Setting KPIs can often feel arbitrary, especially when entering new markets. How do you get past this uncertainty to set realistic goals?

First of all, let's not convolute KPIs (Key Performance Indicators) with targets.

KPI definition should happen independent of our knowledge of the market or the availability of historical performance data. It simply means defining the metrics that matter for your business.

After your KPIs are defined, setting targets is the next step. In the context of a new market, where there is less information available than in a mature market, a few approaches can be considered:

• Benchmarking: looking at comparable markets, both internal and external references, to use as a guide post. 
• "What you need to believe": backsolving the KPI to allow the business to hit certain financial goals (e.g. return on investment)

In new markets, we often get targets wrong initially. However, the discipline of setting KPIs, tracking and learning from them, is what matters most.

Entering a new market is inherently uncertain, but I think that by combining a thorough market research, a flexible and iterative approach, local insights, and collaborative goal-setting, you can establish realistic and informed KPIs. Regular reviews and adjustments based on actual performance and market feedback will be key to refining these KPIs over time. Here are some strategies to navigate this uncertainty and set realistic goals, I'll start from the most obvious ones:

1. Market Research and Analysis:

Conduct thorough research to understand the market dynamics, customer behaviour, competition, and regulatory environment. I would use industry benchmarks and case studies from similar businesses that have entered the market.

2. Adopt a Flexible Approach:

New markets can be unpredictable. Be ready to adjust your strategies and KPIs as you learn more about the market.

Use an iterative approach to goal setting, where KPIs are regularly reviewed and updated based on performance and market feedback.

4. Utilize Lean Methodologies:

Adopt a lean startup approach by testing small, measuring the outcome, and learning from the results. This can help in setting more informed KPIs. Launch MVPs to gather market feedback without substantial upfront investment.

5. Engage with Local Stakeholders:

Engage with local customers, partners, and industry experts. Their insights can be invaluable in setting realistic and relevant KPIs. Networks in the new market can provide on-the-ground insights that are not available from external research.

6. Set Short-Term, Achievable Targets:

Focus on achievable short-term goals that can build momentum and provide early learnings. Establish progressive milestones that incrementally increase in complexity and ambition.

7. Risk Assessment and Contingency Planning:

Understand potential risks in the new market and how they might impact your KPIs. Have plans in place to address these risks should they materialise.

8. Collaborative Goal Setting:

Involve various functions (sales, marketing, customer success, finance, product) in the KPI setting process to ensure a well-rounded perspective. You should always consider input from team members who will be directly involved in achieving these KPIs.

OOF! Asking the hard questions today! I love it! Yes you are 100% correct. I don't know how many times I felt like I should just get a dart board out or ask a magic 8 ball about our next FY targets because there are so many things that could effect our performance that we have no control over (pandemic, election results, weather, etc). That being said, I do the best I can to root myself in data (like any good strategist!). Find as many historical comparisons as you can whether in a similar vertical, a competitor, or perhaps a large company 10 years prior. That data then gives you a general idea of how others have performed in a comparable market. You can then use that starting point to deviate from based on feedback from your sales leaders and industry advisors. I have found that sales leaders tend to be a little on the conservative side (they don't want to make promises they might not be able to deliver on) and industry advisors tend to be a bit overly optimistic. I try to strike a balance between the two.

It's rare that you are the first company to set KPIs when entering a new market. Here are some best practices I've used to set realistic KPI goals when I helped advise clients at Google measure the efficacy of their marketing campaigns when they first entered a new market:

1. Benchmark - look at how your company performed with a similar product or campaign, make adjustments on assumptions for the new target market (e.g. competition, brand name recognition, product demand) and adjust the targets for the KPI accordingly. You should also benchmark against competitors as well, especially if you don't have a good internal benchmark, to setting realistic targets.

2. Set Conservative Targets - err on the side of caution and use assumptions that provide more headwinds on KPI performance when setting KPI targets. Often times there may be unknown headwinds to the KPI performance in the new market. You won't know actual performance until product launch. Model out different potential scenarios (e.g. sunny day vs rainy day models) for potential market performance and discuss the likelihood of each scenario (you can use % weightings) to determine what would be a 'reasonable' target for the KPI.

3. Test and Incorporate Rapid Feedback Loop - set up tests by launching the product in a small sub-section of the market, measure initial performance and compare against targets (also extrapolate out to compare against potential long-term performance.) If you are significantly under or over performing, conduct a root cause analysis and then adjust your targets accordingly in light of the finding. Continue this iterative process to always inspect if the targets are reasonable and/or you need to address issues with performance against the KPI target.

I'll be the first to say it. It's really hard. There's no perfect answers and attempts to quantify this kind of uncertainty can sometimes like a reach, and at worst, feel like complete BS.

But this is a really important question. How do you determine what "good" looks like when you're doing something you haven't done before?

1. I think the first step is admitting that there's no single "right" answer. If you let go of thinking that there's one perfect solution, you allow yourself to move past unrealistic expectations and get started on the work. You have to be ok with knowing it's going to be directional. But having a direction is way better than not knowing which way to go at all. As the saying often goes, done is better than perfect. There's a good chance that your KPIs will evolve as your thinking matures and you learn more about the market you're entering.

2. The second step is to really understand the art of assumption making. Realistic goals start with realistic assumptions. So if your assumptions are reasonable, chances are your goals will be too. Now, what's considered reasonable might be very different for different people, but remind yourself that goal here is to narrow down your range of possible outcomes into something that feels actionable.

3. The next step is to determine whether a "tops-down" or a "bottoms-up" analysis makes more sense. For the sake of example, let's say the KPI you've decided to focus on is # of new customers to acquire.

   1. One top-down analysis could start with market sizing, where you quantify the TAM (total addressable market) based on population, your target demographic, and other salient and available data points, then identify, based on that TAM, what % would be reasonable to target. Your final answer might look something like: "We should target acquiring X # of customers which represents Y% of the TAM."

   2. A bottoms-up analysis might involve looking at internal data and seeing if there have been similar historical precedents. What's been the customer acquisition rate from other markets the company has entered? Do these markets offer similar-enough comparison points? If it's not a straightforward 1:1 comparison, is there some type of aggregation you could do?

4. The final step, and arguably the most important, is to simply get started, learn, and iterate. Once you've acknowledge that the KPI is there to set the direction, the real work begins when you start moving in that direction. You'll quickly get a sense of whether your assumptions were right, or whether they need to be updated.

The final note I'll add to all this - and this is sometimes the dose of realism that we get dealt - is, sometimes the goal is not to be realistic.

Sometimes, the question is "what's required?", not "what's realistic?". If the CEO challenges you to grow revenue by X% or if you need to hit X target in order to keep the business afloat, you have no other choice but to figure out how to make it work. Humans are curious, in that way. We're capable of doing things that we can't even imagine yet or that we think are impossible.

In situations like entering new markets (I'm think new geo, segment, or product intro), ideally the company has a business case justifying the investment that can be the starting point for your KPIs. Anchoring to these "early days" KPIs in the business case is probably your best bet to making things as minimally arbitrary as possible. If that sizing/business case creation is not happening, there is a bigger issue to address than RevOps KPI setting!

Assuming you have some idea of the reasons behind the new market entry and the business case that supported it, you should be able to create at least a few KPIs that tie to those goals based on assumptions from the company's past experience. For sake of example, let's say you have decided to launch a new product. The business case says it's a $100M opportunity for the company, half from new customers and half from cross-selling to existing customers. You could then estimate some pipeline, logo or attach rate, and revenue KPIs based on estimated adoption of the product by new customers and existing (ideally based on historical data on similar product launches such as 5% first quarter, 15% second quarter, 25% by year 1, etc.).

From there, you could reverse-engineer further KPIs that would support that outcome such as the dollar amount of qualified pipeline needed, number of opportunities to be created, number of MQLs from a launch campaign, number of outbound activities or demos required, and so on. This will really depend on how your GTM motions work as to what is most important to the launch.

Regardless of the quality of the inputs you have and the degree to which you have to make guesses with or without any data, I think it's really important to have something to measure against even if it feels arbitrary. That gives you a framework to discuss performance even if it needs to be revised as you learn more. That's a far better outcome than having no KPIs at all and not being able to assess the success or otherwise of the program.

Setting targets or key KPI’s without enough insights is definitely a tricky task. Here are some steps I would recommend -

1. Research, research, research - conduct market analysis, understand demographics, customer profile, and any unique factors to consider. Understand the competitive landscape - products, services, offerings, market cap.. And leverage any case studies to understand challenges to consider and factor in. 

2. MVP - Minimum Viable Plan - Focus on the key items , basically anything that directly aligns with business goals. Design the initial KPIs with intent to learn and tweak. 

3. Be agile and iterate - Be ready to experiment and pilot - test different approaches, learn what works best. Have a clear cadence for review and be ready to adjust based on progress and learnings. Embrace failure, KPI’s may at-times require revision or maybe even reboot. 
   

4. Leverage Experts & embrace local talent: As I learned from Jeetu Mahtani, Hubspot Alum,  in a recent GTM podcast , having team members who are familiar with the local culture and business practices can be invaluable. Leverage them and learn from them 
   

5. Set Directional Targets : Instead of precise numbers, setting targets around ‘improving by X%’ or ‘reducing by Y%’ is a completely reasonable approach. 
   

Remember, Progress over perfection! Good Luck!