09 Aug Your Key Performance Indicators Predict The Future Of Your Business
Your company’s actual sales numbers and profit often take the lead role in determining the success of your business. The rest of the metrics are typically supporting factors.
Maybe it’s about time you rewrite your script? If you depend solely on the sales to find out if your business is doing well, it might be too late to discover you’re on the verge of trouble.
You see, there are other driving forces behind the success (or failure) of any business. I’m talking about Key Performance Indicators (KPI’s). KPI’s serve as your road map. It dictates where your current trajectory is taking you.
KPI’s are not the same as business metrics. With KPI’s, you’ll need to set some business objectives to define it.
Let’s say you want to increase your sales revenue. To do this your primary focus is going to be on sales growth. So this means you’ll be creating & viewing Sales Growth KPI’s.
KPI’s can save you the headache of crunching numbers and trying to figure out what it means for you business as long as you know the difference between a sales forecast and a sales pipeline.
Too often, sales professionals use the term interchangeably even though they’re two different terms.
So how do you define these two terms?
A sales forecast enables you to estimate where your company will stand in terms of sales in the future. There’s also a term called an accurate sales forecast. It seems like two contrasting ideas, but accurate sales forecasts are the key to making crucial business decisions. It’s on your sales patterns, new market analysis and of course, other underlying factors like the market trends.
Now, how about the sales pipeline?
It’s typically more of a visual approach or representation of the current deals you’re working on. They show you an overview of a sales representative’s “funnel” regardless of their closing probability.
Now that we’ve given you a quick example, let’s get back to KPIs…
How do you go about writing a clear objective for your Key Performance Indicators?
4 Steps To Developing Your KPIs
1. Be Clear
Each and every company has different objectives or goals to accomplish. You don’t need pompous terms to define a particular objective. Be simple and concise so everyone understands what you want to improve in your business. As mentioned earlier, if you want to increase your sales revenue, focus on the metrics that you and your team need to focus on and drive their growth.
2. Be Specific
Before you can achieve any of your business goals, you have to make sure that you tailor them to the right people. For your sales team, train them to encourage a customer to upgrade their products or services. For the production team, make sure the products undergo inspection, so they reach customers in excellent condition. There’s no such thing as universal KPI’s. You have to formulate strategies for each area of your business and make sure that everyone has efforts they can put towards tangible success.
3. Use Qualitative Factors
You might have the tendency to use common measures when setting goals and comparing performance over time. Having a KPI as “Increase Customer Satisfaction” needs to have a real, number-based measurement to determine your success. Having a customer satisfaction survey with a point based system to measure this KPI would be perfect!
Once you’re done selecting the baseline you would like to use for tracking the performance of your business, now it is time to come up with a strategy to work on those KPI’s! This step will give you an idea about which aspect of your business you should focus on to get your desired results.
Why KPI should you focus on?
Can’t decide which KPIs you should measure? Your goal is to gauge the performance of your company. So if you want to focus on increasing your sales, your KPIs should be related to increasing sales, improving customer service, and increasing your return on investment.
If you have detailed metrics, you’ll be aware of the aspects of your business that you should put more focus on. Avoid tracking too many KPIs at once because having too many areas of focus will leave you trying to change too many things at once and not knowing what affects your actions made.
Want some help in targeting the right KPI’s for your long-term business success? We have the right tools, people, and skills to help improve your business performance, regardless of what stage you’re at- Give us a call or send us an email today to see how we can help!