When it comes to understanding the importance of KPI’s for business coaching clients, it’s a little like cooking…
Have you ever tried experimenting in the kitchen without a recipe? Maybe inspiration strikes and you hop into the pantry to grab ingredients that you think will taste good together. And voila! It does taste good! You share your invention with your friends and family, and they like it too! A few days later, they ask you to prepare the same dish. There’s only one problem: you forgot how much salt you included. Was it a pinch? A spoonful? Did you use olive oil? Or was it coconut oil? You trust your gut and unfortunately, you just aren’t able to deliver the same quality.
That’s why we write down portions when we cook, that’s why cookbooks offer you measurements. Because they serve as your guide to achieve the same quality every time or come up with something better when you already mastered it.
In business, these units of measurement are called Key Performance Indicators (KPI’s). And they make all the difference for your business coaching clients.
The Importance of KPI’s for Business Coaching Clients
In business, every move is critical; every decision is important; every performance creates ripples affecting operations, finance, etc. That’s why we should make everything measurable to the extent it’s possible.
In an organization, departments work together and people collaborate, creating domino effects for everyone. What better way to ensure that processes and functions are working the way they should than by setting up KPIs? KPIs show you the performance quality and even help forecast what will happen next.
It’s like the human body. Each vital organ is a KPI. When each of them functions well, you have a healthy, working body. But if one organ fails to deliver, you experience sickness, disease, and discomfort. Each KPI is different, but together, they make sure you have a sound organization. Sales department might have new revenue, new leads, closed deals as KPI’s while the operations team might have customer satisfaction, attendance, and attention to details. They have different ways to gather data but all will assist in creating a smooth-running, effective organization.
Over time, KPI’s may change to alter results. Each KPI should be carefully selected to be in line with critical organizational goals. KPI’s that are not wisely chosen may yield undesired or confusing results.
A Case Study in KPI Success
Some time ago I coached the owner of an accounting firm. In our first one-to-one session, I asked how much he billed an hour. He told me that all his work was billed at £50 per hour. I asked him what his most significant problem was. He replied that he was not making enough money! How was this possible if he was billing what he needed? I asked him if he was over-delivering to his clients – he did not know. We looked at each client and calculated the hours he and his team were actually working against the billed amount. It showed that their billable rate for work was an average of just £17 per hour. They were massively over-delivering across all clients out of fear of losing any of them. We set a KPI to obtain a billable rate in in excess of £50 per hour by becoming more efficient at client delivery–and in the process, turned this around in just 6 months.
Key Takeaways for Creating KPI’s with Your Clients
In a nutshell…this is why you should set KPI’s with your business coaching clients:
- Visions are converted to measurable goals, making it easier to identify and target.
- The goals say a lot about an organization’s performance. KPI’s help identify the drivers of the organization’s velocity in reaching their goals.
- It allows you to assess current performance and forecast possible opportunities and threats.
So how do you implement KPI’s with your clients?
- Consider the 3-5 KPI’s that your clients could measure that would have the most impact on their business.
- Set monthly targets for each KPI.
- Get the person who is responsible for each area to measure and report on these KPI’s in their coaching sessions.
- Talk through the KPI’s in each session you have with your clients.
The importance of KPI’s for business coaching clients can’t be overstated–it’s one of the most effective ways to ensure their success, and your ability to retain your clients long-term. For more great business coaching tips and resources, check out our ebook, Secrets of a Business Coaching Rock Star!