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OKRs vs. KPIs: What’s the Difference?

OKRS vs KPIs -What's The Difference?

Tracking marketing metrics is non-negotiable when it comes to running an agency. While key performance indicators (KPIs) are already an integral part of your operations, there’s another system to track performance: objectives and key results (OKRs). 

Your clients probably don’t care about the difference between KPIs and OKRs–they just want results. It’s your job as an agency to sit with them to understand their business goals, set up the right metrics to track your progress, and then let them know how you’re getting them there. 

In this article, we'll explore:

Let’s dive in.

What Is a Key Performance Indicator (KPI)?

Key performance indicators (KPIs) are metrics that directly tie into your client’s business goals.

Note the difference between KPIs vs metrics. Your agency may track many metrics–but that doesn’t mean they all equally contribute to your clients’ long-term goals. And while all KPIs are metrics, not all metrics are key performance indicators (KPIs). 

Metrics vs KPIs Graphic

Some of your clients may not know about KPIs but set this foundation early on to establish reporting best practices. Explain to them that KPIs tie directly into their business goals, and emphasize the importance of tracking them. After all, it’s the only way to progress and improve.

Monitoring KPIs has two-fold benefits: Not only will your clients understand what’s happening in their business, but you’ll also demonstrate your agency’s ROI and ability to achieve results. 

Agency Tip: For easier comprehension, incorporate data storytelling and data visualization as part of your clients’ KPI reports. 

KPI Examples

Common KPI reporting examples to track clients’ marketing performance include:

  • Total website traffic

  • Organic search rankings

  • Sales qualified leads

  • Monthly recurring revenue 

  • Email clickthrough rate

These will vary based on your client's goals, so be sure to choose the most relevant KPIs if your agency decides on this option.

What Are Objectives and Key Results (OKR)?

The OKR system was most recently popularized by Google and is used as a means for teams and organizations to define measurable goals. 

This goal-management system breaks down a goal into two components:

  • The Objective – The goal you want to achieve.

  • Key Results – The measurable results you need to achieve that goal (i.e., KPIs).

The OKR framework involves setting an ambitious goal that may or may not be achieved. Although this might sound counterintuitive to the ingrained concept of SMART goals, there's a reason for that.  

It’s an intentional tactic to set high, aspirational targets and take business goals up a notch. OKRs also encompass KPIs (known as ‘Key Results’ in this framework), which are used as data measures of success toward the specified objective. 

Think of this long the lines of that classic quote by Normal Vincent Peale.

“Shoot for the moon. Even if you miss, you'll land among the stars.”

The reason behind setting aggressiveand sometimes unrealisticgoals is that even if you don't achieve them, your client will be better off than when you started.

The challenge with setting these kinds of "shoot for the moon" goals is that you run the risk of constantly underperformingwhich is never a good look for a marketing agency. That's why it's important, if your client uses the OKR framework, to clarify that the goal is not 100% success for every goal. In fact, getting close to 100% completion on all of your OKRs typically means they were not ambitious enough.

Example of an Objective and Key Results (OKR)

Let’s look at an example of an OKR you might set for a client trying to market their SaaS business:

Objective: Scale aggressively by achieving 500 new free trials per month. 

  • Key Result 1: 55,000 organic site visits per month from target countries.

  • Key Result 2: Create a product marketing funnel and automation system to bring in 500 new trials per month from website visits.

  • Key Result 3: Manage customer reviews and seek out 200 more positive reviews.

In this scenario, the ‘Objective’ is an ambitious goal that surpasses your client’s current business outlook and pushes them to achieve a high-reaching, aggressive target.

Even if this objective isn’t met, your client will still achieve success by getting marginally close to this desired target (provided they’ve followed through on implementing key results). 

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What Makes An Effective OKR?

An OKR is made up of three components: 

  • Different levels 

  • A clearly defined timeframe

  • A way to track progress

Let’s explore each component further.

1. Levels

OKRs are usually set at the following three levels:

  • Company

  • Team

  • Individual

As an agency, your role is to take the COMPANY OKR (this is your client’s business goal) and get your TEAM (your marketing agency) to set INDIVIDUAL goals–aka, goals for specific campaigns and campaign specialists.  

2. A Clear Timeframe

At each level, set 3-5 OKRs with either an annual or quarterly timeframe. Using over 5 OKRs will dilute your agency’s or client’s focus, which is counterproductive.

If you’re using an annual timeframe, use quarterly OKRs to support it. That way, you’ll know exactly what needs to be done each month. 

3. Grading to Measure Progress 

There are two distinct ways to measure OKR progress:

  • Binary: A key result is graded as either ‘0’ (not achieved) or ‘1’ (achieved).

  • On a spectrum: A key result is graded between 0 and 1 (or on a percentage scale of 0% to 100%). Scores closer to 0 indicate that key results are far off track. On the other hand, scores closer to 1 indicate a higher likelihood of success.

Let’s take an example. Say your client sets a key result as ‘get the brand live on TikTok before the end of the month,’ which is tied to their overall objective of getting 1,000 sales in that quarter. At your next monthly meeting, they’re most interested in answering the question, ‘Was the TikTok campaign launched or not?’ 

A binary key result works well in this case because it’s either a yes (binary score of 1) or no (binary score of 0). Think about it–there’s no way that 0.5 of a TikTok account could be launched!

The challenge with a binary result is that it doesn't take into account the work in progress toward that result. Your team might be 90% of the way to completing the client's TikTok setup, but if it's not completed by the deadline, it counts as "not achieved."

On the other hand, another client may aim to hit a $100,000 sales target coupled with a key result of ‘increasing website traffic to 10,000/month’. 

A spectrum works well to monitor progress as website visits climb before the month’s end. At mid-month, your agency may report a score of 0.60, which tangibly shows you’re on track to deliver their key result by the end of the month. 

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Setting Ambitious Goals with OKRs

One interesting feature of OKRs is that the objective is supposed to be an ambitious “stretch” goal: your client should set an objective that’s possible without necessarily knowing if it can be achieved. 

For example, Google aims for an OKR score of 0.6 - 0.7, which means that employees are expected to fall short despite doing their best. In fact, consistently hitting an OKR score above 0.7 is a cause for concern since it means they’re not being ambitious enough when setting their goals.

It’s important to note that OKRs are not tied to compensation because the system is meant to encourage risk-taking.

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OKRs vs. KPIs: What Are the Similarities and Differences? 

As we’ve outlined, OKRs and KPIs work in tandem with your clients’ business goals. Here’s a quick summary of their similarities and differences. 

Similarities

Differences

Data-driven and focused on specific targets

OKRs are ambitious, directional, and contextual; KPIs only provide data points

Based on the successful delivery of key results 

OKRs encompass KPIs but not vice-versa 

Both provide reliable insights that could be used to propel a business forward

OKRs include grading (binary or spectrum) to track success–KPIs only report on pre-determined data measures

Time-sensitive and specific

OKRs are set quarterly or annually; KPIs could follow other time intervals (e.g., weekly, monthly)

While OKRs and KPIs both provide valuable insights, the major difference is that OKRs include an overall target that guides all key results. 

As such, OKRs give a ‘why’ and an explanation for your client’s key results, which is helpful for context and understanding the big picture.

KPIs, however, solely provide data progress and don’t always tie into an ambitious goal or objective. Nonetheless, OKRs and KPIs are both valuable measures to drive your client closer to success. However, there are instances when one works better than the other–let’s explore below. 

When To Use OKRs Instead of KPIs

As outlined, OKRs encompass KPIs as part of the overall framework. But when is it best to use an OKR framework vs. KPIs? Let’s explore this further with an example.

Say your client aims to reach 1M website views in the 2nd quarter of the year. To get there, you may set actionable KPIs such as injecting $50,000 in Google display ads and churning out 20 blogs per month.

In this case, an OKR framework will work to reach your client’s ambitious target (or at least close to it). While those KPIs work as standalone measures, the OKR framework adds context and purpose.

On the other hand, say your client doesn’t have such aggressive targets and is only interested in maintaining a baseline, manageable level of web visibility. KPIs alone may do the trick without the need for a high-reaching objective.

In a nutshell, an OKR framework may work better for businesses with an ambitious vision. However, KPIs may be standalone metrics that reflect and maintain business health. 

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Should OKRs Replace KPIs?

Here’s the big-ticket question you may be wondering–should I replace KPIs with OKRs? One isn’t better than the other necessarily. It depends on where your client is, and what they’d like to achieve. 

And so, OKRs aren’t a replacement for KPIs–they’re an enhancement to the goal-setting system when more refinedand more ambitiousgoals are preferred.

Can OKRs and KPIs Be Used Together?

Absolutely. 

Remember that the OKR framework houses key results as part of its framework (i.e., KPIs). Using OKRs and KPIs together is a powerful solution for clients with high aspirations and clearly outlined ways to get there (or at least close to it). 

What Are Common Mistakes to Avoid With KPIs and OKRs?

There may be instances where targets are set, and the mark is completely missed. Here’s when that might happen. 

Setting Targets That Aren’t SMART

A common rule of effective goal setting is ensuring your targets are SMART: Specific, Measurable, Attainable, Relevant, and Timely.

If your agency sets targets that aren’t bound to these parameters, it may lead to unattainable goals or vague expectations. For example, say you’ve got a client that wants their website to have a higher Google search ranking. 

Simply setting an OKR goal of ‘Improving Web Visibility’ isn’t the best option if there are no defined ways to track key results. Similarly, KPIs with no specificity or time sensitivity will result in vagueness and increase the likelihood of missing targets altogether. 

Let's pause for a moment to discuss the Attainable part of SMART goals, as we've already mentioned how OKRs are typically more aggressive and sometimes unrealistic. However, they shouldn't be impossible.

When setting OKRs, it's important to keep in mind that the results should be attainable, even if the likelihood of achieving them all is less than 100%.

Lack of Accountability

To monitor whether you’re on track to hit key results, your agency needs to ensure accountability. For example, one staff member may be responsible for the SEO arm of an overall OKR goal, whereas another may oversee the advertising aspect.

Regardless of the case, invest in a central hub that streamlines agency operations, allows seamless communication, and shows visual progress toward achieving goals. 

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They Don’t Align With Business Efforts

Let’s take another scenario; you can’t meet targets if they don’t accurately reflect what’s happening in your client’s business. Let’s say your client sets an OKR for the quarter of 'Drive $200k in eCommerce revenue via a new Shopify storefront.'

However, their business has prioritized an upcoming tradeshow and isn't able to provide your agency with product details, online pricing, or images.

It’ll certainly be a miss if their business efforts don’t align with this KPI (e.g., because there is no way to get their eCommerce website live and optimized without their support). 

That's why it's important to ensure that the entire business is aligned on those goals so everyone can work toward achieving them.

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Not Planning for Unforeseen or External Challenges

This may seem like a bit of an oxymoron. After all, how does an agency plan for unforeseen challenges?

Unexpected turns happen from time to time which could affect your client’s business outlook. For example, a potential recession, algorithm changes, or technology shifts (such as the Google G4 update) could greatly impact your client’s chances of success.

In these scenarios, it’s important to factor in the external landscape and make informed decisions. If you’re working with the OKR framework, you’ll want to keep an ambitious target but also ensure it’s not totally out of reach or out of touch. 

Similarly, any set KPIs should realistically factor in what’s happening on the outside.

You'll also need a mechanism to tie these external factors to results. For example, if your team had planned to hit 10,000 clicks from Facebook, but the new page experience has significantly impacted your ability to do so–that's something that should be called out in your report's summary section.

Should You Implement OKRs in Your Own Agency?

Quite a few leading companies use OKRs. Among them are Google, Intel, and Amazon. And your client may prefer the OKR framework. But should your agency follow suit? 

If your agency has high aspirations and aiming for a trajectory of growth, the OKR framework works well for small or large teams. The OKR method ensures everyone is on the same page and knows what they’re working towards.

If you already have a large-scale team, implementing OKRs will help your agency achieve more by setting ambitious goals that stretch your beliefs in your limits.

And nobody said that you must have 4-5 OKRs at each level on day one. If that seems overwhelming, start with one OKR per level, like:

  • One company-wide OKR

  • One OKR per team

  • One OKR per person

Agency Tip: Don’t half-heartedly approach OKRs if you decide to implement them. Your team will take it seriously once you do. 

Summary: OKRs vs. KPIs

KPIs are business metrics that are directly relevant to a specific business goal and are used to evaluate the progress toward that goal.

Meanwhile, OKRs are a powerful goal-setting and goal-management system that encourage you to strive further than you might have thought you could–and measure your progress along the way. 

Both are invaluable tools for monitoring progress and tracking data. In summary:

  • Use the OKR framework if your agency or client wants to reach an aspirational goal and drive business to higher heights

  • Rely on KPIs alone if you're interested in maintaining business health and ensuring that things run smoothly.

Regardless of your structure, a solid reporting system is an absolute must to communicate your progress to your clients and to track your Agency's growth. With a tool like AgencyAnalytics, you’ll manage clients’ goals and metrics under one roof. 

There’s no need to pull all that data manually–use pre-built report templates and dashboards to automate client reporting and save time each month. 

Invest in an automated reporting tool that puts billable hours back in your day. Try AgencyAnalytics free for 14 days, no credit card required.

Faryal Khan

Written by

Faryal Khan

Faryal Khan is an experienced marketer and brand photographer with a passion for content creation. She creates value for brands through storytelling and captivating visuals.

Read more posts by Faryal Khan ›

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