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Key Performance Indicators! (KPI’s) – The Hidden Danger!

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  • Key Performance Indicators! (KPI’s) – The Hidden Danger!
mans hand turning a dial wiht the letters R.O.I

“Unless marketing spend gives me 10x Return on Investment (ROI) I’m not interested”, I paraphrase slightly but this was the response I received from an estate agent recently, having delivered a demonstration of our new web platform. The Mutual platform provides market appraisal leads and improves existing market appraisal conversion rates.
At face value, the agent’s response seems reasonable, focussed, and professional – where is the danger in that you ask?
KPI’s only measure what is measurable and not necessarily what is valuable. We have all heard the phrase “They know the price of everything and the value of nothing” this can apply directly to a mindset that is focussed on the Return-on-Investment KPI.

Imagine some pre-historic farmer had a bag of grain to sow. He consults the local witch doctor about his prospects. After consulting the magic runes, the witch doctor tells him that the year ahead would be much colder than normal with more rainfall, fierce winds, and very little sunshine. The farmer focussed on his ROI decides it is not a good idea to sow his seeds as the weather prediction suggests he is unlikely to obtain his usual 50 bags of grain in return. The witch doctor’s prediction was accurate but a return of just 4 bags of grain could have guaranteed the farmer and his family from starving to death. Being focussed on a KPI can be fatal!

The estate agent, very professional as he was, in being so focussed in a return on investment missed considering the wider picture (just like the farmer!). Value elements that may not be easily measurable; the increase in customer satisfaction which may lead to referrals 3,6, 12 months hence, direct improvements to other KPI’s resulting from using the platform such as quicker sales turnover or reduced withdrawal rates, improved staff retention due to better job satisfaction and time efficiency savings etc.

The moral of the story: If you are using KPI’s in your business (and you should, they are useful) you do need to consider a wider view beyond what they measure, KPI’s are part of the story not the whole story!

If you are using KPI’s in your business, then maybe it is time to re-evaluate and consider value related areas that they don’t/can’t measure. List those items next to each KPI so the next time you make a judgement or decision based on one, re-check your focus, so you can also understand the wider implications of what you are not seeing!

If you are wondering what I told that agent our ROI is?
I said, ‘it depends upon the attitude and skill of the agent utilising our platform’. Unfortunately for him, he never considered the wider benefit to his clients and prospective clients, if he couldn’t have a 24 carat gold 10 x ROI guarantee then he ‘wasn’t interested’. He knew the price, if only he had understood the value!
Max Fuller is the Founder of Mutual the UK’s First Pre-Portal Property Platform