Podcast Summary: The Analytics Power Hour – Episode #258: "Goals, KPIs, and Targets, Oh My!" with Tim Wilson

Release Date: November 12, 2024

In Episode #258 of The Analytics Power Hour, hosts Michael Helbling, Moe Kiss, Tim Wilson, Val Kroll, and Julie Hoyer delve deep into the intricate world of setting goals, Key Performance Indicators (KPIs), and targets within business analytics. Featuring guest Tim Wilson, the conversation navigates the challenges and best practices associated with defining and aligning metrics to drive meaningful business outcomes.

1. Introduction to Tim Wilson and the Episode's Focus

The episode kicks off with introductions, highlighting Tim Wilson's extensive background in analytics, including his role as Head of Solutions at Facts and Feelings and his co-authorship of the upcoming book "Analytics the Right Way: A Business Leader's Guide to Putting Data to Productive Use." Michael Helbling emphasizes the importance of the episode's topic, setting the stage for an in-depth exploration of goals, KPIs, and targets in analytics.

2. Defining Goals, KPIs, and Targets

Tim Wilson begins by distinguishing between two fundamental uses of data in analytics:

• Analysis and Hypothesis Validation: Exploring and confirming business assumptions.
• Measuring Performance: Tracking whether set goals and KPIs are achieved.

He points out that these functions are often conflated in business reporting, leading to ineffective assessments.

"[...] goals or KPIs can seem like magical thinking, not connected to reality, or laughably small as to not elicit a sense of purpose or effort." [00:13]

3. Challenges in Setting Effective KPIs

The conversation highlights how businesses frequently merge analysis with performance measurement, resulting in reports that merely describe what happened without objectively assessing if expectations were met.

Tim Wilson critiques the common practice of presenting metrics without contextual goals:

"[...] slides like that with somebody saying, but was it good? Like, was it good or not?" [05:16]

Moe Kiss brings up a scenario where aligned teams still face misaligned expectations from wider business stakeholders, emphasizing the complexity of maintaining alignment throughout a campaign's lifecycle.

4. The Importance of Alignment

Tim Wilson underscores the necessity of aligning business outcomes with analytics from the outset:

"[...] really capturing that and making and socializing it, like encouraging the marketers to communicate up as well." [07:16]

He advocates for clear, upfront discussions about what constitutes success to prevent later disagreements and ensure that all stakeholders share a common understanding of goals.

5. Outcome vs. Output Metrics

A significant portion of the discussion revolves around differentiating outcome metrics from output metrics:

• Output Metrics: Quantitative measures like clicks, impressions, or open rates. They are easy to track but often manipulative and not directly tied to business outcomes.

• Outcome Metrics: Qualitative measures that reflect meaningful business objectives, such as revenue growth, customer retention, or brand awareness.

Tim Wilson emphasizes the superiority of outcome-oriented metrics, arguing that they align more closely with business objectives and are less susceptible to manipulation.

"[...] outputs are just so easy to manipulate and they don't necessarily lead to something that matters." [44:26]

6. Setting Targets and Navigating Forecasts

The hosts explore the complexities of target setting, especially when business stakeholders rely heavily on historical data and forecasts rather than outcome-based goals. Tim Wilson expresses frustration with organizations that resist setting ambitious targets due to discomfort with predicting future performance.

"[...] asking them to predict the future contingent on them impacting the future." [31:48]

He advocates for maintaining original goals even when projects exceed expectations, using such scenarios as opportunities for hypothesis generation and continuous improvement rather than mere validation.

7. Practical Applications in Campaigns

Through various scenarios, including post-campaign reporting and measurement planning sessions, the hosts illustrate the importance of:

• Clear Definition of Success: Ensuring that all stakeholders agree on what success looks like before campaign execution.

• Avoiding Metric Cherry-Picking: Preventing selective reporting of metrics that appear favorable while ignoring those that do not align with predefined goals.

Julie Hoyer posits that effective KPI setting not only measures success but also protects business partners from future misalignments.

"[...] this is saying, like, we want to be able to, like, objectively have that point on slide one." [06:32]

8. Overcoming Organizational Resistance

Tim Wilson shares experiences where initiating honest conversations about goal alignment led to healthier business relationships and more effective campaigns. He stresses that although it may be challenging, fostering an environment where success metrics are openly discussed and agreed upon is crucial for long-term success.

"[...] it's a real cost and damage to an organization if that's what they're ending up in." [14:46]

9. Q&A and Deeper Insights

The episode features an engaging Q&A where the hosts and Tim unpack specific challenges related to KPI setting, metric selection, and the balance between actionable insights and business outcomes. They explore how to ensure that KPIs reflect meaningful progress and how to adjust strategies based on metric performance without falling into analysis paralysis.

10. Key Takeaways and Final Thoughts

As the discussion concludes, Tim Wilson reiterates the importance of:

• Alignment: Ensuring that all stakeholders are on the same page regarding business goals and how they will be measured.

• Outcome-Oriented Metrics: Prioritizing metrics that directly reflect business objectives over easily manipulated output metrics.

• Continuous Improvement: Using both successes and shortcomings as learning opportunities to refine future campaigns and strategies.

The hosts agree that effective KPI and target setting are foundational to leveraging analytics for productive business outcomes, emphasizing the need for clarity, alignment, and a focus on meaningful metrics.

Notable Quotes with Timestamps

• Michael Helbling [00:13]:
  "Setting a goal or a target can be a surprisingly challenging thing in a business."

• Tim Wilson [05:16]:
  "But it doesn't fundamentally answer the question. Did it get as much of that metric?

• Tim Wilson [14:46]:
  "Organizations struggle with this mightily and it's not like an analyst can just fix it with kind of the nature of what their report looks like."

• Julie Hoyer [06:32]:
  "This is saying, like, we want to be able to, like, objectively have that point on slide one."

• Tim Wilson [31:48]:
  "It's something that like an analyst can just say, oh, I'm going to check this box and do it. It is a real cost and damage to an organization if that's what that's ending up."

Conclusion

Episode #258 of The Analytics Power Hour offers a comprehensive exploration of the critical role that well-defined goals, KPIs, and targets play in business analytics. Through insightful discussion and real-world examples, Tim Wilson and the hosts provide listeners with valuable strategies to enhance alignment, prioritize meaningful metrics, and drive impactful business outcomes. Whether you're an analytics professional or a business leader, the insights shared in this episode are instrumental in refining your approach to performance measurement and goal setting.