The Goal Post

Key learnings about goal formats, types, examples, and best practices

Creating useful goals requires identifying the right metric, setting a goal value that is appropriate, and drafting the goal in a format that is clear and can be objectively evaluated. This process is pretty straightforward once you get some goal-setting experience under your belt, but it’s not that intuitive.

In this post, assembled my key learnings about goal formats, goal types, example goals, and goal-related best practices. My goal is to provide a resource that someone new to goal setting could use to create a solid set of goals for the first time. Here goes…

Goal Format

Before you start writing specific goals, decide on a goal format. My favorite format is the SMART goal. It works in 95% of circumstances and should work for you. SMART stands for Specific, Measurable, Achievable, Relevant, and Time-Bound. There are a ton of resources about SMART goals on the web, so I won’t repeat them here.

These are some SMART goal templates that I continually reuse and teach:
(note: Italicized terms including “TK” are placeholders)

• Increase [metric name] by TK%, from TK in [previous time period] to TK in [goal time period]

• Increase [metric name] by TK bps, from TK% in [previous time period] to TK% in [goal time period]

  • bps stands for basis points. There are 100 basis points in each percentage point. When you compare two percentages, use basis points instead of another percentage to avoid ambiguity.

• Launch [product name] to [deployment stage] in [region(s)] by [date]

  • Stage could be “live in production at 100%” or “to all customers”, or something short of that such as “in beta” or “in experiment to at least 10% of customers”

  • Region could be WW (worldwide), specific regions (e.g. NA - North America), countries, cities, or zip codes.

I’ve listed the launch goal template last because it’s my least favorite. They’re appropriate for a major product or a key initiative (e.g. launching a marketplace, launching in a new country), but they’re too prescriptive for many other circumstances and provide no value measuring the actual outcome you’re trying to achieve with a launch. You shouldn’t claim success launching a feature by a certain date. Set a metric-based goal on the impact the feature is supposed to achieve. Metric-based goals are durable and give you the flexibility to meet a goal in different ways including launching a different feature or simply fixing something that is broken.

Goal Types and Examples

Topline/Scale Goals. These are the headline goals that measure your product’s impact on the overall business, and the overall scale of your product They can either be in absolute terms, or you can measure a KPI for a sub-segment of a business as a % of the overall business.

• Increase Revenue by 35%, from $10MM in FY 2021 to $13.5MM in FY 2022

• Increase Gross Margin by 40 bps, from 27.1% in Q2 2022 to 27.5% in Q3 2022

• Increase ProductX % of Overall Revenue by 460 bps, from 35.4% in FY 2021 to 40% in FY 2022

• Increase Gross Bookings by 22%, from $50MM for TTM ending Q2 2021 to $61MM for TTM ending Q2 2022

• Increase 12-month Active Customers by 18%, from 30MM at the end of 2021 to 35.4MM at the end of 2022

Health Goals. These are measures of well your business or product is working, and key inputs or levers that generate the impact shown by the topline goals above.

• Increase New Customer Conversion Rate by 80 bps, from 3.2% in FY 2021 to 4% in FY 2022

• Reduce 3-month Customer Churn Rate by 150 bps, from 18.5% in Q2 2022 to 17% in Q3 2022

• Increase Average Order Value by 15%, from $132.00 in Q2 2022 to $151.80 in Q3 2022

• Increase Percentage of Products with At Least One Customer Video by 1,000 bps, from 40% at the end of Q2 2022 to 50% at the end of Q3 2022

Customer Experience Goals. Conversion and scale metrics cover some of the positive measures of a good customer experience. You can supplement with goals in other inputs into a positive customer experience. It’s also helpful to measure the frequency or degree of things that negatively impact customers.

• Increase Customer Support Contact Satisfaction Rate by 800 bps, from 70% in Q1 2022 to 78% in Q2 2022

• Increase Average Star Rating by 8.1%, from 3.7 in FY 2021 to 4.0 in FY 2022

• Decrease 30-day Return Rate by 30 bps, from 6.7% in Q2 2022 to 6.4% in Q3 2022

• Decrease Customer Contacts per Order by 60 bps, from 4.2% in Q1 2022 to 3.6% in Q3 2022

• Decrease Late Delivery Rate by 220 bps, from 9.5% in Q4 2021 to 7.3% in Q4 2022

Growth/Marketing. There are many ways to evaluate the effectiveness of growth/marketing efforts. This is a sampling of goals that measure growth inputs, efficiency, and outputs.

• Decrease Marketing Expense as Percentage of Revenue by 250 bps, from 8.2% in FY 2021 to 6.7% in FY 2022

• Increase Direct Traffic Percentage of Weekly Visitors by 600 bps, from 18% in Q2 2022 to 24% in Q3 2022

• Increase Average Weekly Unique Visitors by 20%, from 35K in Q2 2022 to 42K in Q3 2022

• Decrease Customer Acquisition Cost (CAC) by 33% from $60 in FY 2021 to $50 in FY 2022

• Increase 12-Month Customer Long-Term Value (LTV) by 30%, from $200 in FY 2021 to $260 in FY 2022

• Increase 90-Day Free Trial to Paid Conversion Rate by 1,000 bps, from 60% in Q2 2022 to 70% in Q3 2022

Technical Goals. These are a few technical goals that have a direct impact on the customer experience. The three at bottom are key components of Google’s Core Web Vitals. “at tp75” means that 75% or more of page loads achieve the goal.

• Decrease Fatals as a Percentage of Page Loads by 10 bps, from 0.82% in Q2 2022 to 0.72% in Q3 2022

• Decrease Largest Contentful Paint (LCP) at tp75 by 10.7%, from 2,800 msec in Q2 2022 to 2,500 in Q3 2022

• Decrease First Input Delay (FID) at tp75 by 42%, from 142 msec in Q2 2022 to 100 msec in Q3 2022

• Decrease Cumulative Layout Shift (CLS) at tp75 by 20%, from 0.12 in Q2 2022 to 0.1 in Q3 2022

Goal Best Practices and Gotchas

Setting a goal on a brand new metric. If you’ve never managed to a metric over a period of time you don’t understand its sensitivity or how easy it is to move it. The newer the metric and the more complex it is, the greater the risk you’re going to have “the reddest of red” goals come evaluation time, as Amazon SVP Diego Piacentini once remarked about a goal I set on a new metric I didn’t fully understand. Lesson learned.

Understand your metric’s headwinds or tailwinds. Many metrics may have headwinds or tailwinds external to your company or within your company but external to your product. Before you set a goal value, dive deep on the metric and try to understand any factors (macro trends in customer behavior, changes to home page real estate to support another product, navigation changes, pricing changes) that had a meaningful impact on it during the previous period or may in the goal period. Estimate that impact and then set the goal value accordingly and be prepared to explain the difference between the organic value and the incremental impact you’re signing up for.

Reference the prior value. Don’t make people guess or do math. A goal like “Reach 1MM active users by the end of 2022” doesn’t give any indication of where you’re starting from or what impact you had. Make it easy on them to see the impact by providing the previous value as well as the difference between the previous and goal value.

Be precise about dates and time periods. It’s okay to use an end of period value (e.g. “by the end of 2022”) for metrics that are monotonically increasing or decreasing. A better practice is usually to use a metric that is averaged/weighted over the entire goal period.

Avoid QoQ/MoM for metrics with seasonality. Many metrics are impacted by seasonal factors Those patterns are easy to see in any e-commerce business by day of week and especially due to spikes around individual holidays and the Nov-Dec period. For any metric that has seasonality a quarter-over-quarter (QoQ) or month-over-month (MoM) comparison may tell the wrong story because you can’t tell the difference between impact of seasonal headwinds or tailwinds from the incremental impact you and your team achieved.

Keep metrics stable. If you change the definition of a metric during the goal period and use it only for the goal period value, you invalidate the goal and may lose trust when the change is found out. Your options are to (a) continue to use the original metric definition when evaluating the goal, or (b) restate the prior and goal values using the new metric definition. Beware though, (b) often makes the goal harder or easier to achieve. Call it out if it made it easier so you don’t get called out.

Don’t compare time periods of different lengths. It’s okay to compare time periods that are of slightly different lengths (e.g. 31-day months against 30-day months), but don’t confuse people by comparing significantly different time periods (e.g. comparing Q3 vs. Jan-June).

I hope these examples and tips are helpful to you. Drop a comment about any best practices I missed!