10 KPI Fails and How to Avoid Them

Robert McLaws
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Woo-hoo! A new year is here and, like many leaders, you’re facing it with new optimism, new learning from the past, a new set of goals, and new KPIs (Key Performance Indicators). You may even have new team members and a new round of funding, which would be pretty sweet.

Fast-forward to next month or the end of the quarter. Not to be a total buzz-kill, but imagine that your team is demoralized and stressed (or even job-hunting) because they missed their targets, your board is cranky and distrustful, and your marketing and sales teams are spending more time blaming each other for KPI misses than actually doing their jobs.

But all is not doom and gloom. In fact, if you think NOW (early in the year and month) about what you can do better when setting, measuring, and reporting KPIs, the more likely you are to experience KPI fails.

Here are some of the most common mistakes companies make when establishing and tracking KPIs. Learn from others and you’ll be crushing your KPIs this year!

1. Having too many of them

Keep them simple and easy to understand. Everyone in your organization should be able to explain what they are. If you are measuring minutia, the time you’ll spend actually working on your business will suffer.

The KPIs you DO have should probably include some of the “old standards” for SaaS companies, like

  • Revenue
  • Retention rate (and net customer retention)
  • Customer churn
  • Renewal rate
  • Customer health measures. (Like human health, this is a super-complicated one and a topic for another day.)

But these five measurements will only tell you part of the overall story. See #2.

2. Having too few of them

Yup. That sounds like a contradiction. The reality is that you can look at a topline number that’s below forecast and have zero idea of why you missed the goal.

You may crash your car, but knowing that it happened because you were texting or because you were driving too fast or too slow is critical to ensuring it doesn’t happen again.

3. Not including time as a component

We have seen time and again (pun intended) that delaying critical hires can have a huge impact on results. You can’t set back the clock, but if you’re missing a couple of key members of your sales and marketing team, start filling those roles NOW..

Take into consideration that the ramp-up period for a new hire is typically 90 days. Late hires can have a dramatic impact on business results, which leads to the next failure (and what you can do about it).

Dragging your feet when you have a team member is underperforming can also have a huge impact on long-term results. No one really likes to deal with the problem performer, but only by facing those challenges head-on and taking fast action can you improve both performance AND morale.

4. Limiting KPI ownership to one or two departments

For example, you will likely need help from an internal HR professional or external recruiter in finding those people noted in #3. If you establish a timeline for hiring that will ultimately be “owned” by all the people in your organization responsible for making it happen, you can stay on top of, monitor, and even incentivize the outcome.

Keep in mind too that training can have a huge impact on results. The faster you can onboard new hires, the better the chance that they’ll hit their quotas.

5. Excluding the KPI owners in setting the goals

Perhaps you’ve already established your full-year forecast and KPIs. But when your team members understand, buy into, and feel comfortable speaking about their concerns about hitting their goals, the more ownership they’ll feel.

6. Using them as punishment tools

You don’t want your team to fear the KPI. You want them to embrace and own results. If sales team members know that the wrath of the Director or VP (or snarky passive-aggressive comments) will reign down on their heads and headsets every time they miss a goal, morale (and maybe even performance) will suffer.

Create a safe space where people can learn from failures, have honest conversations with leadership (see #7) and come to work (even if it’s simply a desk in the bedroom) with a positive attitude.

7. Being unresponsive to KPI concerns

Distinguish between whining and real life issues. Perhaps you have a salesperson who isn’t pulling their weight. Or a marketing team that really IS generating junk leads or not communicating well with the sales team.

Over time, you’ll learn to separate the moaning from the reality and encourage your team members to not only surface issues but propose actionable solutions.

8. Acting like an ostrich

We get it. You love your product or service. But perhaps the market is telling you something about seasonality, market fit, or their own individual business needs that you are choosing to ignore.

If you know that an industry is subject to seasonal ebbs and flows, your forecast and KPIs should be structured around those realities. Know when you’re missing KPIs because of internal factors, but also be aware that external factors (especially in today’s peculiar pandemic economy) are having an impact on your deal flow and results.

9. Not tying tactics to your KPIs

Your goals may look impressive, but the specific and timely actions you’re taking to achieve them are always critical. Are you funding the right programs and people that will deliver results?

You should be constantly looking at how and where you’re spending your sales, marketing, and hiring dollars to ensure that your day-to-day activities are the right ones. That expensive ad campaign may be great for your ego, but if it’s not generating leads and sales, walk away -- quickly!

That said, be patient enough to see the results of your spending. Again, set timelines and make decisions based on those.

10. Having the wrong tracking systems

We’re living in a world today where time-consuming tasks can now be automated. That not only leads to faster reporting at lower costs, it ensures accuracy.

Do a simple audit of the systems you’ll be using this year to track and measure your KPIs, such as financial reporting, timeline management, marketing operations, and (of course) capacity planning. You can even set a KPI for the timing and outcome of that audit!

Of course, you’ll make some of these common mistakes this year. Our goal is to help you minimize them. We hope you’ll look at each of them carefully, discuss with your leadership team, and set a goal this year of getting control of your KPIs!

And yes…we can help you with the capacity planning KPI. Schedule your demo today.

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