KPIs or ‘Key Performance Indicators’ have been around a long time and are in extensive use in big businesses. I’m not going to hold these acronyms against anyone, but in essence they’re the targets you set for anything in your business.
The purpose of them is to measure on a frequent basis the key elements of your business and monitor how they’re performing against targets set or previous periods (i.e. how did March do against February, how did the 2nd week of March do against the first week etc.)
Especially, if it is relatively simple to access the information, you should definitely have targets, or as some like to refer to them – KPIs.
Just think of a darts board and looking to get a ‘bullseye’. KPIs are the ‘bullseyes’ of your business! You still with me….?!
What KPIs Should I Use?
That very much depends on the business you are in. You should consider what it is, that you’d like to know on a regular basis about your business. Is it daily or weekly or monthly? What indicators are important to monitor in your entity, to ensure the business is progressing satisfactorily? These are very different measurements, in each business and company. It needn’t be more than a few KPIs, a few ‘bullseyes’, as long as they are telling you the health of your business. Also these areas you are monitoring don’t have to be, shouldn’t be – just financial.
Here are a few ideas:
- Sales – daily sales, sales growth %, new customers signed up, sales versus budget
- Work in Progress – new orders, orders completed, outstanding orders
- Amount owed by customers, amounts overdue by customers
- Stock Levels – number of days sales in your stock
- Web site statistics -Traffic, order conversion rates etc.
You also have areas such as:
- New ideas – how many new ones, have you set a target for imagination
- Happy Customers – your customer satisfactory rating, returns etc
- Social Following – numbers of followers, likes, comments, views
- The Great Outdoors – how many glitter shoe walks your team have been on per month
- Knowing your competition – visiting your local high streets to understand the competition surrounding you.
There are many to choose from, but they have to be:
- Simple to access – preferably automatic digital access not someone toiling over a mound of paper to gather the information
- Timely – every Monday morning at 10am for last week’s KPIs for example
- Simple to understand. There is no point getting all these reports sent to you, or downloaded – if you’ve not got the foggiest what it all means. Understand what you want to see, and then when you look at these reports – they will make more sense.
- Relevant to your business.
- Available to the key members of your business.
- KPIs that prompt reaction and then action.
The aim is that when you receive your monthly accounts there are not any big surprises as by monitoring KPIs, say weekly you’re already aware of any significant issues.
Grab your darts and hit the ‘bullseye’!