The key performance indicators (KPIs) for one company will differ from another’s, but both share the same challenge: selecting which KPIs best measure the goals and progress of their particular business model. Owners have a vast array of reports and data to choose from, but that data needs to target the areas most critical to the decisions managers need to make. Effective managers distil the essential information from the mountains of data an untargeted search produces.
What are key performance indicators?
KPIs are the tools organisations use to define their goals and establish quantitative measures of progress towards them. They provide data that spotlights performance across a variety of areas – financial performance, customer relations, marketing efforts and even employee productivity.
Financial performance
The bottom line is why we’re all in business, and understanding your financials is like knowing what’s happening inside your car’s engine as it rolls down the road. If you’re losing sleep over whether your latest marketing spend was worth it, a detailed return-on-investment KPI will help. KPIs can also highlight underperforming net profit margins or lacklustre revenue growth, giving you the information you need to meet your original financial goals.
Customer relations
Customers are the key to enviable sales numbers, so understanding what motivates them is a real advantage. Customer-focused KPIs let you track engagement and retention. If satisfaction scores are sagging or turnover is high, you can target your reports to help develop meaningful responses.
Marketing efforts
Few businesses prosper without a viable marketing plan. KPIs designed to highlight marketing performance let you break down cost per lead, brand equity, conversion rates, social footprint and more – so you get the most from every marketing dollar by discovering what is and isn’t moving you towards your sales goals.
Employee productivity
Your marketing drives in customers; your employees typically close the deal. Since locating, screening, hiring and training staff looms large in any budget, using KPIs to measure employee performance makes sense. Savvy owners monitor average revenue per employee, engagement levels and average tenure, among other measures, to get a feel for the pulse of their workforce.