How do you recommend setting targets for KPIs?

• I ran a training for my team on this earlier this year! Here's an abridged version (feel free to reach out to me via LinkedIn if you want the full deck):
• What do we mean when we say “project-specific KPI”?
• As we develop quarterly plans, or kick off specific strategies, we look for folks to outline a few things:
• Context: What’s true today, or what got us here
• Objective: What we are trying to achieve. Usually no more than 1-3.
• Strategies: How we are going to hit our objective(s)
• DACI: Who is involved (Driver, Approver, Contributors, Informed)
• KPIs: What we are going to measure to understand if we achieved our objective
• Why does it matter to set KPIs for our projects?
• Ability to measure your progress
• Gives you a goal to hit
• Allows you to understand how your work ladders into larger objectives
• Allows you to calculate or understand return on investment
• Tells you if you are aligned to your strategy, and if your strategy is working
• "Meaningful KPIs or performance measures have a specific definition: A performance measure is a quantification that provides objective evidence of the degree to which a performance result is occurring over time." - https://www.staceybarr.com/questions/howtosetkpis/ 
• Ways to model & forecast your KPIs
• Tops-down:
• Top-down forecasting is a method of estimating a company's future performance by starting with high-level market data and working “down” to revenue. Ex. we want to double revenue next year, so that’s coming from the tops-down.
• Great example: if the business looking to grow ARR by 30% next quarter, and you have a top of funnel marketing goal that maybe isn't perfectly tied to ARR, you could still use that 30% growth rate as a starting point for the metric you are looking to drive
• Bottoms-up (or trends-based)
• At a high level, bottom-up forecasting is a projection of micro-level inputs to assess revenue for a given year or set of years. Ex. rollup of individual sales quotas. Or, looking at our historical performance to predict future performance
• Using a comparable effort or external benchmarks
• Sometimes you are doing something new, and have no historicals. In these cases, I often refer to other similar projects, or find external benchmarks to be my guide
• Pro tip: If you are building teams and launching programs or at a start up, it will be TOTALLY normal not to have existing benchmarks or historical data to go from. This is not an excuse not to set a KPI. As long as you show your rationale and logic for why you set your target a particular way, you'll get a lot of understanding and appreciation if your first efforts to benchmark are off.
• How I use historical data to set targets (in this example, for a quarterly target):
• Quarterly data: Last 8 quarters is ideal to give you a sense of how this quarter performed not just last year but the year after. Look at quarter-over-quarter (QoQ) and year-over-year (YoY).
• Monthly data: Quarters might hide monthly seasonality, so it is also good to look at monthly data.
• Weekly data: Can use this if you think there are more recent weekly trends that will give you insight (ex. did you recently invest in an awareness campaign that will continue? Or, did you recently turn off a paid ad campaign that was driving traffic but no meaningful lead or MQL volume)?
• General tips:
• You don’t want to forecast too high and miss by a ton
• Nor do you want to forecast too low and way over achieve
• Aiming for a +/- 10% is a good idea
• You won’t always get it right, especially if it is a brand new initiative
• Look at broader trends to inform your stretch: Ex. if we are growing all SQLs 25% QoQ, look at what you are trying to do in your own channel or with your own project - is this a mature channel so we should plan for more incremental growth? Or is this an area where we have a ton of opportunity and can grow meaningfully in a short period of time?
• Think about improving percentage rates CAREFULLY! Going from a 15% open rate to a 20% open rate is not a minor 5% improvement, it is actually a 33% improvement (20%/15% - 1 = 33%). This is the difference between percentage points and percentage change
• My biggest secret to forecasting KPIs: It is not JUST math. There's a lot of judgement, art and rationale involved. You know the strategy, you know the levers, you know what you are investing in or pulling back from. If you partner with a finance or operational team to set targets, make sure that there's always a point where you can have inputs or negotiate based on what you know about your strategy, market trends, and how current investments are performing.

Build a simple waterfall model that starts with the revenue target for the year. Assign a percentage of that target to marketing. Use some conversion benchmarks (either historical for your company or industry avg) to work up a funnel for how many opportunities, demos, MQLs you need to hit that target. Plannuh has a free funnel-building tool to guide you through this exercise. https://funnel-builder.plannuh.com/

Setting targets for demand generation KPIs all starts with understanding the goals. All of the departmental and individual goals should roll up in support of the overall company objectives. This allows day-to-day work to stay focused, impactful and meaningful.

Here are a few ways to get started:

1. Define the objectives. What are the overarching company objectives? Once this has been defined, you can start to think about how to best support these objectives.
2. Identify your ideal customer profile (ICP): Depending on your business, you may be at various stages of having a defined ICP and product market fit (PMF). However, this is critical. Without understanding your target audience and what pain points you are addressing and helping to solve, your efforts and KPIs will not be focused.
3. Identify supporting metrics. Based on the goals you are supporting and your target audience, what does success look like? How will this be measured?
4. Define measurement. Measurement can mean different things to different companies and individuals. What does measurement look like for you? This does not mean every program has to result in a revenue KPI. This step is about having a way to gauge success.
5. Set milestones. It’s helpful to have a north star. Segment your goals into manageable milestones. This allows you to have smaller “wins” along the way. This helps from a few perspectives including reporting to stakeholders and your overall satisfaction with your efforts on a program.
6. Establish reporting. You’ll find it incredibly helpful to have reporting that when possible, includes how you are pacing toward goals. This allows you to keep a pulse on what’s working and what isn’t working.
7. Identify experiments. This should be an iterative process. Experiment and learn as quickly as you are able both for successes and “failures” a.k.a. opportunities to learn.

Here are a few additional responses I’ve given that may be helpful for this question:

• What is an important KPI that you see demand generation teams completely missing?
• I'm sure there will be questions about the best KPIs to track, what are some of the *worst* KPIs to commit to achieving?
• How do you recommend socializing KPIs (before the work starts and when it's done)?

Setting KPIs (Key Performance Indicators) for a new start-up in the technology industry can be challenging as there may not be a lot of historical data to use as a reference point. However, here are some steps to follow when setting KPIs for your new start-up:

1. Identify your business objectives: Start by identifying your overall business objectives. This will help you determine what you need to measure to ensure you are making progress toward your goals.
2. Determine the most critical metrics: Identify the most critical metrics that will help you measure progress toward your objectives. These may include metrics such as customer acquisition, revenue, user engagement, and product development.
3. Look for industry benchmarks: Research industry benchmarks for your key metrics. This will help you determine what is considered successful in your industry and help you set realistic targets.
4. Set targets: Based on your business objectives, the critical metrics you have identified, and industry benchmarks, set targets for each metric. Make sure your targets are specific, measurable, achievable, relevant, and time-bound (SMART).
5. Review and adjust: Review your KPIs regularly to ensure you are making progress towards your business objectives. If necessary, adjust your targets based on your performance and any changes in your business environment.

Remember, KPIs should be aligned with your overall business objectives and should be regularly reviewed to ensure they remain relevant and effective. If there are not reliable benchmarks, you can start by making minimum viable investments of different campaigns/channel and these results will become your KPIs.

This may sound cliched but it is tried and tested. Targets should be SMART :)

• Specific
  KPIs should be defined for each channel tactic or campaign. Paid search, paid social, webinars, events should have channel specific goals. The Marketing team overall maybe responsible for # of SQLs and pipeline revenue but each campaign owner needs to understand how their channel/campaign contributes to the SQL and pipeline goals

• Measurable
  Having measurable targets drives success. Sometimes when you launch a campaign you may not have all the answers. Even in cases such as these, it is helpful to draw a line in the sand. This then becomes a baseline you can build from. For example, I just launched a direct mail campaign and if you have launched one you know how tough it is to track meetings booked and MQLs sourced by direct mail. We have our target account list and I collaborated with sales to define conversion rates for meetings booked, SQLs and pipeline sourced and influenced.

• Achievable
  This is a no-brainer. Achievable targets inspires the team to go get them. You can always define goals and stretch goals :))

• Relevant
  Targets should be defined so they are relevant at every level - to campaign managers, marketing leaders and to the business.

• Time-Bound
  This is self explanatory. Targets should be defined annually and for the quarter

The 2 most important factors in determining targets are: Past performance and current/future business goals.

• Past performance: Looks at historical performance (within the company or look at industry benchmarks), to understand what can be achieved by deploying a particular campaign, e.g. email CTR, website bounce rates, etc. Look at data from atleast 2 years to give you a better sense of trends and patterns, e.g. did a large deal skew Q2 last year? You can only know if you look at Q2 from a year before.

• Business goals: This needs to be then coupled with the business goals. For example, if past performance indicated you can generated $100M pipeline with $1M investment, then at a 10% growth target, you can generate $110M in pipeline with an equivalent increase in budget. However, if the business is planning a 30% or 40% growth rate, then your targets will change accordingly. Just make sure to ask for resources and investments accordingly.

When setting targets for KPIs, it can be helpful to follow a structured approach that could include such steps:

1. Identify the goals and objectives of the project or initiative for which the KPIs will be used.
2. Select the most relevant and important KPIs to track progress towards these goals and objectives.
3. Collect and analyze data on the current performance of the selected KPIs, in order to understand their baseline levels.
4. Set targets for each KPI that are ambitious but achievable, based on the goals and objectives of the project and the current performance of the KPIs.
5. Monitor and review the performance of the KPIs on a regular basis, and make adjustments to the targets as needed based on changing circumstances or performance.

If you want to learn how to set up OKRs (pretty close to KPIs methodology), you can read my practical guide: "The Practical Guide to Marketing OKRs for Product Leaders".