The key performance indicators (KPIs) for one company will invariably be different from the KPIs of another firm. The challenge is to select which KPIs are best suited for measuring the goals and progress of your particular business. You major focus may be on customer satisfaction or profitability. Whatever your focus for the financial year, you need to ensure you set KPIs that measure and reflect this.
What Are Key Performance Indicators?
Key performance indicators are the tools businesses use to define their goals, and establish quantitative measurements designed to determine whether any progress is being made towards the achievement of those goals. They provide data that can be used to spotlight performance characteristics across difference measure such as financial performance, customer relations, marketing efforts, and even employee productivity.
Below we look at some of the key KPIs business use to measure their achievements.
1. Financial Performance
At the end of the day, the bottom line is why we are all in business. Understanding how well you are doing financially is the equivalent of checking your map on a long journey to ensure you are heading in the right direction.
For instance, if you are losing sleep at night over whether or not your latest marketing plan was worth the check you signed at the bank on Monday, you will want to explore your Return-on-Investments (ROI) with a detailed ROI KPI. Conversely, a KPI can highlight underperforming net profit margins, or lacklustre revenue growth rates, and the information obtained can present valuable information to ensure you will meet your financial goals.
2. Customer Relations
As noted, a profitable bottom line is the ultimate goal of businesses, and customers are the key to achieving enviable sales numbers. As such, understanding what motivates your clients provides inestimable advantages to the entrepreneur who knows what they are looking for. Utilizing customer relation-focused KPIs, merchants can track levels of customer engagement and subsequent retention rates. If customer satisfaction scores are sagging or turnover rates are high, the worried business owner can target their reports to help develop meaningful responses to address these lapses.
3. Marketing Efforts
Without a viable marketing plan, few businesses can expect to prosper. With KPIs designed to highlight marketing performance, you can break down your cost per lead, brand equity positions, conversion rates, social networking footprint, and more. Get the most of every marketing dollar by discovering what is working and what is not moving you towards your sales goals.
4. Employee Productivity
While your marketing function is designed to attract customers to your business to buy from you your employees are typically tasked with closing the deal. Poor employee performance can sabotage your efforts of growing your business, even if your marketing is working.
Employees are a significant investment for any business, the costs of having, hiring and training employees is a huge commitment for a business, so using KPIs to measure employee performance just makes sense. Plus is employees know what is expected of them they are far more likely to achieve objectives set for them, helping your bottom line.
Savvy entrepreneurs use KPI to monitor the average revenue per employee, engagement level, and average employee tenure to name just a few of the reports that can be tailored to get a feeling for the pulse of your workforce.
Overall KPIs can be developed and measured for almost any aspect of your business that is important to you. It is essential to ensure you are measuring and monitoring the right things if you want to achieve your business goals. As business advisors and Accountants we can assist you to develop and implement KPIs into your business that will help you monitor and strive for business improvement, we can even monitor and report to you regularly on your achievements in line with your KPIs and identify ways to assist you achieve them. Call us today for a FREE, no obligation review and lets see how we can assist you and your business.