One major challenge faced by both midsize and small sized companies is lack of data visibility. Answering Business performance related questions does require lots of effort and consume plenty of effort. Hence, what is desired is proper business strategy combined with clear answers to a variety of questions. A nice dashboard with neatly displayed data is what they require.
About Key Performance Indicator (KPI)
KPI is considered to be a measurable value to demonstrate how effectively specific business objectives are obtained. KPIs, at higher levels, may focus on business performance. At the same time, they may be used at your organization’s lower levels, thus focusing on specific department performance or processes. This communication form should be relevant, clear and inspire action.
How to choose the Right KPIs?
1. Smart KPIs:
SMART standard goals when followed helps define KPIs. This way, all team members can know what your objectives are.
- Measurable: How to measure progress? How to know whether desired outcome is achieved or not?
- Specific: What is your desired outcome (percentage improvements, dollars, etc.)
- Relevant: Why this outcome is vital?
- Attainable: What can be a realistic target to achieve based on current performance? Also what should be the stretch goal?
- Time-bound: When this goal is to be achieved? How often to review the progress?
2. Business objectives:
It is necessary to understand that KPIs are not to be considered as mere numbers. Rather, the objective is to be tied with marketing strategy and business outcome. Identify what you desire to achieve. Take top-bottom approach. Organizational goals are likely to drive each department’s goals. This, in turn, drives each individual’s goal. Set business, salesperson and sales team goal. The fact is KPIs tend to change at varying levels based upon organizational objectives. Employees executing work are likely to be more focused to achieve short term objectives while executives will seek long-term objectives. Each KPI can be found to be tied to a particular strategic objective, thereby providing target for measuring against. This can help increase Conversion Rate.
3. Review regularly your KPIs:
KPIs can prove to be useful only if people rely upon them to make decisions. Establish regular time to review progress made. It can be quarterly, monthly or even weekly. In case people do not monitor KPIs, then make adjustments in your processes, reporting and business strategy. It will become easier to consume availed information. KPIs do change with time. Periodical review can help understand if they make sense as to where the business is currently placed. Accordingly make essential adjustments.
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4. Focus on action:
Check if you are able to control the outcome and marketing strategy Establish your KPIs. Then communicate the same to your team. Also state what you are measuring as well as why. It allows them to know where you are headed. They can also how they will be of help. It can help establish short-term KPI targets. Such milestones with time can help guide your efforts while motivate your team consistently.
5. Limit chosen KPI numbers:
Narrowing focus can be tough. However, things will be better off especially in the long-term when trying to focus on several aspects. KPIs are crucial to enhance Conversion Rate. Same can be stated for metrics. On having KPI clarity, avoid going overboard with metrics to measure. No magic number exists. Rather, what’s perfect for your type of business will entirely depend on your capacity, goals set, etc.
Establishing the Right KPIs can help you to improve your overall business performance. A vital step to achieving this aspect is to implement ERP software.