Objectives Are Everything

By May 29, 2006

Quick, list the objective for the next marketing dollar you spend. Is it quantifiable and time-bound? Is it something other than “increase revenue”? I talk to dozens of companies about improving their business through relationship marketing and find that developing clear financial and marketing objectives is the most productive step in the discussion.

What is a good objective?
A good objective depends on the framework you choose. The approach I generally follow uses quantitative objectives and tactics with qualitative strategies. So in my framework, objectives must be very crisp. They must have a measurable goal, a performance condition, and environmental conditions within which the goal must be achieved. This may seem like basic stuff, but go back over your last few projects and examine just how few of them–if any–addressed all three components.

The reality check
Having all three components, however, does not ensure that an objective is useful, meaningful, or relevant. The question to ask yourself is “If I or my company achieves this objective, will we be considered successful?” This is a critical reality check, since it calls into question the metrics you chose, the measurement system, the time allotted, and the causal relationship between the objective and the company’s overall objectives (which is usually to make more money).

So an objective such as “increase transaction frequency by 10% by the end of the year” might, at first, seem to fit the definition of an objective, but it fails the reality check. What transactions? Which channel? Which customer segments? How is frequency measured? What is the current benchmark? A much crisper statement might be “Increase multichannel purchases per registered customer by 10% by the end of the fiscal year.” Two people within your organization can read that statement and have a relatively good chance of agreeing on what it means.

The pessimist check
Unfortunately, passing the reality check may not be enough. Everyone in the marketing profession has known an analytics guy, the one who attacks the statistical validity of measurements or causality assumptions for fun. Overcoming the analytics guy a year from now will take some creativity and a little time. So the next question to ask yourself is “What could happen to explain away my results?”

Put on your worst enemy’s hat and try to knock down your successful accomplishment. Did you include only customers who already existed? Did you extrapolate a sample set? Did you substantially hurt your margins through the course of attaining your objective? I’ve heard all these arguments and many more. So you’ll have to take the step of making your objectives pessimist-proof. Now your original objective might sound more like “Increase transactions per customer in Q3/Q4 of 2006 by 10% vs. Q3/Q4 2005 (where transactions per customer = (total positive transactions)/(unique customers making a purchase).” Sound good? A drop in the count of unique customers making a purchase year over year would explain the growth of transactions per customer, and trust me, someone would notice. Defending this objective means including constraints.

We’re veering into academic territory, but constraints can’t be ignored. Your objective must include another environmental condition: “…without reducing the number of unique customers.” The objective is now (mostly) pessimist-proof. There will always be ways to get around your objectives; you can address only the most likely concerns.

Next steps
Good objectives are only one small part of the grand scheme of strategy. They are, however, crucial, since they eliminate a major source of errors in strategy and tactics. So start using the three components, the reality check, and the pessimist check; incorporate them into your standard approach; and you’ll never look back.

Michael Greenberg is vice president of marketing for Loyalty Lab, a San Francisco-based developer of customer loyalty programs for the retail industry, and writes a monthly column for CHIEF MARKETER.