In this lesson, we’ll cover how setting and tracking specific goals can help you understand and improve business performance. You’ll also learn about Key Performance Indicators and how these can be used to evaluate the effectiveness of processes most important to achieving your goals.
Let’s dive in: Key Performance Indicators, or KPIs, are quantifiable measurements used to focus attention on the metrics most important to meet business goals. They are also useful in helping a team understand how progress will be tracked and measured.
There are many ways to construct KPI’s, but they should all be measurable, practical, achievable, and provide direction. So what does a KPI look like in the real world?
Meet Ryan. He owns a chain of fitness centres called ‘Fit Gym’. He needs to make sure that he has enough customers to keep the business growing. To do this, Ryan wants to sign up at least 50 new members per gym a month. This would be his goal. To help achieve this goal, Ryan now needs to set KPIs that will measure the efforts his staff make towards meeting this target.
Here are the KPIs Ryan has identified for his sales staff, based on actions that can help improve membership sign-up rate.
The sales team should:
- reach out to 20 prospective customers per day
- respond to all online queries on social media and email within 15 minutes of receiving them during working hours; and
- renew or upsell 8 existing gym memberships per month.
Analysing results against these KPIs will accurately assess which employees meet the expected standard, and help identify who needs additional sales training.
When you consider your business or the business you work for, remember that a KPI can be anything that gets you closer to achieving your goal. From sales calls to posts on social media, email list sign-ups to customer satisfaction ratings, make sure you choose the KPI that best fits your needs.
So how do you know what your KPIs should be, and how do you measure them? KPIs should be specific, measurable, Attainable, relevant and time-bound. By creating them this way, you can ensure they will be clear and achievable. Try creating your own KPIs and see if you can answer the following:
a. Is this KPI specific enough?
b. Can it be measured?
c. Can employees attain this?
d. How relevant is it to the wider business objective?
e. And lastly, when is it due to be delivered or carried out?
An example KPI could be to increase sales figures by 25% compared to last year. This is both specific and measurable, and reviewing your previous sales figures will allow you to determine whether or not it’s attainable. Increasing sales is key for business growth, which would be an overall business objective, and comparing year on year makes it timely.
Remember to evaluate both KPI results and the KPIs themselves on a regular basis, and respond to the data accordingly. For example, if Ryan’s sales employees are struggling to meet the 15 minute average response KPI due to the volume of enquiries, perhaps he needs to consider increasing the number of staff per shift to meet the demand. This will ensure prospective customers remain happy when their enquiries are responded to quickly, as well as ensure his staff don’t burn out.
When it comes to setting goals and KPIs in your own business environment, ensure that they’re specific, measurable, attainable, relevant and have the forward thinking to help you achieve your long-term plan. Take some time now to think about the KPIs you would set, and how you could measure these to get closer to your goals.
- why setting goals and KPIs is so important to online businesses
- how to construct a KPI using the SMART framework
- how to analyse data gathered to help improve online marketing efforts.