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How Updating Your KPIs Can Translate to Higher Revenue

How Updating Your KPIs Can Translate to Higher Revenue

Many marketing and sales departments live and die by their key performance indicators (KPIs). Often tracked in real time, these metrics indicate whether individual employees, teams, and departments are on target for doing their part to meet the organization’s larger revenue goals – except when they don’t.

That is, it sometimes happens that a team meets all its KPIs all year and revenue doesn’t improve as projected.

When that’s the case, it’s a signal that the organization is tracking the wrong KPIs – that the metrics they’re tracking aren’t actually “key,” meaning they aren’t leading indicators of bottom-line performance.

In some ways, though, this can be a welcome discovery: “wrong” KPIs are also a sign that the organization can grow revenue by refocusing existing energy rather than making major external investments.

Here’s an overview of how to reexamine and update your organization’s KPIs to make sure they translate to the growth you’ve budgeted for.

Case Study: The Insurance Aggregator with Soaring KPIs and Ho-Hum Growth

Before I get into how to fix improper KPIs, let’s take a quick look at how this problem might  manifest in the real world.

An insurance aggregator had identified two big growth opportunities: 

  1. By improving its SEO, it could drive lots of prospects to its site who could start its online application and become paying customers. 
  2. By adding to its stable of carrier partners, it could meet the needs of more types of customers and therefore sell more policies.

The company invested heavily in SEO, partnership growth, and IT (to incorporate new carrier questions into its online app). It signed new partners and saw explosive organic traffic growth. But those things weren’t translating to the revenue growth it had budgeted for.

The problem? Its online application was getting ever more cumbersome. Every carrier required the aggregator to add new questions. Site visitors arrived at a sleek, modern landing page only to be thrown into an outdated, extremely long application.

The solution: The company started tracking completion rates, which were plummeting even as other KPIs soared. The company recoded its application to be modular, smarter, and more responsive to user needs. Lo and behold, completion time dropped and completion rates improved dramatically, meaning everyone’s work suddenly yielded much bigger payoffs.

How to Rethink KPIs: Refining the Top-Down Approach

So what’s an organization to do when it notices that growth in its KPIs isn’t translating to the bottom-line revenue growth it needs?

I recommend a top-down approach that makes room for external input and ongoing refinement. Here’s what that might look like:

  • Executives define big-picture values and guiding principles – two to three things to focus on as an organization. For example, lead the industry in customer experience.
  • Leaders at the next level translate this vision to a set of business goals. For example, decrease wait time on chats and phone calls, resolve support tickets in a set period, and increase NPS.
  • Managers, data scientists, and reporting teams determine what daily behaviors (possibly assisted by technology) have to happen to achieve those goals – as well as how to measure those behaviors. For example, a customer service manager may realize their reps need easy access to 360-degree customer data to resolve phone questions faster.

Organizations can improve the outcomes of this exercise by adding a third-party perspective to the mix. While business leaders have intimate knowledge of their business capabilities, customers, and capacity for implementing various changes, a third party brings insight about what’s worked elsewhere and how to implement tools and technology to make measurement and insight possible.

Incorporating that third-party perspective can prevent a trial-and-error process of updating KPIs, thus saving the organization time and money.

Iteratively Improving with Automation and AI

The reality for most organizations is that the right KPIs will change over time. Today, sales numbers may be tied to outbound phone calls. But as more phone-reluctant Millennials and Gen Zers enter buying roles, that could change. 

In the shorter term, Google algorithm updates or a new phone size could drastically affect how various marketing efforts perform.

Part of the work of updating KPIs, then, should be implementing technology with AI capabilities that can learn from performance data under changing conditions. 

Salesforce, for example, has AI features (called Einstein) that can surface trends and make recommendations – e.g., noting that when salespeople go two weeks without interacting with a customer, their probability of selling to them drops by 25 percent.

It can then generate pop-up reminders when a salesperson hasn’t had any customer contact for, say, nine days. As an organization gathers knowledge like this, it can update its KPIs accordingly. See Figure 1 for an example of what this looks like in Salesforce.

Figure 1: Salesforce’s Einstein AI recommends the next best action for an account (source).

Another consideration: as an organization updates and refines KPIs, it’s also important that stakeholders have real-time visibility into the numbers that matter for them – individual, team, departmental, regional, or company-wide performance. Without this, it’s possible to get to the end of the year and not realize that your KPIs are out of date (i.e., no longer leading indicators of performance).

Visibility happens with the right business intelligence tools and technology – AI, predictive analytics, next best actions, etc. – fuel well-crafted dashboards.

Creating the right dashboards with the right information for the right stakeholders is key to staying in alignment: an individual salesperson only needs to see their own performance; the manager can see (and be responsible for) the teams. And it’s up to higher-level executives to make sure the company’s hitting large-scale revenue numbers – and taking action if they’re not.

When Looking for Untapped Growth Opportunities, Check Your KPIs

Even though KPIs are primary performance metrics in many organizations, it’s rare that companies revisit them with any regularity.

If your organization is looking for ways to improve revenue with the resources you currently have, it may be time to reexamine your KPIs to ensure that your team members are focusing their energy where it will have the most impact. To start the conversation about what this process might look like, get in touch. We’d love to help you find the right KPIs for where you are today and figure out systems that can ensure you continue to measure the right metrics as your industry and organization evolve.

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