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If you don’t know what you’re working toward, it’s hard to create a plan.
Goals guide teams, departments and companies around a common objective and help them develop a plan to achieve it. Beyond that, goals can also help motivate employees to find ways to be innovative and improve on the status quo.
The goals businesses set should be aggressive — not something everyone can achieve without trying. But in order to incentivize effort, goals also have to be specific, measurable, achievable, relevant and time-bound (SMART).
The SMART Goal Framework
There are different goal-setting frameworks you can leverage, but the SMART goal framework is effective because it can apply to a wide variety of objectives.
The qualities of a SMART goal are:
There needs to be a number behind the goal itself, whether that’s a percentage, a dollar amount or the quantification of a metric. Just saying you want to increase or decrease something doesn’t enable you to determine whether or not the goal has been accomplished.
The metric your specific number is referring to needs to be quantifiable. For example, you couldn’t say you want an 89% increase in marketing because “marketing” isn’t quantifiable. But, you could set a goal to increase marketing-attributed revenue by 89%.
Furthermore, you also need to be able to track the goal you set. If your goal is measurable in theory but not something your company has the systems in place to analyze data about, that wouldn’t result in a SMART goal for you.
For example, even though customer lifetime value (CLV) is a measurable metric, if your company doesn’t have a way to aggregate the data from your marketing, sales, project management and billing tools in order to understand all the different components making up that number, it wouldn’t be truly measurable for you.
Is your goal actually possible? Ensuring your goal is both aggressive and achievable can require a lot of analysis.
For example, if you want to increase your revenue by 50% before the end of the year, you need to understand a plethora of contributing factors to determine if that goal is feasible, including the growth rate of every section of your funnel both currently and historically.
The subject of a goal needs to be something its owner has direct control over. A customer support team shouldn’t have a goal to increase website traffic by 30% because the work that team does day to day working with customers doesn’t result in traffic, and website traffic doesn’t reflect the effectiveness of their work as a team. Instead, a relevant goal for a customer support team would be to decrease ticket resolution time by 30%.
The timebound component of your SMART goal typically aligns with the timeframes used for your overall business goals: month, quarter or year. However, timebound can be any amount of time.
Setting a timeframe indicates what level of prioritization a goal should receive and enables you to track your progress. For example, if an operations team has a goal to get 90% adoption for a new CRM they’re implementing that could mean they need to get that adoption within the next week or within the next five years. That indefinite time frame might lead to the CRM not satisfying the purpose it was purchased for. Instead, the ops team could establish a plan to roll out the tool over a month and a half with the goal being to see 90% adoption in three months.
It’s important to not set SMART goals in a vacuum. Your marketing team shouldn’t be setting a goal that doesn’t align with the goals of your sales team, and both of those goals should align with your larger company objectives.
In addition to feeding into company-wide goals, individual and team goals should also help employees determine what work they should be doing day to day.
However to make sure your SMART goals serve their intended purpose, you also need to ensure you’re maintaining them. Have milestones along the way to ensure you’re tracking progress on a consistent basis and re-iterate your goal regularly.
If you set a SMART goal at the beginning of the year to be accomplished by the end of the year but then never talk about it, people will probably forget about it so it won’t get achieved and then your business will suffer.
This post was originally published June 10, 2014.
Guido is Head of Product and Growth Strategy for New Breed. He specializes in running in-depth demand generation programs internally while assisting account managers in running them for our clients.