When you can describe a problem, most of the time, you’ve already solved it.
That’s more or less the idea behind setting SMART business goals. SMART is a practical rule for how to set goals so they’re clear to everyone and there’s a collective understanding of the direction you want to go.
For this, the word SMART was chosen. Each of its letters corresponds to the initial 5 elements that a SMART business goal should have:
Let’s get to know each of these elements and how they can help you set business growth goals.
Definitions and examples of SMART business goals
Once we have defined each of its characteristics, we’ll present some examples of SMART business goals so we can make the concept clearer.
Specific means – referring to something unique, and is the opposite of general, broad, or vague.
Therefore, a specific goal should detail where you want to go.
It goes without saying that your goal in business is to make a profit, or to sell more. These are general goals, not examples of SMART business goals.
Sell what? Where? To who?
An example SMART business goal that respects the ‘Specific’ characteristic, could be:
I want to sell more high quality sports products in my 4 mall stores. I’ll do this by taking advantage of a sports festival that my city is hosting.
Now, finally, that’s being specific!
When we refer to something as being measurable, it’s more than just a measure of something or a number to be achieved. It’s also about being able to ascertain this number objectively.
So, if we were to define 75 percent of a city’s children as being happy, we wouldn’t be able to measure it. The statement is subjective and impossible to measure.
Therefore, a measurable example looks something like this:
Sell 35% more high quality sports products, compared to last year, in the 4 mall stores. Take advantage of the effect a sports festival will have on the city.
Now, we need to be able to attain our examples of SMART business goals.
If we were to suggest a 200% increase in something. Depending on the circumstances (but most likely), this would be unattainable. So, it discourages anyone whose job it is to achieve it, therefore making it something useless and purposeless. And ultimately the goal is rejected.
A goal that has a practical meaning and helps a company to grow is relevant.
SMART goals have to be important to the business.
For example, setting a goal to change the floors in all of your stores could certainly be necessary and an important goal for maintenance personnel.
Yet, for your business, this is an operational detail, so your goal should always be linked to something that will define the company’s destination.
How are you going to conquer new markets, expand your network of stores, number of customers, sales etc?
This is the last element in our examples of SMART business goals: It refers to a date, a time to reach the goal.
In our case, it could be to achieve the 35% increase in sales by the end of the year.
Some examples of SMART business goals
- E-commerce: Increase our lead base of site registrations by increasing our downloadable materials by 25% by the end of the year.
- Clothing Store: Sell 30% more evening dresses during the month of May, when weddings occur in our region. Introduce a credit card based hire-purchase plan for up to 10 installments.
- Fastfood Network: Open 25 new stores by the end of the year, 10 in our state and 5 in each of the 3 neighboring states.
Determining goals through using OKR
OKR (Objectives & Key Results) is a well-known method of determining business goals used by large companies. It became very popular once Google adopted it and began seeing excellent results.
OKRs are divided into Objective and Key Results.
So, the Objective is where we want to go. Therefore, key Results indicate how we’ll know, during the process of reaching the Objective, whether we are actually reaching it.
OKRs typically refer to a 3-month period in which Key Results are monitored to see if the company is on track.
In addition, OKRs comply with the following characteristics:
- Objectives are ambitious (contrary to SMART objectives) and must be very difficult to achieve
- Key Results must be measurable
- If 70% of OKRs are met, it is considered OK
- Each OKR should have 3 or 4 Key Results, at the most.
One person who can tell us about the characteristics of this methodology, and how he uses it in his creative company, is Pedro Renan, CMO at We Do Logos:
“Here at We Do Logos we collectively seek objectives and pursue well planned results without wasting resources. Therefore, the OKR methodology fits us like a glove, allowing us to quickly correct directions if necessary.“
Renan gives us an example of how he defines an OKR for a business similar to his. A business where Digital Marketing is used and which also has a particular focus on Content Marketing, to attract customers, generate leads, opportunities, and convert sales.
“Let’s say the CMO of the company sets an Objective to achieve a Cost per Acquisition (CPA) of $25. In order to know if the company is reaching the Objective, it could stipulate 3 different Key Results: The Number of Accesses, the Number of Leads Generated and the Number of Generated Opportunities. That way, if the company reaches the Accesses Result, but not the Leads Generated Result, the company will know which Key Result is preventing them from achieving their Objective. And the same goes for any other Key Results.”
Here’s the logic behind OKR: Use Key Results to learn how things are going and to redefine actions to achieve the Objectives.