[Principle 4] Begin by setting Key Goal Indicators (KGI) and Key Performance Indicators (KPI) to structure marketing activities.

This series commemorates the release of the book "10 Essential Rules for Digital Marketing Success: Creating a Mechanism for Sustained Sales" by Dentsu Digital Inc.'s top marketers.

Part 4 features an excerpt from "Principle 4: Start by Setting KGI and KPI to Structure Marketing Activities," specifically the section on "The Relationship Between Digital Marketing Objectives and KGI/KPI."

 

The Relationship Between Digital Marketing Objectives and KGI/KPI

Just as individuals have life goals, companies have objectives. Corporate activities progress by setting short-, medium-, and long-term goals for the entire company and for each business unit, then repeatedly verifying progress and making decisions. Marketing inherently supports these corporate activities, but it also commits to the goals and provides critical metrics for decision-making.

Therefore, marketing activities span all departments alongside corporate operations, with results expected from each. However, these efforts must not only function independently to achieve results but also converge toward the company's overall goals through organic collaboration.

Especially now, with the proliferation of online business, integration with offline (physical) operations is essential. Furthermore, to deepen and prolong the ongoing trust relationship with customers, individual marketing efforts must be organically interconnected.

Digital marketing aims to enhance the efficiency of individual marketing activities while simultaneously fostering their integration, thereby supporting the achievement of corporate objectives.

To achieve this, goals must first be clearly defined. While aspects like sales, profits, customer acquisition, and retention are common targets for many companies, stating only "increase sales" or "improve customer satisfaction" amounts to little more than slogans. To be meaningful as goals, it must be clear what state constitutes achievement.

This means setting specific deadlines and measurable numerical values for what state we aim to achieve by when. Examples include "Increase sales by X times within one year," "Raise profits by X% by year XX," or "Acquire X new customers this fiscal year."

These targets are called "KGIs (Key Goal Indicators)." They are "Key Goal Achievement Indicators." A KGI must never be a mere slogan.

However, simply setting a KGI does not guarantee its achievement. To reach the goal, various measures (such as initiatives) must be implemented.

If the measures implemented to achieve the goal function effectively toward the objective, the target value set for the KGI should be met by the deadline. Being able to check along the way whether progress is on track significantly aids in achieving the goal. If progress appears off course, the direction of the measures can be adjusted.

To verify whether these measures are working effectively, measurable indicators like numerical data are essential.

These metrics are called "KPIs" (Key Performance Indicators). Generally, when executing marketing initiatives, we tend to encounter KPIs more often than KGIs, making it easy to mistake the KPIs we set as the actual goals. However, KPIs are merely indicators to judge whether the measures taken to achieve the KGI goal are functioning appropriately.

If the KGI is the goal, then KPIs are the "roadmap" for the means to achieve it. Therefore, KPIs must be clear and measurable, just like KGIs, and they must also be timely for evaluation when needed and flexible enough to adapt to changes in the environment.

The relationship between KGI and KPI can be illustrated as shown below.

Figure: Relationship Diagram of KGI and KPI

 

 

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