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KEY PERFORMANCE INDICATORS


KPI OVERVIEW


TYPES OF METRICS

1. Targets: Future Goals

2. Critical #s: Drive Priorities

3. KPIs: Key Performance Indicators


WHAT’S THE DIFFERENCE?

• KPI – something we Measure, a metric that we track

• Priority – something we Do, a specific action statement

K P I V S . P R I O R I T Y


LEADING VS. LAGGING INDICATORS

Leading indicators GUIDE us. They give us a glimpse into the future and help us see where

we need to make adjustments.

Lagging indicators REPORT the results. They let us know where we ended up. They are

driven by our leading indicators.


TARGETS


TARGETS

A handful of goals/results that we set and strive to achieve over a period of time

Often longer-term and sometimes strategic in nature

Always Lagging Indicators


EXAMPLES


CRITICAL NUMBERS


CRITICAL #S

Metrics designed to drive a company priority or your Main Thing that will be highlighted for a specific period of time for the purpose of making an improvement in the company.

Should be Leading Indicators


2 CRITICAL NUMBERS ENSURE BALANCE

Critical Number #1•What is the best leading indicator to measure progress on your Main Thing?

Critical Number #2•What might slip through the cracks if you were too focused on your Critical #1?

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CRITICAL NUMBERS EXAMPLE

• Main Thing: Explode Growth!• Critical #1: “New Sales

Revenue” (a process KPI) • What might slip through the

cracks if we focus too heavily on sales?

• Critical #2 might be “Client Retention” (a people-focused KPI)


WORK ON KPIs


KPIS: KEY PERFORMANCE INDICATORS

Ongoing metrics that track and measure the health of the

company over time.

Examples: On time delivery, Client Health

Index, Net Promoter Score, Quality

C a n b e L e a d i n g o r L a g g i n g I n d i c a t o r s


DETERMINE WHAT TO MEASURE

• What are the key indicators that tell us if our business is healthy?

• What metrics do we look at to know if our company (or department) had a good week?

• Is there a specific problem we need to solve?

• Do we have KPIs to measure our Critical Numbers?

S T E P 1

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KPI EXAMPLES

EmployeeTurnoverStrengths Survey IndexEmployee NPS

CustomerNPS - Net Promoter ScoreClient Health Index

ShareholdersPrice/share# Months cash runway

Make / Buy/ Deliver• Quality / Bugs• Supplier mistakes• On time delivery

Sell• Sales actual vs plan• # Qualified Leads

Records (Finance)• A/R Days• Cashflow

Relationships/People Productivity/Process


SET RED-YELLOW-GREENSUCCESS CRITERIAHow will you know if you’ve achieved success?Set Success Criteria for each KPI:Green: Success: What’s our goal?

Red: Unacceptable: When do we have a real problem?

Yellow: Between Red & Green: Our warning sign

SuperGreen: Time to Celebrate

What will you do if the KPI is Yellow or Red? Make a plan now.

S T E P 2

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SET DATA STANDARDS

Your data is only as good as what you enter, so be sure you are all entering it the same way!

Set data standards for each KPI:Make sure we are all measuring the

same wayAgreement on a quarterly,

monthly or weekly time horizon

Decide on deadline for updating status

S T E P 3

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BEGIN TRACKING YOUR KPIS

• Make sure all the details are entered in Rhythm.

• Begin tracking in your Weekly Meetings.

• Come back after a month or so to review and refine your KPIs.

S T E P 4


REVIEW YOUR KPIS

• Do we have a good mix of leading and lagging indicators?

• Were we blindsided by anything last quarter?

• Are we talking about the right things in our Weekly Meetings?

• Do we have too many KPIs?

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4 STEP PROCESS TO DEVELOP LEADING INDICATORS


EXAMPLE

1. What is your desired result?$X Monthly Revenue

2. How do we get the result we want?What drives revenue? Monthly Revenue is caused by closing deals.

How many deals do we have to close to create $x Monthly Revenue? We must close 20 deals.

How many leads do we need to close 20 deals? We close 20% of strong leads, so to close 20 deals, we need 100 strong leads.

How many qualified leads do we need for 100 strong leads? To get 100 strong leads, we need to generate 500 qualified leads.

What’s the criteria for a qualified lead? A prospect who has accepted a meeting and has a budget is a qualified lead.

3. What is the Leading Indicator to Drive Results?KPI = # Qualified Leads every week


AUDIT YOUR KPIS

Are all of these still relevant?

Do they all still provide valuable insight?

If one goes Yellow/Red, should it prompt an action?

If the answer is no, remove or refine it!

R e m e m b e r, l e s s i s m o r e .

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PITFALLS TO AVOID

1. KPIs for KPIs sake…. “not sure who uses this, but we’ve always measured it.”

2. Running the business with all Lagging Indicators…. and thinking you can effect the future

3. Too many KPIs in one category. Limit to 1-3


ASSESS HOW YOU ARE USING YOUR KPIs TODAY

Red-Yellow-Green Your KPIsYou are tracking a result KPI and one or two Leading Indicator KPIs with Red-Yellow-Green success criteria.You are tracking a result KPI and one or two Leading Indicator KPIs.You are mostly tracking result indicator KPIs.You have so many KPIs that they don’t trigger any actions and they are confusing to you and your team.You haven’t defined KPIs yet.

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