Difficulty of Finding the Right KPI

What is KPI?

We all have goals to achieve in a certain period of time. In order to achieve goals, it is better to have some indicator to know that we are on the right track. And KPI (Key Performance Indicator) is an indicator measurement to show whether we are doing good or not. In order to be accurate, KPI needs to be relevant to our goals. If not, there will be a situation where KPI was well achieved but still far away from reaching our goal.

Setting the right KPI is difficult

In reality, setting the right KPI is quite difficult. The reason is that once we set the KPI, members tend to focus on achieving those KPIs instead of achieving ultimate goals. It would be really simple if the person's KPI is directly related to the person's goal. But in many cases there are uncertainties in between which makes it difficult to evaluate whether KPI is really meaningful or not.

If there is a sales goal and metrics that 60% of trial users will purchase the product, the number of trial users would be a good KPI. Because, we can assume the sales number by monitoring the number of trial users.

For B to B business, we will have meetings with potential customers to let them know about our product and eventually we would want those potential customers to purchase our product. Since holding meetings with potential customers is an easy indicator to track, and since those people having a lot of meetings with potential customers looks busy, we tend to evaluate such a person as working hard. But attending a meeting just because the potential customer is interested in our product sometimes might not connect to our sales goal. It would be better to prioritize having more discussion with the potential customers who already decided to adopt the solution and deciding which product will fit their company more. In this case, it would be better to set KPI for not only the number of meetings but also the conversion rate.

In order to have a decent conversion rate, we need to explore indicators to distinguish which kind of potential customers would have a better conversion rate. For this particular example, there is already an indicator which we call BANT. Checking whether the customer already has the Budget, Authority, Needs and Timeline would be the one who will have a higher conversion rate.

Wondering on webinars

For marketing events, we will hold seminars or webinars in order to let potential leads understand more about our product. Because of COVID-19, like many other companies, we tried holding webinars. For webinars, since people can easily join and leave, it is difficult to judge who the real participants are. Also, thanks to the internet, people can join from anywhere so the participants might be people from abroad. Therefore, even though the number of participants attended can be the indicator to know the size of the webinar, making that number as KPI might not be relevant. Furthermore, for events like webinars which we have never tried before, it is difficult to assume the outcome. This makes it difficult to find indicators which can measure the effectiveness. For those new things, I believe we will need to try several times in order to find the pattern and trend. Eventually, I believe we can find some relevant way to define its success.

Importance to be able to see in real-time

I believe KPI is like a speed meter on a car. A speed meter can help you predict the time you will reach the destination. And, if you would like to reach the destination earlier, you will have to speed up the car. But, if you are not in a rush and would like to enjoy the outside view, maybe you will slow down the car.

KPI is also an indicator to predict the result. You will need to think about some additional plan if the value of KPI is not good. On the other hand, when the KPI is good, you can start to think about next term's KPI. In this meaning, like a speed meter, I believe KPI should be calculated in real-time, and we should be able to check it any time. If it takes a lot of effort to check the KPI, it might be too late to do things by the time you finally find out that the value of KPI was not good.

Salesforce as a KPI manager

In our company, we use Salesforce to manage our sales status. On our sales dashboard, we have charts of KPIs along with charts of goals. Since our business is based on annual contracts which usually start at the beginning of each month, numbers such as ARR (Annual Recurring Revenue) usually change by month. However, many other KPIs such as number of trial users, number of Sales Accepted Leads and number of Marketing Qualified Leads change constantly. By looking at the changing numbers, we can see whether we are doing well or not. Plus, we would also check the growth rate which is also a good indicator to see whether we have decent growth to reach our goal.

Since all the data is calculated in real-time, although I need to push the refresh button to update the dashboard data, I am able to see the situation anytime. Of course, we must input the data manually in order to calculate. But for that part, our team members are doing great on registering data as the sales process progresses. I think knowing the current status by looking at the numbers leads us to precise decision making, rather than blindly guessing the situation.

Last year, when COVID-19 started, there were times when many projects were postponed. However, after a while, we could see that businesses were getting back to normal. During those times, KPI was able to let us tell how bad the situation is and how much better it is getting. Understanding the situation by looking at the number really helps.

Recently, I have created a chart to see how our company is growing by making a chart by year, and it is quite interesting to see how our company has grown so far. I hope this growth continues throughout the future.