In order to measure progress within a business, whether it be progress on business objectives such as revenue growth and sales growth, or increasing customer retention, key performance indicators (KPI’s) are essential. Every element of your business should be trackable in order to maximise productivity and success in general.
KPI’s are particularly important within small businesses due to more limited room for error and higher need for continued year on year growth. For a small business, the bottom line is making enough money selling their products and services to cover the wages of their employees. This can generally be done without the tracking of KPI’s. However, if a business wants to perform at a high level consistently and achieve long term success they must have a set of KPI’s for both the individuals within the business and the business itself.
What are the most important kpis?
The most important KPI’s can vary drastically from business to business depending on a business’s strategic goals and business objectives. These goals could be in your marketing division, sales team, people, development, finance, operation and delivery and distribution elements of your organisation. Marketing, for example, should have KPIs that encompass things like social media campaigns per month, number of leads added to the database and compare these to a target for leads to build the database each month. If at the end of the month the marketing team hasn’t hit their goal, this might be time to take an objective look at the tactics they are deploying to see if a change in direction might be more effective in targeting new leads.
If a supposedly important KPI is achieving the mark that you set for it, but that isn’t translating to the business objectives and goals that you set for your organisation, you may need to re-evaluate what you consider to be important KPI’s. As mentioned before, a good KPI is closely connected with the progression of the goals you’ve set for your business. This could be a higher net profit margin for the year or higher conversion rates, no matter what they are, they need to contribute significantly to the progression for your goals.
KPI’s are important for determining WHY your business isn’t performing to the standard you want it to. But it’s also worth reviewing to determining why and how you’ve achieved success. It can be easy to brush over the numbers when times are good. However, if you skip over these numbers when your business is performing well, then you might miss out on some valuable insights that could be useful when your business is struggling. Remember, what goes up must come down, and KPI’s can be a huge help in replicating your success when your business is struggling.