KPI’s are supposed to measure the success of your business, but beware! There is a saying… “What gets measured gets done!” That warning should make it clear to you that a badly considered measurement of success will lead to unforeseen behaviours that can be destructive to your business.
The challenge of KPI’s is that there is a wealth of recommended KPI’s out there from all manner of companies, organisations or that bloke down the pub! The caution of “What gets measured gets done” is that people want to be successful, so they will make sure they make their KPI! “Well, that’s what I wanted”, I hear you all say; the problem is that to make that KPI, they may undermine other areas of the business. If you have a pure Sales KPI, do your sales team start to panic and phone everyone towards month end to make their target? Is that of benefit to a long term relationship with your customers? It all depends on how aggressive the targets are, but your sales KPI’s point is to show sales volume, not to risk future business by potentially alienating customers.