Choose the right KPIs
KPIs (Key Performance Indicators) are actionable metrics you choose to keep your business strategy on track and achieve success. But you want to choose the right KPIs for your business. That way, you see progress, know what’s working and what’s not. And can improve performance.
Because KPIs are chosen based on desired accomplishments, KPIs are going to be different for every business. Here are 8 ways to choose the right KPIs for your business.
1. Align with goals and business strategy
The starting point is what are your goals and the business strategy to get there. What does success look like? For a business, it’s generally a financial achievement described in clear and simple terms. Therefore, KPIs should align with goals.
- Increase sales by 25% in a year through new customer acquisition
- Generate 50% more qualified lead in six months with greater use of outreach programs
- Improve operating costs by 30% in two years transitioning from offline to online customer support
2. Set specific targets to choose the right KPIs
With goals established, KPIs are the signals that tell you’re on the right track. But, for KPIs to be telling, they require targets just like your goals. For example, if your goal is to increase sales by 25% through new customer acquisition, you want to set a target for the number or percent of new customers necessary. In addition, how much do you expect them buy or spend versus current customers? What did it cost to acquire them? How long did it take? When you set targets, you have a clear direction, profitability is higher, and success is much more likely.
3. Consider assets. And areas of improvement
Almost every business has assets they aren’t using. Maybe you have an email list of people who read a newsletter but are not yet customers. This is a strong asset. With a little encouragement like an incentive or introductory offer, this is a group with strong potential to be customers. On the other hand, many businesses may have that same list and not know who is in it. A little scrubbing and segmentation can result in a big improvement generating short-term results.
The use of Pulse Surveys can be an excellent way to obtain customer feedback. This type of market research has been proven effective by studies that have looked into its potential impact on companies’ bottom lines and overall satisfaction levels with the product or service being offered in question.
4. Measure effectiveness of tactics to choose the right KPIs
Tactics are the tools in every business strategy. Advertising, sponsorships, events, social media outreach or a website overhaul, for example. Choose KPIs that measure the effectiveness of your tactics. If you do, KPIs help get to goals faster. And the results let you know what is working into what is not.
5. Be accountable for investments
Marketing tactics, infrastructure improvements or any additional resources are investments. Firstly, by including investments, you show business accountability. Secondly, you can determine return on investment (ROI), profitability and customer lifetime value (CLV). These are very valuable business metrics in general and for forecasting.
6. Pick substantial measurements to choose the right KPIs
Think about your audience. It’s likely to be senior people, the “C” suite, board of directors or owners. They are likely to have strong financial backgrounds. What sways them are hard numbers like visitors, conversions, revenue, and cost per acquisition. That’s because these are referred to as action metrics. Softer, harder to explain metrics like engagement, relevance and followers are likely less to influence. That’s because these are called vanity metrics.
7. Define schedule for actions
A primary reason to choose the right KPIs is to create actions. When you have done your analysis right, your audience is going to want to know what comes next? Therefore, set a schedule for preparing your analysis. And identifying the actions to be taken. For example, it can be monthly or quarterly. Whatever works for your group to do a good job.
8. Don’t measure too much, don’t do it alone and don’t worry
It shouldn’t be a daunting task to choose the right KPIs. Firstly, six to eight KPIs are more than enough. And it helps if each is distinct and different. Secondly, make it a group activity. That way, everyone is involved and accountable. Lastly, don’t worry if you didn’t choose the right KPI. You can always exchange for a different key metric.
Does this help you to choose the right KPIs for your business?