Let’s start with a question: how do you measure your success?
Is it strong financial performance, satisfied customers, positive and sustainable growth? However you determine your success, we can all agree you need a clear set of metrics that both reflect those commercial objectives and help you make informed business decisions going forward.
In our blog E is for Evaluation and Analytics, we explored the importance of setting, tracking and reporting on data about your audience’s behaviour and your business performance. Having this insight is essential to a healthy business, but what happens when KPIs turn killer – and actually damages your business growth?
Yes, you can have killer KPIs (and yes, we know this term sounds like a rubbish name for a B2B horror film).
It’s understandable how KPIs can become a danger to businesses. Today, we have access to more data points than ever before. But it can be like choice overload in a supermarket – it’s hard to know which are the ones that matter. The potential to cherry pick metrics that look good, but don’t really reflect how a business is performing, is huge.
Not only that, but the threat of oversimplification looms large. KPIs aren’t black-and-white facts. They’re indicators (the clue’s in the name), something that shows what a situation is like or how it’s changing. They’re fluid, nuanced, and evolving – a living picture of your business performance, not a static truth. And yet there is a tendency to strip that complexity down and instead focus with myopic intensity on one or two elements.
What happens when KPIs turn killer?
So yes, KPIs are essential. They’re your polestar, your guiding principles. But when you hyper-focus on them, they can become destructive. Don’t believe us? We show you three of the most common KPIs that can do more harm than good if you get them wrong:
1. Overall Campaign KPI
Your topline KPIs focus on the overall success and financial impact of your campaign, relative to your investment into the campaign itself. With a bird’s eye view, you can find out what’s working and what isn’t, turning elements up, down or even off.
Turns killer when you make your target too generic and hide important details. A low overall conversion rate might be caused by one specific area that’s underperforming (like your landing page). If you’re consumed with the bigger picture, you may lose sight of these small details.
At the other end of the spectrum, hyper-fixation on a single overarching number could incentivise teams to “play the game” rather than focus on genuine improvement. Think aggressive sales targets that lead to unethical behaviour as employees trying to smash them, or productivity incentives that mean employees feel forced to compromise their health and wellbeing in order to meet them (see Amazon’s infamous “time off task” story).
2. Number of customers acquired
Surely getting more customers can only be a good thing? Not quite.
Turns killer when you put all your efforts into getting new customers, without considering whether they’re the right ones for your business. Blindly chasing quantity over quality could translate into poor retention and a high churn rate – neither of which will be good for business growth.
Not only that, but a single-minded drive to get more customers shouldn’t come at the expense of looking after your existing ones. These long-term, solid customer relationships are key to success. If all your energies are channelled into acquiring new customers, your existing ones could lose the love (and therefore the loyalty).
3. Cost of customers acquired
Your customer acquisition cost measures the amount of money it would take to convert a potential lead into a customer. Quite rightly, it’s often considered a good focal point for business growth – for obvious reasons.
Turns killer when the cost is too high when compared to a customer’s lifetime value. If you’re sinking vast quantities of money into whizzy campaigns that aren’t translating into a profitable income during their time with you, you’re just going to be losing money.
There’s a common thread to these killer KPIs: they reduce performance to a single number, one measurement that apparently declares whether your business is doing well or not. But business success is multidimensional, and as Goodhart’s law reminds us:
“When a measure becomes a target, it ceases to be a good measure.”
You can hit sales targets by slashing prices, or meet profit goals by cutting corners – but neither equals sustainable growth. Just a rather nasty atmosphere where everyone is frantically chasing those figures.
How to kill off your killer KPIs.
KPIs are powerful tools, but only when they’re used wisely. Avoid tunnel vision – instead of obsessing over one metric, build a balanced scorecard that reflects your business’ bigger picture. Combine quantitative data with qualitative insights and don’t just ask, “Did we hit the number?” but “Did we achieve the right outcome in the right way?”
Because the real killer isn’t the KPI itself – it’s how you use it.
At Golley Slater, we can make KPIs work to your advantage.
Killer KPIs be gone! Our team of experts are ace at helping you set a balanced set of objectives and goals that reflect your business’ growth trajectory, plus measure how well you’re doing against them.
We’re a friendly bunch, so drop us a note today.
