How do you work towards a goal?
A poster in a gym I once attended read, ‘if you’re not assessing, you’re just guessing’. It stuck with me partly because it rhymes nicely, but also because it sums up the general advice you often hear when working towards a goal, which is that you need to know where you are now in order to identify the right steps to take to get to said goal.
Strategic gap analysis builds on this principle by measuring not only the current performance of important metrics (more on those shortly) for your end goal, but also the maximum impact each metric could have on the goal. The difference between current performance and maximum performance is referred to as the impact gap, and shows you which levers to pull, and how hard to pull them. Strategic gap analysis helps ensure that the metrics you prioritise are the ones that will make a difference, and these can then be tracked over time to inform and guide strategy.
How do you carry out strategic gap analysis?
The first step is to identify the important metrics that you want to measure the current performance of. This process is usually bespoke to your objectives, but will likely involve a form of regression such as key driver analysis (KDA) to identify how important different metrics are in driving your end goal. If the shortlist for these metrics is actually a long list, or you don’t know where to start with a shortlist, qualitative research can help to refine the list first.
Along with identifying which metrics are important for your end goal, KDA (or another suitable technique e.g. another form of regression or more advanced statistical analysis such as structural equational modelling, or SEM) will tell you how important each metric is in relation to the other metrics assessed. This provides the basis of the maximum impact score for each metric.
Next, you need to understand how well your target audience thinks you’re delivering against these important metrics. This provides the basis for calculating your current impact score. The final step is to compare the difference between the maximum impact score and your current impact score for each metric. Your focus should be on improving the metrics that can have the biggest impact on your end goal and also have the largest impact gaps.
Bringing this to life with an entirely fictitious example
Let’s imagine you work for a subscription content service, this could be video on demand, or audio content such as podcasts or books, or maybe something else, you choose! One of your top strategic goals at the moment is converting free trial starts to paying subscribers.
You’ve carried out KDA and have identified eight drivers that are important in the decision to become a paying subscriber after a free trial period. These important drivers include the amount of exclusive content, the frequency that new content is added, the size of the content library, and how easy it is to find something to watch/listen to. You ask customers who are currently trialling your service how well they think it performs against these key metrics – how satisfied are they with the size of the content library, frequency that new content is added, etc.?
Next you plot the current impact score for each key metric against its maximum impact score. Although the KDA has shown you that exclusive content is the top driver for conversion, your gap analysis reveals that you’re close to delivering the maximum impact here, but much further away from meeting needs around the frequency of new content, which is the second most important driver. Similarly, although the size of the content library is the third most important metric for converting free trial starts, it’s closely followed by ease of navigation, where there is more room for improvement from a user perspective.
From this example we’d conclude that, to increase conversion you need to maintain satisfaction around the presence of exclusive content and the volume of content available, while increasing satisfaction with the frequency new content is added and the ease of finding content.
