was a different one as well and they fully supported it.
Mark played hockey at competitive levels growing up, I played soccer through college. That sports background is 100000% something I wouldn't trade for the world + have found as a common denominator in many high-performers in organizations.
Someone told Mark that he couldn't do something (wasn’t ready to be a VP), so he just smiled and said, “challenge accepted.” In the past 5 years I’ve gone from Lead, to Director, to VP, and each step along the way I had people telling me I wasn’t ready either.
And for anyone interested, here’s the playlist I add to each week with some of my favorite podcast episodes:
See you next Saturday,
Sam
Hey Sam, great article. I'm just getting involved on some of our internal marketing initiatives, and this perspective helped a ton. I also appreciate you reinforcing with Dave's LinkedIn post.
I'd be really interested in seeing a follow up to this post on how you go about reporting on marketing output and effectiveness to leadership in a way that earns trust.
The challenge I'm running into is company stakeholders expect constant measurement on all sorts of metrics, and getting them to trust and have faith when it comes to investing in good marketing initiatives even when there isn't a 1:1 return is something I'm trying to learn more about.
Is it as simple as augmenting your analytics with self-reported attribution? I'd be really interested in seeing how you go about this and how you get buy-in while still being accountable for your marketing strategy.
Anyway, appreciate the post! Grateful for good resources like this to help me get some good perspective.