Have you identified your North Star KPI?
Ancient explorers may have been lost in unfamiliar areas, but they knew if they could see the North Star they'd be able to figure out where they were going.
And with all the different ways they learned to navigate, the North Star was always available when they needed it.
When it comes to your business, you need to have a North Star KPI (Key Performance Indicator). That means you need to identify one metric you can monitor which will both drive the right behaviors and indicate performance.
Do you have one number your entire team can rally behind?
In a retail environment, this might be customer interactions. In an online setting, it might be the net promotor score. For one of our past clients, it was sample requests.
What's the number every member of the team can understand and contribute to driving?
Here are 3 key criteria for your North Star KPI.
1. Your KPI drives growth.
This might seem obvious, but the first criteria when you're identifying your North Star KPI is that it drives growth. The “P” in KPI stands for performance, after all!
What that doesn't mean, though, is that you should just pick your top-line revenue number as your North Star KPI.
Instead, pick a metric that is aligned with your strategic initiatives and desired areas of growth.
For example, we had one client that realized its past success had been completely dependent on the market. When the market was up, they did great! When the market was down, their performance fell.
As they tried to figure out why this was happening, they realized they hadn't really been generating any new customers. Instead, they'd been relying on orders from existing customers, who were all sensitive to market conditions.
Since they discovered this connection, the company decided to track net new accounts as their North Star KPI. They continued to monitor a lot of other statistics, but the primary number they focused on was new accounts. They knew if they could develop a pipeline and continue to bring in new business, they'd have growth that was less dependent on market fluctuations.
What is inhibiting your growth? In what key areas do you need to see growth? What strategic initiatives are you implementing? What new offerings is your future depending on? Consider all of these factors as you work to identify your North Star KPI.
2. You're prepared for the results.
When you establish a North Star KPI, you need to be prepared for the consequences.
What behaviors would this KPI drive? What actions would different teams take? How might their behavior change from what they're doing now? Does your culture support these changes?
Do you even have the right people and teams in place to support working toward this KPI?
We had a client that, though a combination of compensation and reporting, motivated the entire sales team to drive complex engagements. They then developed a backlog of complex engagements and the implementation team fell months behind. This damaged their reputation in the market and made it difficult for salespeople to sell.
Look ahead at the potential results if the team were to meet or exceed your expectations. Are you prepared? Are you even set up for them to work toward the KPI?
In the story I shared in the previous point, the client quickly realized their team structure was driving the wrong behaviors and couldn't support their desired results. Salespeople were responsible for managing the accounts they brought in, which involved a lot of detailed pricing requests and busywork. Senior salespeople were overwhelmed, functioning as full-time account managers. Even new hires were assigned a large number of existing accounts to manage. Even if they could find the time, if they brought in a lot of new accounts, they wouldn't be able to manage them effectively.
So as they set their North Star KPI of net new accounts, they adjusted their processes. They removed some of the most time-consuming busywork from the sales team, and at the same time, provided sales assistants to their top performers. This freed their salespeople up to actually sell!
3. Everyone can contribute.
When it comes to your overall key performance indicators, you should be tracking many things. Each department should have a set of relevant KPIs to drive their behavior and monitor performance.
But when it comes to your North Star KPI, make sure everyone can understand their contribution.
Let's go back to the example I've been using throughout this post. If you are driving net new accounts, how do other departments contribute?
Is your implementation team prepared to onboard more new accounts? Are they currently tracking how long it takes to get new accounts set up? What are their processes for ensuring a successful implementation so you don't lose customers before they even get started?
What about customer service? As you track net new accounts, they are essential to making sure you keep your existing accounts. They need to understand the unique concerns new customers might have. They may need to develop a process for quickly learning about new accounts.
Let's look at marketing. If sales hasn't been bringing in new accounts, you may not be well known in your market. What could marketing do to drive your name ID and brand recognition in the marketplace? They may need to implement new initiatives and adjust their current strategy. Marketing and sales alignment is key to achieving any sales growth initiative.
What about IT and business analytics? They may need to adjust current systems and reports. They can help you both to improve your new client acquisition processes and to develop the reports you need to track performance.
Consider how all of your different departments can contribute to the KPI. And if they can't, it might not be your real North Star.
So what's your North Star KPI?
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