Latest / Second Act Business Owner / Measuring Success | The Key Indicators (KPIs, KBIs, and KAIs) of Business
Transcript
- Ep14 === [00:00:00] Lee Gray: Hi, everyone. Welcome to episode 15 of the Second Act Business Owner Podcast. We are so happy that you are here. Do you realize that if the podcast was a person, 15 would be just starting to drive? Isn't that exciting? Just a little fun analogy for you there. Why Goals Need Measures --- Lee Gray: But I wanna talk to you a little bit today about goals. And ~what I wanna s-~ what I want to [00:01:00] say about goals is, wouldn't it be great if we knew how to put things into place so that we can measure the activity that we know we need to produce the goal, to achieve our goal? What we know about goals is that if someone knows the goal, they're likely going to be able ~to,~ to score, right? But you have to know, what is the goal? And then also, how do you measure? ~So in...~ Right now, there happens to be a bunch going on in the United States with soccer, and I think about those soccer players. They know what the goal is. They've got all kinds of things that they do to track, is this right? Is this right? Is this right? And they know that if they do those things consistently and perfectly, they will achieve their goal. They will win the game So I'm gonna be talking to you about three things today. SMART and SMARTY Goals --- Lee Gray: I'm assuming you already have a SMART goal. [00:02:00] Most people know what that is. A SMART goal is a specific, it's measurable, it's something that can be achieved. There's nothing wrong with a stretch goal, but achieve. It's realistic, relevant to the business or to the life or to your second act, and it's, ~uh,~ has a timetable to it. I also think their goals should be really SMARTY goals. The Y at the end meaning why is this goal important? So a really good example of a SMART goal is, ~um,~ sales for 2027 of 1,500,000. That's a great goal. Another ~s- um, ~SMART goal around business could be margin increase of 5% on all orders over $500. That's a very specific measurable. You can measure it. It's specific. It's achievable because we know the business that we're in. Is it relevant? Yes. Profit margin is hugely important to a business. And is it time-sensitive? Yes, I gave it a [00:03:00] time-sensitive. Why is it important? Because without profit, the business doesn't work. So you, you've got your goal. Now what do you do? KPIs KAIs and KBIs Explained --- Lee Gray: We wanna sit down and think about three kinds of indicators. We've got key performance indicators, KPIs, key activity indicators, KAIs, and key behavior indicators, KBIs. ~ What I like for you to do is to sit down and list all of the things that are key activity indic- So a So a K- a, a key activity indicator is the activity.~ the, uh... Example of a receptionist. A, one of the behaviors of a receptionist is to smile and welcome to every single person that comes into the business. Not one in 10, not nine out of 10, every single one. That would have to be a self-measure, but sometimes cultural and behavioral measures are ~self-as-assessing,~ and that,~ that, that perfectly, it~ it makes perfect sense. So you've got, for the business, the business is going to have KPIs, KAIs, and KBIs as well, and each person in the business should have six [00:04:00] measures for their goals. Each department should have six measures for their goals. What we like to have is three KBIs, three KAIs, and three KPIs. Plumbing Business Examples --- Lee Gray: As an illustration, let's talk about a plumbing business. So a key activity indicator for a plumbing business might be that when the person is on site, they've completed their work, one of the things, one of their activities is to ask for a referral or a testimonial. And a KPI, key performance indicator, for a plumber might be something like starting and stopping on time, completing all the projects that they were assigned that day in the workday timeframe. That would be one. You could easily measure that. The other would be ~Getting surveyed, asking the, um,~ asking the customer to give surveys, and ~a-~ having a survey on a scale of one to five to be at least a 4.8. So that would be a great KPI, key performance indicator, that you could [00:05:00] have as a plumber. Now we get into KBI, key behavior indicators, and for plumbers, I think we know, ~you know,~ what they should be maybe. ~Wearing that,~ wearing a belt would be a b- behavior indicator. The other would be, ~uh,~ being on time, having clean apparel, um, having a, a uniform, parking the car where it needs to be parked. Those are all really behavioral things that~ can be ma- can make or break a customer, uh, um...~ can make or break customer satisfaction. Pick Your Top Measures --- Lee Gray: So now that you know the difference between a KPI and a KAI and a KBI, think about for your business, what would be five or six of each that you could list, and then whittle that down to no more than, no more than six, ideally two of each, and those would be your~ g- goal mea-~ measures for your goal,~ for proce-~ for exceeding your goal. And ideally, that's all we're looking for. ~We're looking for... We're gonna, we're gonna...~ We know where the goal is. We know how we're getting measured. We do those things right, we're going to have success. We know that when they're done perfectly, that we're going to be [00:06:00] successful. Quarterly Reviews and 13 Weeks --- Lee Gray: And ideally, ~hmm,~ each quarter, it makes sense to have a look at those measures to make sure~ that nothing is, uh, n-~ that something doesn't need to be tweaked. Occasionally, we may need to change a KBI or a KPI, one or the other. And think about it this way. ~Um, I,~ the reason I like looking at these, and these are on a daily or weekly basis, have you ever wondered why, when people set a goal at the beginning of the year, a New Year's resolution, that it falls off the planet? It's because we think, "Oh, I've got 52 weeks to get that done." But what we wanna do with goals is break them down into, it's a 52-week goal, and we're going to measure it quarterly. We're gonna measure it every 13 weeks, and then we're gonna set goals that are monthly and then daily. So the measures need to roll up into 13 weeks ultimately and then be adjusted every 13 weeks. The seasons change every 13 weeks, and if you think about it, businesses [00:07:00] change every 13 weeks too, so~ so sometimes we need to have s- um-~ Occasionally, the measures need to be adjusted to reflect the seasonality of your business, but there's something about those four seasons in the year that have an impact on KPIs, KIs, and KBIs, so keep that in mind. Build a Simple Dashboard --- Lee Gray: I~ Okay,~ We have the identified KPIs, KBIs, KAIs, so how often do we look at them? How often... How do we even look at them? That's a system that you'll have to work through in your business, but in my opinion, simple is better. The idea of the, ~the ~dashboard, because that's what you've done, you've created a dashboard that's going to tell you when you're getting low on gas or whatever. You're not gonna wait until you're out. These numbers, when reviewed every day, if they're a daily KPI, they need to be looked at daily. If they can be weekly, then weekly's okay, too. But I like the idea of you can put your KPIs in your phone and track them. Track Weekly Stay Accountable --- Lee Gray: You can have a single s- simple spreadsheet to enter them in, and enter them daily, and then they [00:08:00] cumulate weekly, but they need to be reviewed at least once a week with whoever your direct report is. And if you don't have a direct report, find someone else who can hold you accountable to those KPIs. It's really important that they're not just developed and forgotten. They have to be developed and tracked. Tracked and tracked. Tracked weekly, tracked daily. think it makes sense to set a goal today to list out your KPIs, KBIs, and KPIS. You can do it, and it's just one more thing that you can do to ~s- ~take ~an,~ a step into your second act, no matter where you are in your second act. Wrap Up and Free Assessment --- Lee Gray: I'm Coach Lee with Action Coach Business Coaching, and I tell you what, I have enjoyed having this conversation with you about key performance indicators, behavior indicators, and activity indicators because they are so simple, but when overlooked, they can be the demise of a business, and that's what I feel like expressing And don't forget, we do have an assessment that you're welcome to take any time. Just takes a few [00:09:00] minutes. Based on your answers, you'll get a response where you are in your second act. It's sometimes very nice to know, hey, I'm making some progress. Take the assessment, doesn't cost you anything, and we look forward to hearing from you.