What is a KPI?
In today’s world of information, data is more important than ever before. Cloud-based storage and free, easy to use software such as HubSpot have levelled the playing field. In short, it is now even easier for small businesses to run their numbers like a major corporation. Having data has made strategising success in your business even easier. An essential form data-based strategy is Key Performance Indicators (KPI).
A KPI allows you the chance to see just how well your business is performing. By setting objectives and targets, you can see how well your team are reaching their most important goals.
An Example of a KPI
In sales, a very important KPI could be sales growth. This KPI will give you a visual indication that your business is growing steadily. But how might you measure this? Simply take your current period’s revenue and subtract the previous period’s revenue. You now have a clear picture of sales growth between these two periods. Now run this across three sales reps and you have a picture of how well each team member is performing. This quantifiable information gives you the chance to identify a problem early and help your team get back on track.
How to Set a KPI
How you set a KPI depends on what you are trying to measure. The most important role to remember is that a KPI has to be specific. For example, ‘increase sales’ is too vague and doesn’t set out for what is actually achievable. A specific and measurable objective has to be obtained, a timeframe has to be understood and an outcome has to be agreed upon. To put it simply, setting a target to increase sales growth would mean setting out a believable percentage in a specified time frame. Here’s an example: “A 10 percent increase in sales growth over the next 90 days in the Bristol region”.
Track the Performance
Now you have a considered, specific target that you can track against pre-existing data. For example, in order for your rep to reach this target in the allotted time, they have a daily target to fill. After two weeks, you can see how they are tracking. Will they make their targets? Are they over performing? This is the power of a KPI. You have the ability to use quantifiable data to track results. With consistent measurements and a solid, delimited goal, the probability increases that this can be achieved.
Are You Setting Targets?
Now that you know what a KPI is, are you setting them? Business owners who worry about footfall, sales and breaking even are often running a business without any system to analyse and report their goals. Our mission is to share our wealth of knowledge and help business owners put systems in place to help them measure their success and achieve their dreams.
Do you need help setting some real, quantifiable targets? Our team of fully accredited business coaches have the knowledge, experience and empathy needed to help you run a profitable, commercial business that works without you. For more information, get in contact today and schedule your complimentary coaching session.
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