KPI Overload: The Negative Effects of Tracking Too Many Metrics
Intro
When it comes to KPI's (Key Performance Indicators) in proptech, it can be easy to get carried away and track too many metrics. This can be a huge detriment to your business, as too much information can lead to "KPI overload" – an overwhelming amount of data that may not be as useful as you think. In this blog post, we'll explore the negative effects of tracking too many KPI's, and discuss what the Goldilocks number is for the right number of KPI's in your business.
The Dangers of Having Too Many KPI's
In the same way that multitasking can exhaust us and spread us too thin, having too many key performance indicators (KPIs) can have negative effects on a business.
In fact, many organisations have 8-10 KPIs in different departments, this can easily lead to 50 or even 100 KPIs overall. This phenomenon is what we call "KPI overload," and it can make it difficult to truly understand what is driving your business forward. As the saying goes, "K.I.S.S. Keep it simple, stupid!"
When there are too many KPIs to track, they become redundant and difficult to interpret. This creates a situation where there is too much reading between the lines to understand what the metrics are measuring. It's essential to focus on the most important business activities that drive profits and cash flow. This will help you develop a set of true key performance indicators, which typically should consist of only 6-8 numbers that truly drive the bottom line.
With too many KPIs to track, you can end up wasting time and energy on irrelevant metrics. Instead, simplify your analysis and determine the few KPIs that really matter for your business. By doing this, you can avoid KPI overload and ensure that you are measuring the right things to drive success.
The Goldilocks Number of KPI's
When selecting your KPIs, remember to limit their number. Tracking too many KPIs can be overwhelming and make it difficult to focus on what matters most. Aim for the "Goldilocks number" - not too few and not too many.
One of the very best businesses I ever had to fortune to work with was Romans, when dealing with the MD there he was very clear that whilst they monitored all manner of stats the need for a few tight KPI's was a necessity, he needed to be able to run his eye over the branch report at top level and instantly see which ones were essentially Red, Amber or Green in terms of performance. From there he could prioritise and jump down into the stats for micro management and pick up directly with the branch managers.
I'd actually go further than what was mentioned above, if you can bring it down to the magic number, the power of three then that's the best possible chance you have of communicating effectively. Us sales people are simple creatures and if you inadvertently make things too complicated you'll at best lose the power to motivate and at worst utterly confuse us.
How to Prioritise Your KPI's
Its irrelevant whether you're a proptech business or estate agent, tracking your key performance indicators (KPIs) can help you stay on top of your business and identify areas that need improvement. But with so many metrics to choose from, how do you prioritize your KPIs?
First, define your purpose and objectives. What do you want to achieve with your business? Are you looking to increase sales, is it all about improving customer satisfaction, or is it about getting more efficient? Once you have a clear idea of your goals, you can choose the right KPIs to track.
It's important to regularly review and update your KPIs to ensure they remain relevant to your business. Make sure to communicate your KPIs to your team and visualise them in a way that's easy to understand.
When selecting your KPIs, use the SMART criteria: specific, measurable, achievable, relevant, and time-bound. You should also consider the quality, accuracy, and reliability of your data sources and methods, that's likely to be eyeballs on your CRM and other key proptech systems.
The Benefits of Having the Right Number of KPI's
Once you have identified the right KPIs for your business, you will begin to see a range of benefits that come with measuring and tracking them. Knowing and measuring the right KPIs can help a company achieve results faster and with greater accuracy.
One key benefit of having the right number of KPIs is that it allows a company to focus on what really matters. Rather than getting bogged down in dozens of different metrics, teams can concentrate their efforts on the handful that will have the most significant impact on their property or estate agents' performance. This streamlined approach can lead to faster progress and better outcomes.
Additionally, having the right KPIs can help ensure leadership accountability. By selecting metrics that are directly tied to key business objectives, executives can be held accountable for the outcomes they are driving. Ultimately its all about transparency and barring me in a mankini transparency is always a good thing.
I quoted a fantastic agency above but let me show you a brilliant example of who i think has totally nailed this from the proptech side of the business. My good friend and only the second biggest show off in the industry behind me Kristjan Byfield has I believe totally nailed it. When he setup The Depositary he had the dream, sorry the aspiration to be able to return deposits through the platform down to 10 days. If you were to look at it compared to the national average you'd say that was pie in sky thinking but read what he had to say just last week.
"Our latest toy over at The Depositary - a live data display of total tenancies processed to date and the average time for our agent community to return a deposit over the last 30 days.
11 day returns is an incredible statistic approximately 50% faster than the national average (21)."
WHAT A STORY ! So by having a ruthless focus on two KPI's the number of tenancies and then the days to return he's been able to achieve this goal. Furthermore do you for one minute think that anyone in that business isn't thinking 24/7/350 (he loses 15 days a year after nights out with me 🤣) what can they be doing to impact these two KPI's.
I'd say that takes it up a notch from not just Key Performance Indicators to Killer Performance Indicators !!
Furthermore gamifying it helps them stay on top of those stats and of course is an amazing marketing tool as proven by the fact he doesn't even know I'm writing about this, and if I know one thing this will get eyeballs as any article I mention mankini's in always does.
If I was to complete his power of three magic number of KPI's i'd probably add in his Net Promoter Score for The Depositary too, given that they're the highest we've got on our platform which shows they've got amazing after care too.
Ultimately, the benefits of having the right number of KPIs go beyond simple metrics and can help drive real results whatever your business. By prioritizing the metrics that matter most and holding leadership accountable for their outcomes, businesses can achieve greater success and continue to improve over time. Feel free to jump on a session with us and we’ll take a hatchet to what you’re currently using and set you free from KPI clutter.
To book your complimentary review session with Kerfuffle visit – https://calendly.com/d/v3xz-n2r6/book-supplier-review-mot
