How to Pick Key Metrics for Your Small Business

This post may include affiliate links, meaning we might earn a commission. For more details, check out our terms. 

⚠️ Quick Disclaimer: We’re not experts in key metrics selection, but our experience with processes and human incentives has given us valuable insight on the topic! ⚠️

FAQs: Business Key Metrics and KPIs for Small Businesses

Before diving into our brainstorming session, let’s cover the basics. If you’re already familiar with key metrics and KPIs, skip to the next section, Business Key Metrics Consultation Feat. Our Client. 👇  

What Are Key Metrics?

Key metrics are measurements you can use to track and evaluate business performance and processes in your company. The results showcase a general overview of how each department is doing. 🔎

Think of key metrics like bird watching. With your binoculars, you can zero in on a bird and get a sense of what they look like, how they fly, how fast they fly, etc… It’s like putting your internal systems under a microscope. 🔬

What Are KPIs?

In contrast, KPIs provide more of a bird’s eye view of your organization. Although many believe Key Performance Indicators (KPIs) are the same as key metrics, there are a few distinguishing factors. For instance, KPIs measure your progress towards your long-term business goals. 🏆  

KPIs are also helpful for:

✅ Guiding your business growth
✅ Transforming your ideas into actionable steps
✅ Reducing information overload
✅ Achieving your desired results quickly

Now that you understand key metrics and KPIs, let’s jump into our discussion with Mallory!

Business Key Metrics Consultation Feat. Our Client (01:23)  

👋 Brief intro: Mallory is a client and active member of our ProcessDriven Foundations™ community. She recently hit a wall with her customer service KPIs and hopped on a hot-seat consultation with Layla to fill in the gaps. The following is a summary of their discussion. Enjoy!    

As Mallory brainstormed some ideas with ChatGPT (with unsatisfying results), she realized she didn’t really know the difference between reports and KPIs. We get it! Business jargon can be confusing as hell, which is why we break them down in posts like this! 📖

The purpose of key metrics is to incentivize your team and their behaviors, while reports help inform your team on what’s happening inside the business.

With this in mind, let’s consider a customer service scenario: 

If your customer service employee reviews a report on support tickets and sees many requests for products (A, B, C), they may not feel empowered to resolve the issue. Instead, they may dread selling those products. 😔 

In this case, sharing this report with your staff member may not improve their performance, and could actually have the opposite effect! All the report is telling them is that they have a lot more work on their hands. 

Yes, you want to be transparent with your crew, but consider who will benefit most from the data. For example, it may be ideal for the CEO and product manager to have eyes on core KPIs and relevant reports. 

On the other hand, a customer service employee would benefit from key metrics related to their behavior and efforts. 💪 

📢 Program shoutout: Love this candid conversation? We host live chats like this twice a month in our signature program, ProcessDriven Foundations™. If you want a second opinion on your operations, processes, systems, and more, join the waitlist today!

KPIs for Small Businesses: Lead and Lag Metrics (03:03)

During this portion of the brainstorming session, Mallory highlighted her lead and lag measures:

✅ Lead measures: Average customer response time
✅ Lag measures: Categorize the issue by SKU and customer messages, total costs of refunds/replacements, and customer product rankings

📚 Business terms: Lead refers to something you can influence or control as the person who owns the metric. Lag indicates something you can indirectly control from your initial effort. For example, working out three times per week is a lead effort, and gaining muscle is a lag effort. 

Layla reviewed Mallory’s measures and pointed out that the lag measures, customer issues by SKU, and customer messages would be relevant in a CEO report. These factors are also outside the customer service’s control, so they may not correlate with the lead measure, average customer response time.

Layla made the following recommendation when applying lead and lag metrics: consider the opposite. ⚖

👉 What would happen if your customer average response time was exceptional?
👉 What’s the harm of responding to an inquiry within seconds? 

📝 Brief note: Leila Hormozi, CEO of Aquisition.com, inspired the balancing approach mentioned above. Learn more about her push-pull metric system in our hiring breakdown post. 

If a customer receives too quick of a response, they may believe it’s an automated message from a robot (as Mallory suggested 💬). 

Another possibility is the reply is unhelpful, affecting the quality of the customer experience. 

In this case, the average customer response time would be excellent. However, it could also impact other areas negatively. For instance, if it takes over 50 exchanges to resolve an issue, the number of messages pouring in will skyrocket. You may also receive an influx of clients with low satisfaction rates. 📉

🗝️ Key takeaway: Select a key metric that’s inversely correlated to the KPIs you determine. 

Customer Support Metrics: Missing Lead Measures (10:06)

Beyond the average customer response time, Mallory was curious about other lead measures to consider. Layla’s response? Most lead metrics occur outside the customer service department because they handle reactions, aka manage issues as they pop up.

 However, you can test various lead indicators to see how they’ll impact your customer service department. For example:

🧲 The number of self-help articles or how-to guides on an FAQ page 
🧲 The number of users visiting your FAQ page
🧲 The number of AI conversations vs human conversations 
🧲 The number of customer resolutions (when integrating AI)

For the lead customer support metrics, Layla recommended focusing on proactive resolutions that precede customer support from a human. 👋

Let’s examine this suggestion and potential outcomes further.

Providing an FAQ page as a resource for your customers can reduce the amount of support tickets you receive. As a result, your employees may have more quality time to answer customer concerns. Anything beats a rushed, half-baked response! 

🎬 For additional context, skip to Layla’s explanation at (11:31).

📝 Note to reader: We’re not promising you’ll receive these results if you implement these measures. Instead, we’re promoting the spirit of thinking outside the box and utilizing creative metrics that may provide valuable information about your business.   

If you’re wondering how to incentivize your team and their behaviors, get creative and go beyond Net Promoter Scores (NPS).

📚 Business term: Net Promoter Scores (NPS) is a popular metric that offers insight into customer loyalty and employee fulfillment.

Business Key Metrics Recap: How to Pick Key Metrics

While this client call revolves around customer support metrics, you can apply many of these tips to your small business as long as they make sense within your business model. 😉

Here’s a summary of the main points:

📈 Metrics/reports inform you on what’s happening in your organization  
📈 Key metrics are tools to help incentivize what you want to see more or less of
📈 When selecting key metrics, consider making them complementary
📈 Defining key metrics for your processes can set a strong foundation for your team by helping them make better decisions and focusing on your priorities 

Do you have a list of process-related questions? If so, join our next hot-seat chat inside our signature program, ProcessDriven Foundations™! Our doors are opening very soon, and we would love to support you on your system-building journey. 🎉

Good luck with your key metrics, and enjoy the process!