By Tom Laufer.
I’ve talked before about Planning Season and the opportunity that analytics offer as a true force-multiplier for a company during the planning process.
One thing that still surprises me is that many product and growth teams struggle in setting clear goals, such as defining a specific KPI value to aim to achieve by a certain date. In other cases, those who have actually set goals, they are defined in a somewhat random manner.
Clearly, it’s quite difficult to define success if you don’t set these goals.
That’s why the best product companies in the world are investing significant efforts in the process - I know this first-hand from my days at Google.
Defining goals should rely on two different methods that eventually converge, Top-Down and Bottom-Up:
Top-Down:
This method is based on company management setting goals for the company, for example achieving 30% year-over-year growth. The Product and Growth teams should then identify the biggest levers and define the KPIs that will enable the company to achieve this 30% growth, such as conversion, retention, engagement, revenue per user, etc.
Bottom Up:
Here, we map out all our initiatives and estimate the size of the impact. A good bottom-up will include:
- The forecast of the KPI based on the current trend - aka the ”do nothing” scenario.
- Then, adding the initiatives, the launch date(s), and estimated impact by the goal date.
It may sound like a complex process, but assuming you have the right infrastructure, it’s quite straightforward. It also enables you to set your team up for success, gives you the ability to measure yourself and learn from the process, and helps you create a predictable and structured growth process.
