Management | Oct 11
Unfortunately, setting growth goals for a company isn’t an exact science.
- How much can you grow your website traffic this month?
- How many leads will you be able to capture next quarter?
- How much revenue can you expect to generate this year?
- What’s a reasonable growth rate for a company like yours?
- What goals should we even set?
Maybe someday Amazon Echo will be able to answer these questions for us. But, in the meanwhile, we all need to do some homework in order to set smarter, more achievable goals.
Be careful, though. Set goals too high and you might demoralize your team when they fail. Set them too low and you might let a competitor snatch market-share away from you forever.
Based on my years of experience, I find that these seven methods lead to smarter goal setting:
1. Use historical data.
The best way to set achievable goals is to use your own historical performance data. Draw a straight line into the future and use that number. For example, if you’ve been able to grow your website traffic by 10% month over month, set your traffic growth goal to 10%.
You can use historical data to forecast a goal for any Key Performance Indicator (KPI). Sales organizations use previous performance data to set future quotas. Marketing organizations use it to set lead volume targets.
Depending on how large your company is, you might want to build a model that uses historical data, but also allows you to plan for a few eventualities. Build a spreadsheet model that allows you to vary values for each metric. By varying the value of your inputs, you can determine reasonable ranges to help you set more reasonable goals.
Ultimately, you’ll want to give your team a single set of metrics and binary goals, but your model should help you think through risks. For example, if you think you’re reaching saturation in a key market, you should model what happens if you get fewer leads in that market. Or if you think you got a one time sales boost last year from a new product launch, reduce sales volume from that product line in your model. On the positive side, if you think your new pricing will help you increase sales productivity, model that in too.
Obviously, models like this can get complex. You will need to be more sophisticated in your goal setting if you are a public company or have lots of investors to answer to. But for most businesses, it should be relatively simple. Just look at your historical trends and estimate a reasonable goal for the future.
You can start a free Databox account to quickly pull historical data from your key software tools
2. Estimate lift from key initiatives.
Every well-run company picks a few areas for their team to improve upon. This is strategic time that team members spend working on the business, not in the business. You might not be able to dedicate a lot of your team’s time to running growth experiments, but the amount of time and money you spend on new initiatives will govern the growth rate of your company.
For example, if it’s a priority for you to grow your website traffic this quarter, and you want to grow it faster than you have in the past, you’ll likely need to invest more resources into it. You might decide to double the volume of content you publish to your blog. Maybe you’ll increase your Facebook ads budget. Publishing a few guest articles on some high traffic websites that reach your target market would be a good idea too.
Whatever you decide to do, estimate some lift. Instead of setting your goal at your historical growth rates of say 10% growth, set it at 15% growth.
If you’re doubling down on an activity that you know will work, do the math to figure out what you should expect. For example, if you know you can spend $2000 on Facebook ads and expect 10% lift from that, set your growth goal at 20% instead of your typical 10%.
3. Evaluate against peers.
Another way to set more precise goals is to evaluate yourself against peers. Join a mastermind group or build your own group of trusted confidants who are willing to share metrics with you.
If you have to convince others in your organization that your goal is reasonable, finding comparables makes for a convincing argument. People love knowing that your proposal has worked for others.
That said, It takes time to build these relationships and if you don’t have them, you’ll struggle to get enough data to make informed goal-setting decisions right away. To get started, find people at companies who are your peers or maybe slightly more successful than you and ask them if they’d be willing to offer some advice. They’ll most likely be flattered you asked and if you’re willing to share your performance and goals with them, they’ll be more likely to share with you.
4. Purchase market research reports.
The market research industry is approximately a $40B industry. At that scale, there’s probably some market research companies out there who know more about your growth potential than you do.
For most companies, commissioning a custom research project is cost prohibitive. But, you might be able to purchase a report that helps you answer your questions. Companies like Forrester, Aberdeen, Mintel and many others provide lower cost, off-the-shelf research reports packed with insights.
There are also some companies that produce and publish market research for free as a way to market their expertise. HubSpot’s marketing and sales research projects, Bridge Group’s inside sales benchmarks and Insight Squared’s sales benchmark reports provide loads of benchmark data for marketing and sales professionals. Domo and Google have commissioned market research as a means of marketing, too.
5. Browse review sites.
Today, almost every process happens inside some software. So, while software review sites might not seem like a natural place to find benchmarks, you’d be surprised.
For example, companies like G2Crowd, Capterra and even Salesforce’s AppExchange capture customer reviews where you can read what worked for other companies. Browse around and find out what benefit other companies received from using a specific product in a specific way.
You won’t find nice, neat graphs that tell you how much a certain activity or software product can help you increase a metric, but, you might be able to make directional decisions based on reviews from people like you.
6. Consult with experts.
It’s also smart to hire an expert. Many consultants, software companies and service organizations have experience helping companies like yours do what you’re trying to do. Instead of searching and browsing for benchmarks and then trying to figure out what applies to you, reach out to a few experts and ask them to evaluate your situation and make recommendations specific to your situation.
Search for experts who might be able to help people in roles and companies like yours. Don’t be afraid to post your request for advice on Linkedin, Twitter or Quora either.
7. Pull your goals out of thin air.
Another way to set goals is to play it by ear. That might sound a little bit contrary to the point of setting goals, but, the important part of setting goals is getting in the habit of setting them, not setting them perfectly.
Want to wing it a bit in the beginning? Don’t have enough historical data and want to just get started? Starting something new and don’t know what to expect? Set a short term goal that’s a challenge to reach and reward your team if you get there. But, if you don’t make it at the end of the month, don’t fret it. Instead, just reset next month’s goal based on what you were able to do last month.
For many goals, you don’t have to worry about being precise. You just have to get started improving your metric in a measurable way. Then, you can modify as you go. As long as you can measure the results of your efforts on a short term time horizon (i.e you can numerically track the results your activities produce each day, week or month), you can get more precise with your goal setting as time goes on.
If you’re going to go this route, make sure you’re measuring the impact of your activities. Having a tight feedback loop is critical. Setup and use the right software and make sure everyone on your team is monitoring your results frequently. For some activities, especially marketing, you can determine the impact of activities almost immediately.
Set S.M.A.R.T Goals
Setting goals is a critical part of growing any business. Too few companies do it and as a result, don’t make progress on their business. Alternatively, the companies that do it right can achieve amazing growth.
If you’re new to setting goals or just want to improve your ability to hit your goals, use S.M.A.R.T. goals. S.M.A.R.T. is an acronym first published by George T. Doran in 1981 in an issue of Management Review.
It stands for:
- Specific – target a specific area for growth or improvement.
- Measurable – quantify the improvement numerically by defining a KPI and how much it should change.
- Assignable – specify who will do the work to achieve the goal.
- Realistic – set goals that can realistically be achieved, given the resources available.
- Time-related – specify when the goal must be achieved.
While not every goal can be specified perfectly or quantified, most can. By assigning a numeric “measurable’ value to every goal, achievement becomes a black and white judgment. By making it assignable, individuals or teams can be held accountable to achieving them. By making them realistic, everyone will be driven to achieve them and not demoralized before they start trying. By making them time-bound, everyone can work towards a deadline and celebrate if they achieve the goal or reflect on what went wrong if they don’t.
By setting SMART goals, you’ll be on your path towards achieving the growth your company wants. As you get better and better, you’ll be able to achieve growth you haven’t thought possible before.
Whatever you do, don’t wait to get started.
What other ways have you set reasonable goals? How has that helped your organization grow?