Speaker 1: Hey, Chandler Bolt here and in this video I want to talk to you about how to set effective KPIs with your team and with your employees that drive performance. Now first off, what are KPIs? So KPIs stands for Key Performance Indicators and it's really meant to be a key driver or indicator of performance per role, per person in your company. Now I find that there's two main mistakes that most entrepreneurs make with KPIs. Number one is they just don't have them, so they're not measuring them and not everyone has a number in their organization. Or number two, they focus way too much on results, not on what we would call leading indicators. So there's a great book called Four Disciplines of Execution. It breaks down leading versus lagging indicators and that's what I want to kind of talk about in this first part. So we're going to talk about first kind of the fundamental philosophy of KPIs, then we'll transition into how do you set them per role, per person in your company. And then number three, we're going to talk about accountability rhythms and how frequently should you have them reported and how do you hold people accountable to those KPIs. So first things first, leading versus lagging indicators or KPIs. Now there's a lot of misinformation around KPIs and quite frankly, most people are confused when they go to set them. So let's just break down one simple example. So this is a sales team, right? So a lagging indicator for sales might be revenue. Now the problem that most entrepreneurs, myself included, struggle with and what I've struggled with in the past is really looking at that revenue indicator and ignoring all the numbers that help determine how you get there, right? That's a lagging indicator versus the leading indicator is focusing on all the, what we call at self-publishing school, control the controllables, right? So I've got another video called Control the Controllables, which talks about that, but it's really about breaking down what are the micro things that you can control that lead up to the lagging indicator. So we're talking about for sales to continue with that example. How many appointments were completed? How many outbound calls were made? What was the close rate? What's the average order value? Things like that. So let's go into part two. How do you figure out what KPIs people should have for each role? Well, the first thing that I would encourage you to do is think about what are the key, we're talking five, maybe eight critical drivers, as Keith Cunningham calls them, in your business. And how can you make sure that people in your business each own a number? So everybody owns a number. One of the things that we do at self-publishing school is we have these job scorecards. And I also got another video on that. But we've got these job scorecards where everyone's responsible for a number, right? Now also in addition to that, we have our P&L and everyone has a number on the P&L. So the profit and loss statement. So the revenue line items, everyone owns a revenue line item, or I guess I should say every line item is owned by someone. And then also on our P&L, every line item is owned by someone. So now we know if we missed a certain number, we know who's accountable for hitting that number, right? So that's kind of the overarching principle and it's kind of hard to improve your P&L, your profitability, if you don't have people owning those numbers. And there's no better way than to write them in on the actual profit and loss statement itself. Now let's talk about how do you kind of figure them out per role? Well, there's going to be certain things like, so for example, obviously the sales team, For customer success, it might be net promoter score. For your financial controller, it might be accounts receivable. What are the key numbers that if that person does well in their role should go up? And I know sometimes the hesitancy or the doubt is, oh, we can't put a number on this. For just about everything, you can put a number and you can have some kind of measure of success. So for our customer success team, it might also be a customer response time. So how quickly are we getting back to our customers? There's net promoter score. There's how much are we paying for leads? How much are we paying? What's our cost to acquire a customer? That's what the marketing team reports to. How much cash do we have in the bank? That's what the financial controller reports to, right? What was our operating expenses? That's also the ops manager or the financial controller. That's what they report to, right? So hopefully you're kind of starting to get a picture of who owns what and how you split out those KPIs throughout the organization. Now, the third piece is around accountability rhythms and how frequently do you report on these and really how do you hold people accountable to them? So we've got dashboards and scoreboards kind of everywhere at Self-Publishing School. You go anywhere and you'll see them. So we have a daily huddle. We have weekly meetings. We have all those things. And I've got another video that talks about meeting rhythms where you can kind of learn all about that. But depending on the number, we're either going to report it daily, weekly, or monthly, right? But either way, there's going to be a name attached to that number so they know that they are accountable for that number. And then we're going to report frequently. So on our daily huddle, we have a series of numbers that we've deemed are kind of the most important numbers for our business. And pretty much everyone that participates in the daily huddle has a number that they report. Now, we break it down. Now, this is something I've learned from Keith Cunningham. This is a really great principle, which he says there's a big difference between goals and standards. Goals are what you hope to achieve. Standards are the minimum that you accept, right? So we kind of adopted that inside Self-Publishing School. And we have standards for everything that we do. So everything is broken down into green or red. And so you can pretty instantly see whether or not you had what we call a green day or a red day. So I'll give you an example. We're trying to hit sales goals of about 500K a month. That's what we've been doing recently. So we know that we need to hit about $18,000 per day in sales. So if we have a day where we have less than $18,000 in sales, that's what we would call a red day. And if we have a day that's higher than that, that's a green day, right? So we know that we need to have X number of green days in a row. And that's how we're going to stay on track for our longer term goals. So I highly recommend the book, Four Disciplines of Execution. It talks about kind of the fundamentals of a scoreboard. A good scoreboard, you always know what's the score. You always know if you're winning or losing. This is a big adaptation that we made to ours. That's hence the green, red, but then also the trend line where you should be versus where you are. I try to have that on all our scoreboards that we have. And then instantly, you need to know, are we winning or are we losing? Like I said. So just kind of that litmus test. Can I just quickly look at it if it's not even my number and know whether or not you had a good day, a good week, or a good month? So that's KPIs. That's kind of the fundamentals behind them and why they're important. Secondly, how you create them and assign them per role. And then the accountability rhythms that you report on daily, weekly, monthly, whatever you choose to do there. I hope that you enjoyed this video. Comment below. Let me know what you think. What are the toughest KPIs that you had to come up with in your company? Or how have you used this exercise to kind of drill down and see huge improvements in the performance of your employees or in the performance of your teammates? So thank you so much for watching this video and I'll see you in the next one.