What is a KPI?
Whether your business has been going strong for many years or your startup is just taking off, there’s a laundry list of goals you hope to achieve and maintain. Key performance indicators (KPIs) measure how well your company achieves those goals.
Goals are different for every company. Perhaps you want to increase the number of monthly customers you retain, or you want to increase your quarterly revenue by 10%. Whatever your goals are, there has to be a way to measure whether or not your business strategy is working. Key performance indicators do just that. KPIs keep you on track towards your business goals, therefore, they should reflect those goals.
There’s an overwhelming list of common KPIs that a business can use to measure success. However, the important thing to remember is that you have your own business strategy, and your goals might be different than your competitors’.
KPIs have four characteristics in common:
- They hold a numerical value.
- They’re relevant to your strategy.
- They measure your company’s success and whether or not it is improving.
- Your KPIs can be put into practice.
- Sales KPIs
- Monthly sales growth
- Resources spent on one paying customer
- Customer turnover rate
- Monthly new leads
- Lead-to-sale conversion rate
- Financial KPIs
- Net profit margin
- Operating cash flow
- Current accounts receivable
- Current accounts payable
- Line items in the budget
- Project Management KPIs
- Planned value (PV)
- Actual cost (AC)
- Earned value (EV)
- Overdue project tasks
- Missed milestones
- Marketing KPIs
- Monthly new leads
- Monthly website traffic
- Traffic from organic search
- Pages per visit
- Average time on page
An important distinction to make is that KPIs are marketing metrics, but not all marketing metrics are KPIs. Some marketing metrics work better as a KPI depending on your goals. Focus on anywhere from 2 to 20 KPIs based on what you think is important to the success of your business.
Organize Your KPIs
Before you choose which KPIs are best for your company, you need a business strategy. Create a strategy map to define your objectives; this is a brief documentation about the goals that are important to your business. List out your objectives and organize them in whatever way makes sense to you (financial, sales, outreach, etc.) Under each objective, list a few indicators that will help you measure the success of that objective.
Next, organize your KPIs into a dashboard. There are plenty of resources out there, like GoodData and RJMetrics, that will help you create a neat dashboard. These are worth the price if you’ve been perfecting your strategy and KPIs over time. If you’re just getting started with KPIs, a simple Google Sheet should do the trick. Since you want to show progression, you’ll need to compare data over time. Start simple with something like this:
The KPI is monthly website traffic. I’ve organized this traffic into direct, organic, and referred traffic. This chart shows me the amount of traffic from January 2018 to May 2018 for each distinction.
Translate this data into a chart by highlighting the horizontal and vertical headers, as well as the numerical data. Click insert > chart in the main menu. Your table will appear, and you’ll be able to customize as you wish.
Continue this process with each of your KPIs, and soon enough you’ll have your very own dashboard. Keep this information updated to determine in which areas you need to improve. Your business strategy will help you fulfill these goals. If your KPIs show that your business is not getting closer to achieving its goals, then you should reconsider your business or marketing strategy.
Sevaa Group can you help you reach your goals whether it’s technical or involves SEO. Sometimes your website just needs a quick redesign or the backend needs some tweaking. Issues like load time, user interface, and security can all have an effect on your website, your customers, and ultimately your business. Talk to us about how we can help with your next project.