Imagine your business journey as a road trip. You have goals you'd like to meet, points you'd like to reach. Those details define your endeavor, ensuring you don't forget why you started and what you wish to achieve.
Every business should have objectives that are specific to their brand, and every executive decision should reflect them. These are called key performance indicators, or KPIs, and they guide your business in the right direction.
Key Performance Indicators, or KPIs, add purpose to your brand and help you check off those pitstops along your road trip. It's important that you set appropriate and measurable objectives for your business. Here's how to do it.
Setting your KPIs
You're going to have different KPIs for each department in your business, from marketing to finance. The key is to set relative indicators that will help you focus on what matters most to you and your brand. For instance, a KPI for your marketing efforts might be "number of conferences attended in X months," while a KPI for your financial efforts might be "percentage of revenue increase in X years."
KPIs also vary depending on the industry. A PR agency might measure media mentions, while a software company might measure customer acquisition. However, no company – even those in the same field – should have the same KPIs. That's why it's crucial to outline your values as a business so you have a unique vision to measure against.
Ask yourself basic questions about your brand: What do you wish to add to your industry? How can you make society a better place? What are your monetary goals, and how can you achieve them? Basically, you'll want to start by determining some SMART (specific, measurable, assignable, realistic and time-based) objectives. And then determine if you're following through with those by measuring your KPIs. [Interested in performance management software? Here are our best picks.]
"As a business owner, your goal should be to build an ethical and sustainable business model," said Ketan Kapoor, CEO and co-founder Mettl. "Encourage business practices that pose 'zero' threat to the environment and involves no unethical practices to mint large profits."
For example, consider Starbucks and their plan to ditch plastic straws. Corporate social responsibility is important to keep in mind when setting KPIs for any business. Commit to a plan that appeals to both you personally and your consumers.
"To set your own KPIs, you need to know both how your strategy creates value and what that value is," said Kyle J. Brost, MBA, founder and CEO of Spark Policy Institute. "Once you've defined … the unique or key activities you will perform, you can start setting your own KPIs by making those activities measurable, and then measuring them."
Make sure your KPIs are reflected by your business model and your employees. Every person involved in your brand should have the same objectives, so only hire those who share your vision – and then measure them, too.
"Slashing attrition rates should be your topmost priority that also defines your success as an entrepreneur," said Kapoor. "If your employees find their work fulfilling, they stick and continue growing in their roles. And when employees grow, your business grows too. Your KPI should be to build an employee-driven culture where they have complete liberty to share their ideas that translates to better productivity and employee morale."
Measuring your KPIs
Kent Lewis, president and founder of Anvil, said that one of his clients manages his business to just one metric: customer satisfaction.
"He's found that checking in regularly with his clients lead to correcting small issues before they become major problems," Lewis said. "His happy clients drive his business through improved retention, account growth and referrals to new business."
Customer satisfaction is, in fact, a defining factor of success. If you want to meet your KPIs, you need to please consumers. To gauge customer satisfaction for his own business, Lewis analyzes Anvil's net promoter score, which measures how likely customers are to recommend a company to others.
"Twice a year, Anvil sends a brief survey to its clients to evaluate the quality of their experience," he said. "The process helps us identify strengths and weaknesses and improve the customer journey."
Another simple yet important way to measure your success is by regularly reviewing data, especially financial statistics.
"Determinants of this KPI can be your growth in revenues, profits and the shareholder value," said Kapoor. "If these metrics show an upward trend, consider that your employees are running a good show."
If not, however, you'll want to make a change. When something isn't working for your company, it will fall short of your KPIs, and you'll know to adapt accordingly.