We’ve all encountered the mantra: “If you can’t measure it, it doesn’t exist, and you can’t steer it!” .
This echoes particularly loudly in the arena of sales.
Crafting Key Performance Indicators (KPIs) is considered a must-have when building a business.
Your corporate vision should translate into a strategy, the business strategy into a detailed action plan, and that action plan into a set of KPIs and deadlines.
As a result, those KPIs will be, in the worst case, tracked and only tracked, and, in the best case, discussed to challenge the business strategy.
👉 KPIs, while necessary, can be misleading, and need to be developed with care.
When designing and measuring KPIs, here are some common flaws to be aware of:
➡️ Avoiding KPI Tunnel Vision!
While the importance of KPIs cannot be understated, we must avoid letting them obscure the broader landscape. The tracking of KPIs should not overshadow the discussion required to challenge and refine our business strategies. Don’t let your KPIs hide the forest!
➡️ Reaching a set of KPIs is not a guarantee you will succeed.
Behind some well-known epic business failures, you can rest assured that some teams or individuals reached their KPIs.
➡️ Unmasking Reality: Pitfalls of Blindly Trusting KPIs
Consider these scenarios where KPIs may only deliver a partial measure of success:
🔺Turnover vs. Profitability:
- When turnover is measured, leaving aside the profitability of deals.
🔺Hidden Costs Unseen by KPIs
- Costs associated with sales are not factored into KPIs, potentially distorting the financial picture.
- Achieving a 15% growth in turnover, while competitors boast a 40% surge.
🔺Customer Attrition vs. True Value
- Low customer attrition rates paint a rosy picture, but if contracts are renewed with lower margins and wallet share remains low, the real value is hidden.
🔺Business Growth vs. Employee Attrition
- While the business may be expanding, if employee attrition is on the rise, it will sooner or later impact business.
🔺New vs. Existing Clients
- Exceeding records in new customer acquisition is an endless race when customer attrition is high.
🔺Turnover Target vs. Untapped Potential
- Meeting turnover targets seems less positive if your untapped business potential remains largely unknown and unexplored.
➡️ Should the Journey Matter More than Some KPIs?
We must regard business as a journey, not a mere series of KPI milestones. The realization of KPIs is intricately tied to how they are conceived. They serve as indicators, not as exhaustive definitions of the journey while companies are defined by their journey.
👉 Here are my recommendations:
✅The Role of KPIs
- Remember, a KPI is a result, not the journey itself. The ability to design and implement a sound strategy is far more important than measuring outcomes.
✅Strategic KPI Selection
- Choose KPIs judiciously. What you measure and why should align with your broader strategic vision.
✅Beware Unidimensional KPIs
- Businesses are multifaceted, and relying on a single KPI can result in misleading conclusions. Embrace multidimensional KPIs, leveraging tools like CRM and BI.
✅True leadership goes beyond metrics
- Measuring results is a tool’s job, not a leadership job! While measuring results is valuable, genuine leadership involves steering the business machine, developing talent (sales reps and other colleagues), and implementing strategic initiatives, transcending mere KPI observations.
👉 This is not an exhaustive list, are you ready to elevate your results to match your ambitions?
✅ Book your slot now to discuss your business challenges and uncover quick wins in a 30-minute consultation!