To run a company, you should follow the mantra of hiring right people with right skills, meeting your customers’ demand with the right kind of product, and following business processes religiously to fully leverage all your assets.
It is very important to have core knowledge about the various aspects of your business. For example,
- How is your team performing?
- What are the loopholes or the plus points in the processes and whether workflows being followed within the organization?
- Are the products selling and generating the expected Rate of Interest (ROI)?
The Key Performance Indicators (KPI) help track and answer questions such as listed above. To track KPI, business requires data. Data plays a key role in business success or failure! If you are not running your business on facts and figures, there are high chances that you might not realize when your business is digressing from the path of success.
There was a time when marketers use to work on gut feeling. But now, it is very important to get the picture grounded in facts. There are so many free tools available, like Google Analytics that can help you analyze the data and come to a conclusion regarding the strategies to adopt to improve your business. The key is how to use this data in an effective way so that you can have a glimpse at your past and current performance and improve your future decisions!
Steps to identify KPIs
KPIs are the core metrics that helps in detecting the health of your business. You can set KPIs at organization level as well as department level to progress towards a given goal. The information can be delivered in the form of dashboards for sales, marketing, operations, and product teams.
At the time of deciding the KPIs, it is important for you to keep the following points in mind.
- Does the defined KPI aligned with your organization goal?
To measure progress towards a given goal, it is very important for you to have a clear measurable goal. For example, is your goal to increase the revenues by 50 percent over the next 18 months? Now, that’s the spirit! To achieve this, you need to set benchmarks and measure your revenue growth.
- If the KPI measurable?
The 18 months and 50 percent revenue increase in the above example is quantifiable. You can measure revenue growth and see if you’re moving towards your target or not when you quantify your goals. Please remember that KPIs cannot measure intangible goals such as “improve user experience”.
- What are your parameters to measure success?
Well, if you have created a quantifiable and measurable goal, then choosing a KPI is easy. For example, if your target is to generate Rupees 100,000 in sales each day, then you need to measure daily sales figure? If your target is to achieve 50 percent increase in revenues over 18 months, then your KPI is to measure the monthly increase as per predefined monthly goals.
KPI helps track if product sales are aligned with the goals. However, choosing the right KPI is critical. Having the wrong KPIs can still keep you from knowing how your product sales are really doing. They might induce wrong decisions. Choose them wisely, and don’t be over ambitious when you start!