How to Set Realistic Performance Metrics for Teams

One of the biggest mistakes I see is treating metrics as KPIs when they’re really just numbers with no context. If you can’t compare a metric to something meaningful, it’s not a Key Performance Indicator—it’s just noise. 🚫 “Our conversion rate is 2.3%.” 🚫 “Our average order value is $85.” Ok… but compared to what? 🤷♂️ KPIs only work if they measure against: ✅ Historical performance – Are we improving over time? ✅ Industry benchmarks – How do we stack up against competitors? ✅ Goals & expectations – Are we meeting or exceeding targets? If you’re struggling to set KPIs, here are three practical ways to establish meaningful comparisons: 1️⃣ Back of Napkin Estimate (The Quick & Dirty Approach) 📌 What It Is: Using past data, experience, and intuition to create a reasonable target. 📌 How to Do It: 🔹 Look at historical performance for the same time last year/month. 🔹 Factor in external influences (seasonality, trends, promotions). 🔹 Use industry benchmarks if available. 📌 Why It Works: It’s fast, and even a rough target is better than no target at all. Example: A retail eCommerce store sees that last year’s Black Friday conversion rate was 4.2%. Given new promotions and increased ad spend, a reasonable KPI might be 4.5%-5%. 2️⃣ Bracketing (The Logical Process of Elimination) 📌 What It Is: Working with your team to determine what’s way too low, what’s way too high, and narrowing in. 📌 How to Do It: 🔹 Ask: “What’s an unacceptably low number?” → This is your floor. 🔹 Ask: “What’s a ridiculously high number?” → This is your ceiling. 🔹 Keep refining until you land on a reasonable target KPI and a stretch goal. 📌 Why It Works: Helps teams align on realistic vs. aspirational goals. Example: A startup wants to set a KPI for customer acquisition cost (CAC). 🚫 $5 CAC is unrealistic—it’s way too low for their industry. 🚫 $500 CAC is unsustainable—it would kill profitability. ✅ Through discussion, the team brackets down to a realistic $80 target CAC, with $60 as a stretch goal. 3️⃣ Pick a Number & Adjust Later (When No Data Exists) 📌 What It Is: When you have zero historical data or benchmarks, just pick a number and adjust later. 📌 How to Do It: 🔹 Choose a starting KPI that seems reasonable. 🔹 Track performance for a few weeks/months. 🔹 Adjust the KPI based on real-world data. 📌 Why It Works: A bad KPI is still better than no KPI. You can refine over time. Example: A brand-new DTC skincare brand is launching its first paid ads. No data, no benchmarks. 🔹 They set an initial target of a 2% conversion rate based on general eCommerce benchmarks. 🔹 After 3 months, data shows they’re consistently at 2.8%—so they adjust their KPI to 3% as a stretch goal. Final Thought Too many businesses treat metrics as KPIs, expecting them to magically drive decisions. But a KPI without comparison and context is just a number. How do you set KPIs in your business? Drop your approach below! 👇 #Data #KPI #BusinessMetrics #Analytics #DecisionMaking

I lost $243,000 to due tracking the wrong metrics as COO of an 8-figure agency. Here's why... I was focused on the “typical” lagging metrics: - Revenue - Profit - Churn These are important, but tell you what already happened - by then it's too late to fix anything. It's like driving your car while only looking in the rearview mirror… Here's what smart agency owners track instead: Performance KPIs (1-2): - % of Revenue To Target Process KPIs (3-4): - % On Time Delivery - % Revision Rates - % Error Rates - % On Brand Why this works: → Tracking Leading Metrics shows if you'll hit targets BEFORE you miss them → Early detection stops small issues from becoming big issues → Team aligns around metrics that actually drive results How to track: - Daily meetings: Review deliverables, revisions, and errors - Weekly meetings: Daily meeting metrics + performance trends - Monthly reviews: Weekly meeting metrics + traditional lagging metrics The secret? Stop focusing on what already happened. Start measuring what drives future success. This isn't just about better numbers - it's about building an agency that runs like clockwork. What metrics do you think are important to track?

If you can commit to clarity for your team, you'll be amazed at the results. Here’s what my HR team trained supeevisors and revamped our organizational approach and how you can take similar action: 1. Clarify Roles: Ensure everyone understands their responsibilities. Regularly update job descriptions to reflect the current expectations and eliminate ambiguity. (We had impact descriptions made for every employee by their supervisors and trained supervisors on creating them effectively) 2. Create SMART KPIs: Develop Key Performance Indicators that are Specific, Measurable, Achievable, Relevant, and Time-bound. For example, instead of saying, "Improve customer satisfaction," specify, "Increase customer satisfaction scores by 15% within the next quarter." This gives your team a clear target to aim for. 3. Provide Specific Feedback: Regularly offer constructive feedback and openly praise behaviors you want to encourage. This not only reinforces positive actions but also sets a standard for the entire team. 4. Set Clear Expectations: By establishing clear performance metrics, you allow team members to see how their contributions directly impact organizational goals. This clarity reduces confusion and fosters collaboration. 5. Review and Adapt: Implement a system for reviewing KPIs and job descriptions every six months. This ensures they remain relevant and aligned with business objectives. 6. Transform Performance Reviews: Shift to narrative-based evaluations that include not just performance metrics, but also recommendations for development and a list of stakeholders for collaboration. By embracing clarity and structured performance metrics, you empower your team to excel, reduce frustration, and foster a truly collaborative environment. Commit to this approach and watch your team thrive! #TeamCulture #Leadership #PerformanceManagement #PeopleOfficer #HRInsights #SMARTGoals