So many contracts, so few actual measurable metrics. Why your contracts need Key Performance Indicators, or KPIs.
What do KPIs do for your business?
KPIs get better service out of your service providers
KPIs make you more money
KPIs minimise disputes and stress
KPIs save you time
If you could include only one clause that would govern the relationship between you and the digital marketing company that handles your social media*, it should be KEY PERFORMANCE INDICATORS.
* We’re picking on digital marketers today but that doesn’t mean their industry is particularly opaque – just that this was the latest industry we took on in a contractual dispute for a client.
Key Performance Indicators (“KPIs”) are the actual details as to how your service provider provides its services, with concrete, measurable metrics as opposed to vague generalisations about good faith and best efforts.
Which of these clauses will get you better services out of your service provider?
1. “The provider will render SEO marketing services to the client”
OR
2. “The provider will:
2.1. write and publish four blog posts a month;
2.2. create two videos per month and post them on Instagram;
2.3. will raise the client’s search page ranking to at least the 10th page of Google.
Obviously, the second one is preferable, because it provides clear, measurable metrics.
Why are metrics so important?
First and foremost, they keep the service provider to an honest standard. The service provider knows they need to meet these targets to get paid. Second, they minimise the chances and expense of a dispute. It is easier to prove the provider only wrote three blog posts instead of four, compared to proving they “rendered SEO services”.
KPIs keep your service providers to high, honest standards.
What should you do when procuring a new service provider?
Wherever possible, you should secure a service provider’s commitment to clear KPIs in their Service Level Agreements – remember, every contract is negotiable, and if a party refuses to negotiate, you should consider other options. KPIs are some of the most difficult things to draft, because they require deep thinking about what should be done, and what could go wrong – without the help of the service provider, who may be incentivised not to make such commitments.
We can draw on our contracts experience and industry connections to bring together a team of legal and industry experts to ensure your contract is drafted properly. It is well worth investing time in creating clear KPIs to avoid expensive litigation later. If the relationship with the service provider is terminated, you have a standard set of expectations to apply to the next one you appoint. This improves your leverage, growth and profitability.
Maybery Inc. has drafted and reviewed every type of commercial contract, from a simple sales agreement to advanced portfolio transactions and due diligence.
Contact us to review your next contract or proposed transaction.
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