Why KPIs Work Best When People and Customers Come First

Key Performance Indicators (KPIs) are essential in modern businesses. They provide measurable ways to track progress, guide decision-making, and improve efficiency. But there’s often a critical element missing: people and customers are the most important metrics.

It might sound counterintuitive, but the truth is simple—if you take care of your employees and customers, the numbers will take care of themselves. Businesses like Trek Bicycle exemplify this philosophy, proving that prioritizing people leads to long-term success. Here’s why a people-first approach to KPIs isn’t just ideal, but essential.

1. People-First: The Secret to KPIs That Matter

Businesses are built on relationships—whether it’s between a brand and its customers or a company and its employees. Yet, KPIs often focus narrowly on speed, cost, or output without considering the human element behind those numbers.

When I purchased my Trek bike, I was struck by something the staff told me: “We’re a customer-service business that just happens to sell bikes.” That philosophy wasn’t just words—it was reflected in every interaction I had. Whether I needed help with an issue or simply wanted to praise their products, I was always treated with care and professionalism.

• What Trek Gets Right: Their customer-first philosophy creates loyalty and satisfaction. Customers feel valued, encouraging repeat business and positive word-of-mouth.
• The Key Lesson: Focus on making people happy—whether they’re employees or customers—and the metrics will naturally improve.

2. KPIs Are Tools, Not Goals

KPIs are there to guide progress, not dictate it. The danger of overly rigid KPIs is that they can lead to short-term thinking and counterproductive behaviors, like rushing to meet speed targets at the expense of quality.

For instance, in a retail setting, a KPI might measure the number of orders packed per hour. While this emphasizes speed, it often overlooks other crucial factors like accuracy or customer satisfaction. Workers might rush to meet the target, leading to mispacked or damaged goods—a short-term win that creates long-term problems.

Trek approaches this differently. Their "Make the Call" handbook encourages employees to understand and resolve customer concerns thoroughly, even if it takes longer.

• Why This Matters: A people-first approach ensures that KPIs like customer satisfaction and loyalty metrics stay high without pressuring employees to cut corners.
• The Key Lesson: KPIs should reflect outcomes that matter to people, not just numbers on a spreadsheet.

3. The KPI Triangle: Speed, Quality, and Cost!

One of the biggest challenges in KPI design is balancing speed, quality, and cost. Businesses often try to maximize all three but quickly find it’s rarely possible. You can optimize for two, but the third will inevitably suffer.

• Speed and Quality: Achieving both usually requires higher costs, like investing in faster technology or more staff.
• Quality and Cost: Maintaining high standards while minimizing expenses often slows operations due to limited resources.
• Speed and Cost: Prioritizing efficiency at a low cost often compromises quality, leading to errors and dissatisfied customers.

Example: A delivery service might prioritize speed, offering same-day delivery, but neglect proper packaging, leading to damaged goods. While delivery times look great, customer complaints and returns skyrocket—a prime example of focusing on one metric at the expense of others.

• The Key Lesson: Businesses must choose their priorities. KPIs should reflect those priorities while acknowledging trade-offs.

4. Technology: The Backbone of Success

In today’s workplaces, technology drives nearly every aspect of operations. Whether it’s tools for managing workflows, customer interactions, or inventory systems, the efficiency of these tools can make or break KPI performance.

• What I’ve Learned: When technology is slow, buggy, or prone to crashing, inefficiencies ripple through the operation. Workers waste time on glitches, customers are left waiting, and KPIs suffer.
• The Bigger Issue: Software teams are often the first to face budget cuts, but underinvesting in technology leads to long-term inefficiencies and frustrations for employees and customers alike.

A Better Way

• Treat technology as a core investment, not an afterthought. Regular updates ensure systems meet the needs of both workers and customers.
• Gather feedback from frontline employees to identify inefficiencies and prioritize improvements.

5. Happy Employees Drive Happy Customers

Employees who feel valued and supported naturally deliver better customer experiences. Yet, many KPIs focus solely on output, ignoring the well-being of the people doing the work.

Trek understands that employee satisfaction is just as important as customer satisfaction. Their supportive culture motivates employees to go above and beyond for customers.

• What Companies Can Learn: Incorporate employee satisfaction into KPIs. Metrics like retention rates, engagement surveys, and team feedback provide insight into how well a company supports its staff.
• The Key Lesson: Happy employees are more likely to create loyal customers.

6. Flexibility Is Key to Effective KPIs

Rigid KPIs fail in the face of real-world challenges. For instance, expecting the same productivity targets during a system outage or supply chain disruption ignores the reality of the situation.

Trek avoids this pitfall by focusing on outcomes rather than rigid metrics. Their priority is quality service and relationships, even if it means bending traditional measures of success.

• What Businesses Can Do: Build flexibility into KPIs to account for challenges and shifting priorities. This fosters trust and empowers employees to make the best decisions for customers.
• The Key Lesson: Adaptable KPIs keep teams focused on what matters—people and quality—without sacrificing long-term goals.

Final Thoughts: People and Customers Are the Real Metrics

KPIs are essential, but they should never overshadow the people they’re meant to serve. Businesses like Trek Bicycle show that prioritizing employees and customers leads to metrics that improve organically.

By focusing on customer satisfaction, valuing employees, and investing in technology, companies can create environments where everyone thrives. The result? Happier customers, more engaged employees, and KPIs that reflect true success.

What do you think? Have you experienced workplaces where KPIs were designed with people and customers in mind? I’d love to hear your insights!

Disclaimer: This article reflects my personal opinions and experiences and is not intended to critique any specific company or organization.