About This Episode: Key Performance Indicators (KPIs) and Business Growth
As a business leader, you’re constantly searching for ways to drive growth and improve your company’s performance. But with so many moving parts in a medium-sized business, it can be challenging to know where to focus your efforts. You might find yourself asking: Are we making progress towards our goals? How can we measure success? What should our teams be prioritizing?
If these questions resonate with you, you’re not alone. Many businesses struggle to clearly define and track their progress, often relying on gut feelings or surface-level metrics that don’t tell the whole story. This is where Key Performance Indicators (KPIs) come in – and they’re about to become your new best friend.
In this episode of the Endless Customers podcast, IMPACT’s Alex Winter sat down with Allison Riggs, a head coach and trainer at IMPACT, to discuss the critical role of KPIs in driving business success. Let’s dive into their insights and explore how you can harness the power of KPIs to unlock your company’s full potential.
What Are KPIs, and Why Do They Matter?
Key Performance Indicators, or KPIs, are measurable values that demonstrate how effectively a company is achieving its key business objectives. As Allison explains:
“KPIs are really interesting where they’re actually called a lot of different things in different organizations. So if you’re an organization that calls it MBOs, metric by objective, there’s lots of different acronyms and different ways that you can explain or ways to track your success and areas for improvement.”
The beauty of KPIs is that they provide a clear, data-driven picture of your company’s performance. They act as a guiding light, showing you where you’re excelling and where you need to focus your efforts. As Allison puts it:
“We measure KPIs not only to say like, hey, like we’re doing great. Like here’s a goal, let’s go after it. But it also gives you the ability to indicate areas that you need to fix or put a focus on.”
For medium-sized businesses making over $5 million in annual revenue, KPIs are especially crucial. You’ve likely moved beyond the initial startup phase and are now focused on scaling and sustaining growth. Without clear KPIs, it’s easy to lose sight of what’s truly driving your success or holding you back.
The Multi-Level Approach to KPIs
One of the key takeaways from the podcast is that KPIs should cascade throughout your organization. Allison emphasizes the importance of having KPIs at different levels:
Company-wide KPIs
Departmental KPIs
Individual role KPIs
This multi-level approach ensures that everyone in your organization understands how their work contributes to the bigger picture. It creates alignment and gives employees a sense of purpose and direction.
Moving Beyond Vanity Metrics
When it comes to setting KPIs, especially for marketing and sales, it’s tempting to focus on what Allison calls “vanity metrics.” These are easily measurable numbers that look impressive on paper but don’t necessarily translate to business success. For example:
Website traffic
Social media followers
Email list size
While these metrics can be useful, they shouldn’t be your primary focus. Instead, Allison recommends digging deeper:
“As you move through the marketing funnel, you then want to track KPIs like marketing qualified leads, sales qualified leads… I want to see how many people actually become customers or new leads or moved from marketing qualified to sales qualified leads because of email marketing.”
For sales teams, consider KPIs like:
Number of qualified opportunities
Close rate
Number of referrals
But don’t stop there. Allison shares a brilliant example of using KPIs to drive cultural change within a sales team:
“I really liked the one where, especially for clients who are implementing They Ask, You Answer… there’s ‘number of pieces of content used in the sales process,’ ‘the number of 1-to-1 videos that were sent in the sales process.’ Those are indicators of success that your team is implementing the frameworks.”
By tracking these KPIs, you’re not just measuring performance – you’re actively encouraging behaviors that align with your company’s goals and values.
Setting Effective KPIs: A Step-by-Step Approach
So, how do you go about setting KPIs that will truly drive your business forward? Allison offers a clear roadmap:
Start with your long-term vision: “You do want to choose your goals as far as ten years out… You need to start ten years out because you are going to be working backwards.”
Break it down: Work backwards from your long-term goal to create 5-year, 3-year, and 1-year goals.
Involve your leadership team: Get together to create goals for your organization, starting with one year.
Engage department leads: Have them identify 3-5 key metrics that will help achieve the overall goal.
Empower individuals: Let team members come up with their own KPIs that align with departmental and company goals.
Remember, your KPIs should be stretching but achievable.
The Human Side of KPIs
While we’re talking about numbers and metrics, it’s crucial not to lose sight of the human element. KPIs aren’t just about hitting targets – they’re about creating a shared vision and purpose within your organization.
Allison emphasizes the importance of getting your team excited about your goals:
“When you give someone a path, you give them a goal to go after and you get people behind it and they’re excited and they’re on the bus with you, they’re going to be the best employees for you because they believe in you and they believe in your business, and they’re going to do what it takes in order to help you meet those goals.”
This level of engagement can transform your company culture, turning your employees into active participants in your business’s success story.
Real-World KPI Success
To illustrate the power of well-chosen KPIs, Allison shared a fantastic real-world example from an HVAC company client. The company created a “Comfort Club” maintenance program and used KPIs to drive its success:
“One of their KPIs was, well, one, it needed to start with their dispatchers talking about the product and service on the calls. Okay. So what they wanted was they wanted a KPI of 90%, 90% of their dispatch calls with new clients who weren’t members. They just had to talk about the comfort club and send an article after.”
This simple KPI had a ripple effect:
It ensured consistent promotion of the Comfort Club
It educated customers about the value of preventative maintenance
It led to an increase in Comfort Club memberships
It ultimately drove more recurring revenue for the business
This example shows how a well-chosen KPI can align team behavior with business goals, creating a win-win situation for both the company and its customers.
Overcoming KPI Challenges
Implementing KPIs isn’t always smooth sailing. You might encounter resistance or challenges along the way. Here are some common hurdles and how to overcome them:
Fear of low numbers: Some team members might worry that low KPI numbers will reflect poorly on them. Address this by framing KPIs as tools for improvement, not punishment.
Overwhelm: Too many KPIs can lead to confusion and inaction. Stick to 3-5 key metrics per department or role.
Lack of buy-in: If team members don’t understand the “why” behind KPIs, they’re less likely to engage. Involve them in the goal-setting process and clearly communicate how their efforts contribute to the bigger picture.
Inflexibility: While consistency is important, be willing to adjust your KPIs if business conditions change or you discover more relevant metrics.
Taking the Next Step with KPIs
Ready to make real change in your business using KPIs? Here’s your action plan:
Gather your leadership team and define your long-term vision (5-10 years out).
Work backwards to set 3-year and 1-year goals.
Identify 3-5 company-wide KPIs that align with these goals.
Have each department leader define their team’s KPIs.
Encourage individual team members to set personal KPIs that support team and company goals.
Implement a system for regularly tracking and reviewing KPIs.
Celebrate wins and use setbacks as learning opportunities.
Remember, the goal isn’t perfection – it’s progress. As Allison wisely advises:
“Start now. How do we want to end 2024? Like what? What needs to be true? Where do we want to be?”
By embracing the power of KPIs, you’re setting your business up for sustainable, measurable growth. You’re creating a culture of accountability and continuous improvement. And most importantly, you’re giving your team a clear roadmap to success.
At IMPACT, we’ve seen firsthand how effective KPIs can transform businesses. If you’re ready to take your company to the next level with strategic KPI implementation, we’re here to help. Reach out to us, and let’s unlock your business’s full potential together.
Remember, in the world of business growth, what gets measured gets managed. So, what will you measure to drive your success?
Connect with Allison
Allison Riggs is a Head Coach at IMPACT. She trains sales, marketing, and leadership teams to embrace a culture of radical transparency within their organizations, empowering them to become the most trusted voice in their space.
Email her at ariggs@impactplus.com
Connect with Allison on LinkedIn
Work with Allison in They Ask, You Answer Mastery
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