OKRs vs KPIs: A comparison of the two popular goal-setting methods

KPI vs. OKRs

Like how you wouldn’t climb a mountain without a guide, measuring your performance is crucial to gauge your performance and determine where you need to go next. 

 

Setting goals and measuring performance doesn’t make you work more efficiently. They also motivate your team by helping them see how their efforts link to the bigger picture, like company goals and overall vision. 

 

And you’ll need tools to do this well. 

 

 

Let's talk about OKRs and KPIs today, the acronyms for two famous goal-setting frameworks. We'll compare the two, and you'll learn which one works better for setting motivational goals.

 

What are key performance indicators (KPIs)

 

Think of key performance indicators as a scoreboard that shows people how they’re performing towards a specific goal. 

 

dashthis key performance report

 

Scoreboards put all critical metrics in front of you so you can track and report on how you’re performing. Try it with your own data

 

KPIs identify what’s essential to a business, a department, and individual performance while measuring past results or future goals. They help companies to make informed decisions on what to do next and provide clarity for teams on what’s essential to their role. 

 

Before putting your KPIs down on paper, consider spending some time ensuring the KPIs you select are relevant to your strategic business goals. 

 

Read more: We’ve got a list of 50+ KPI examples that will fit into a range of business types and teams if you need some inspiration. Make sure to tweak them to fit your business and industry’s specific needs and terminology. 

 

Important KPI examples, according to department:

 

  • Marketing KPIs: leads generated, impressions, conversion rate, return on ad spend (ROAS), social media engagement
  • Sales KPIs:  opportunity-to-win ratio, customer lifetime value (CLV), sales cycle length
  • E-commerce KPIs: customer acquisition cost (CAC), conversion rate, cart abandonment rate
  • Customer success KPIs: Customer retention rate, customer satisfaction scores, customer churn rate

 

How to choose effective KPIs: 5 questions to ask yourself

 

  1. What are the questions you need answers to? 
  2. How is your quantitative target connected with a strategic business objective?
  3. When do you need to achieve the target?
  4. What quantifiable metrics do you measure to measure success? 
  5. How frequently will you review progress?

 

What are objectives and key results? (OKRs)

 

Top companies like Google, Spotify, and Intel use OKRs to align teams around ambitious goals and achieve the desired outcome. It was coined by venture capitalist John Doerr in his book Measure What Matters.

 

It helps motivate teams down to the individual level if done correctly. In their 2021 goal management report, Ally found that 96% of individual contributors who have clear company OKRs say they have a solid understanding of how their work ties into the company’s broader goals versus 70% of individual contributors who don’t use a goal framework.

 

Think of OKR as a method to define:

 

  1. Where you are now 
  2. Where you want to be 
  3. How do you plan to measure progress

 

The formula to set good OKRs: 

 

I will (Objective) as measured by (this set of Key Results).

 

It’s a framework that defines a stretch goal, clear progression targets, and when to check in to review goal progress. 

 

OKRs in practice: A marketing team’s OKR 

 

Let’s say you’re in the marketing team and need to focus on lead generation for the next quarter. 

 

Your OKR might look like this: 

 

Objective: I will focus on bringing new inbound leads for the business within the next quarter, as measured by these 3 key results: 

 

  1. Double monthly visitors to the website from 15k to 30k visitors per month 
  2. Improve qualified leads by 30% month-on-month for the sales team to follow up
  3. Improve free trial conversion rate to 15% within this quarter to increase the number of potential new customers 

 

Once you’ve defined your objectives and key results, you can develop initiatives that specifically relate to achieving each key result. It’s an excellent way to keep the team motivated while ensuring efforts relate to your objective and, by extension, stay relevant to your organization’s broader goals.

 

OKRs vs. KPIs examples. A direct comparison

 

All this talk about KPIs and OKRs is intangible, so let’s use a concrete example to clarify the difference. 

 

You’ve set out to trek to Mount Everest. 

 

OKRs are your aspirational goal to reach the Everest base camp in two weeks while helping you navigate to your destination. These tend to be more aggressive and are purposely structured to motivate you to aim higher.

 

KPIs focus on day-to-day performance like distance covered, elevation gain, and energy levels. As long as you don’t see sudden dips and these performance metrics remain healthy, no action is required. 

 

How do these 2 methodologies compare? 

 

Overview: OKR is a goal-setting framework to inspire and drive action, whereas KPIs measure specific metrics related to a goal 

 

Starting point: OKRs are based on the company’s strategic vision, whereas KPIs are based on previous results 

 

Intention: OKRs set the direction of a goal. They tell you your goal (Objective) and how to get there (Key Results). KPIs are standalone metrics that track goal performance. 

 

Variability:  KPIs remain mostly unchanged once set as they’re measured on an ongoing basis. Companies usually set OKRs every quarter or year.

 

When to take action: Take action on KPIs when your numbers aren’t meeting targets, whereas OKRs prompt action when you see issues along the way.

 

So which one do you need - KPIs or OKRs? 

 

Which method is better for measuring goals? And should you use one way over another? 

 

It depends on what you’re trying to achieve here. 

 

Is it to set an ambitious stretch goal and align your team around a common strategic goal? In this case, OKRs are more practical to help you keep the big picture in mind. KPIs might suit your needs if you’re looking to monitor the day-to-day operations and ensure your projects remain on track. 

 

But, for all their perceived differences, there’s no need to choose between the two methods. KPIs and OKRs are tools in your performance management system that complement each other.

 

How to use KPIs and OKRs to create practical goals that motivate your team 

 

  1. Keep both specific: Prioritize your OKRs and KPIs ruthlessly to stay focused, and ensure what you’re measuring is relevant to the organization’s essential goals. Tip: Use the SMART goals methodology to help you. 
  2. Avoid measuring too many:  Avoid the dreaded ‘death by KPI’ and measure everything that moves. Have no more than 3 OKRs and 5 KPIs per team per quarter
  3. Use KPI metrics to inform the Key Results for your OKR: Going back to the marketing team OKR example above, you could track visitors, MQLs, and free trial conversion rate as suitable KPIs that relate to your set OKR.
  4. Make sure team members and company leadership are aligned: Everyone has to agree and commit to these OKRs for the system to be effective.

 

How to track your KPIs and OKRs with DashThis.

 

DashThis isn’t an OKR software with built-in OKR templates; it is an automated reporting tool you can use in your reporting. By creating sections grouped according to your KPIs, you can track your progress while ensuring your reports are easy to understand. 

 

Complete these steps.

 

Step 1: Sign up for an account with DashThis (your first 15 days are on us!)

 

Step 2: Connect your favorite marketing tools and data sources in seconds (we support over 40 integrations with top-rated content marketing apps and digital marketing tools). DashThis automatically grabs the data from your connected channels. 

 

Dashthis preset widgets

 

Step 3: Select the OKRs and KPIs you wish to track from DashThis’ preset widgets. 

 

Step 4: Drag and drop as many data points as you desire to create your custom dashboard. Create dashboards with different sections with specific KPIs related to your OKRs. Add notes within the report to summarize essential information or provide the next steps. 

dashthis step 4

 

Take advantage of DashThis' free 15-day trial today to keep your metric reporting organized. 

 

Bonus step: make your OKRs and KPIs public. Share your completed dashboard with your team, stakeholders, and partners in real-time to make it easier to collaborate across different parties. All reports and dashboards created in DashThis include a sharable URL link, making this process simple.

 

Stay on track with your KPIs and OKRs with these resources: 

 

DashThis The Team at DashThis

DashThis is the power behind thousands of reporting dashboards created by and delivered for agencies and digital marketers every month. 

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