KPI's are sending the wrong message

4/26/2021
#kpi, #kpis, #okr, #okrs, #metrics, #performance, #results

Right after college, I enrolled in an insurance company that adopted the Multi Level Marketing strategy. In the beginning, you had to focus on sales. Even more because your commission was based to your sales figures. The company knew that just selling the product was not enough to base your salary on, so they build in a retention plan. If your client would leave within 6 months, you had to pay back your commission entirely. After 2 years, they considered your sale as completed.

Years later, in a different company, my manager explained it to me in words easy to understand: "What's the benefit of creating new clients on one end, if clients are dropping out on the other end". A practice we see all to often. The sales department has a KPI of increasing sales, while the Customer Care department has a KPI of retaining clients. But these 2 departments do not work together. The sales department adds additional benefits to the sale just to get clients to enroll. After a while, mostly a year, these benefits can not be maintained by the Customer Care department., and clients change companies. The competitor now has benefits to enroll.

Instead of creating KPI's for individual persons or even teams or departments, we should create OKR's that are applicable to the entire company. In this case the OKR could be "Increase the number of active clients by 1%". It could mean the sales department will promise less and therefore sells less, but the Customer Case department will have an easier job to retain clients. They might develop a Client Loyalty program. Clients get more benefits the longer they stay with the company.

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