Businesses set key performance indicators as a way to measure success, failure and growth. Your business, big or small, needs relevant numbers and statistics so you can achieve certain goals for you and your team. Discover how setting and measuring KPIs comes into play for your business model as you seek to increase customers and profits.
First, Look SMART
Before you determine what key performance indicators you want to use to measure success, think about the types of goals you want to set with the SMART system. SMART in this case is an acronym for specific, measurable, assignable, realistic and time-based goals. Your KPIs demonstrate how close you are to achieving these objectives, and you can compare the indicator's measurement versus the number you want to achieve. For example, you want to grow by 10 new customers every month, and that indicator in your computer database easily shows how many new customers you brought on board over a particular calendar period.
Setting Key Performance Indicators
Next, select various key performance indicators that apply to your business. A manufacturer might measure the number of orders per month, while a marketing agency could measure the amount of social media likes or shares per day. Revenue increases, customer service success, employee retention, new customers and higher profits come into play with KPIs, as well. Your business model and mission should lead to the kinds of KPIs you want to monitor, and every employee should have a stake in the outcome.
After you set your KPIs, it's time to measure them. You need the right kind of computer software to compile and keep statistics so you know where you're headed and where you've been. Programs put data into handy charts and graphs to give you a visual representation of what's going on with your business.
If you want to measure getting new customers every month, your measure of this KPI would be the number of unique customers you have at the beginning of the month versus how many you have when the month ends. Your CRM software probably has these numbers in its database. For example, you have 345 customers at the beginning of April and then 378 at the end of April. That means you gained 33 customers, blowing away your goal of adding 10 new ones per month.
Another worthy KPI to measure is customer satisfaction. Check in with your customers and clients on a weekly basis to see if you need to correct anything, such as tweaking an order, improving software or delivering orders faster. Fixing problems when they are small saves a lot of time, effort and energy later if problems become huge over time. Like checking in with customers, monitoring your key performance indicators regularly helps you adjust things before obstacles become too big to overcome.
Setting and measuring key performance indicators gives you a recipe for success. Set your goals, know how you want to achieve them and then measure your steps toward accomplishing your objectives to create an overall strategic plan for moving your business forward. How do you measure success for your business?
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