The Wow Company’s Paul Bulpitt ran a brilliant session on setting targets at our 2019 London boot camp. We talked to him about how key performance indicators (KPIs) can help to ease the pressure of early-stage entrepreneurship.
KPIs are measurable values that help a business to understand how effectively they are achieving their goals. They can keep projects on track and prevent big goals from feeling overwhelming, by breaking them up into tangible targets. However, it’s important not to see them as the be-all and end-all of your business.
“People hear a lot of talk about dashboards and targets and metrics – it’s overload. There’s a misconception that once you find the right North Star metrics or six magic KPIs, everything will fall into place. In my experience, that’s not the case,” Paul said.
“The empowering thing about KPIs – in a world with such overload – is that you can choose what to focus on. You can ask: ‘what are one to three things that I look at every day, every week and every month?’”
Make your KPIs manageable
Paul recommends prioritising a few manageable KPIs that will help you to work towards your targets on a daily basis.
“I’m always looking forward. Start by asking: ‘what does success look like in a year?’ A lot of businesses will want more customers, but the specifics are different for everyone. For example, you might want 500 customers or customers in seven different London boroughs. Work back from there,” Paul said.
“Once you’ve thought about your success in a year, ask: ‘what does that look like in six months, three months, today? What’s the most important thing you need to focus on?’”
Breaking down your goals into an achievable action each day can help to keep them at the forefront of your mind. Though it can be tempting to set ambitious KPIs, the key to success is this achievability.
As Paul explains, if your goal is to write 50 articles a week, there’s suddenly little chance of writing one article – the goal is too overwhelming. If you had to write five articles a week though, you’d be more likely to give it a go because the KPI feels achievable.
“Five thousand customers may sound daunting, but if you can create a KPI that’s empowering, all you need to do is wake up every morning and phone 10 people.”
Lagging, lead and live indicators
As part of your KPI management process, it can help to sort the metrics into lagging, lead or live indicators. The primary focus of your KPIs should be a mix of your leading and lagging indicators.
A lagging indicator is a measurement quantifying your past performance, often used to further understand trends. A leading indicator is an action that will lead onto something – if one factor changes, then the rest of your business can start to change direction.
“If your goal is to reach a certain turnover or be a million-pound business, the amount of cash in the bank is a lagging indicator. You can’t just ‘do’ a million pounds, so you need to work back from that lagging metric,” Paul said.
“If each client is worth £100,000, I need to meet 10 clients to achieve my goal. If I secure one client every 10 meetings, I need to attend 100 meetings – that’s the leading indicator. Each morning you can think: ‘what can I do this morning to affect that leading indicator?’. It’s way more empowering.”
A live indicator is used to track your current performance. Setting up a simple metrics dashboard and displaying live metrics like footfall or website visitors can be good for team engagement.
The dos and don’ts of KPIs
Being selective when choosing your KPIs will ensure you’re focused and productive.
“Don’t have too many. What seems to work is the fewer the better. I know people that run businesses off two or three bits of key information,” Paul explained.
Make sure the KPIs you choose are aligned with what everyone else is doing in the business. For example, as the founder or CEO, you might have one core metric that you focus on. The sales team and marketing team will each have a metric that affects that. Review any KPIs you set frequently, to check they’re still complementary.
For Paul, the most important part of setting KPIs is to concentrate on areas you’re really passionate about.
“Make sure your KPIs are exciting and engaging. You don’t want to wake up every morning and have this thing hanging over your head. On some level it needs to be fun.”