How to Choose the Top KPIs for Your Business
Business owners should be measuring the right key performance indicators (KPIs) if they want to track progress within their organization and grow as a company. But what exactly is a KPI? Why do you need KPIs? And, how do you determine the top KPIs for your business?
Understanding what a KPI is will help you better select the top KPIs for your business and continue growing. However, there are a few tips you need to know before determining what is suitable for your organization.
Are you having trouble determining the top KPIs for your business? Wolf Creek Business Growth Institute has had plenty of clients who didn’t know what KPIs were best for their business. If you need actionable advice and help creating a culture revolving around KPIs within your workplace, call today at 225-219-8866 and schedule a consultative appointment with our coaches.
[Related: Picking the Best Business Coach]
Choosing the Top Business KPIs: What is a KPI?
A key performance indicator, or KPI, is a metric used by an individual, team, or organization to measure and track the progress toward a specific goal. Many business owners use KPIs to measure their company’s performance against its primary business objectives. For example, if a business owner wants more website traffic, the top business KPI to measure would be how many visitors are going to the website every day.
Choosing the Top Business KPIs: Why Your Business Needs Them
Your business needs KPIs to stay on track with your key objectives. Selecting the top KPIs for your business will help indicate how well an organization, team, or individual performs. For example, an individual can track how productive their day was, a department, such as management, can track the performance of everyone in the department, and a business owner can track the overall performance of the company.
You can easily identify issues within your company when you track the top KPIs for your business. Are there problems in your staff or department, such as an individual carrying most of the workload while other members underperform? Issues like this can prevent your business from achieving the results you expect. KPIs can help build accountability as team members can measure their performance and determine what needs to be done and when.
KPIs are not meant for individuals or departments to brag about who is more productive than the rest. KPIs can help individuals, departments, and the organization determine how they can help one another achieve goals. Additional help can come in the form of deploying new strategies, dedicating more time to training, or identifying who is under or overperforming.
[Related: How to Make Personal Accountability a Core Value]
Choosing the Top Business KPIs: Prioritize KPIs
Limiting the number of your top business KPIs is key. You should not get carried away and start measuring everything. When you measure everything, you could lose focus of your primary objectives; thus, nothing will be achieved.
You can narrow down your top business KPIs by examining your primary business objectives and learning what your company needs to focus on to reach those goals. Do you want to increase customer satisfaction? Track a KPI that measures customer churn rate or existing customer revenue growth rate. Do you want to increase productivity? Track overall output or number of sales.
A business owner should measure no more than three or four KPIs in a quarter. Limiting the number of tracked KPIs will help you and other departments prioritize the company’s main objectives while effectively managing your time. This three to four KPI limit can also help individuals prioritize their workload throughout the workday. Finished with one priority? Then, move on to the next one.
Tips on Choosing the Top KPIs for Your Business
Now that you understand what KPIs are, why your business needs them, and how to prioritize them, it is time to choose the top KPIs for your business. The KPIs you select should align with your business goals. For example, a top business KPI could be related to your goal of increasing sales, improving customer service, or improving employee satisfaction. If you want to track your organization’s progress, you need to tailor your KPIs to your business goals.
When choosing the top KPIs for your business, remember to keep them specific but simple. Doing this will ensure your team can quickly identify them so they can execute them properly. Growing sales by 5% in the next quarter is an excellent example of a specific goal because it gives your team a value to work toward in a fixed amount of time. Clear and simple KPIs will help create more precise and realistic goals.
The trick to choosing your top business KPIs is knowing what gets measured gets done. Let’s say, for instance, a manufacturing company makes it their goal to get out 1,000 units a week. The different departments, such as shipping and production, understand that they need to have all the materials and time to reach that goal. By setting this KPI, higher-ups will be able to measure whether 1,000 units are being produced while also analyzing the performance of each department.
Examples of Top Business KPIs
If you are still unsure of what top business KPIs are most suited to your company to ensure you achieve your main objectives, here are several examples of KPIs your business can pursue:
- Acquire X number of new customers by the end of a quarter.
- Generate X amount of leads every month.
- Track average time for conversion.
- Number of customers retained in a given quarter.
- Track number of new contracts signed per quarter.
Different industries will track other KPIs, so make sure you select top KPIs for your business and industry. For example, manufacturing plants will measure safety by monitoring how many hours they have gone without an accident.
Contact Wolf Creek BGI for Advice on Top Business KPIs
After selecting the top KPIs for your business, you should create a KPI-driven culture within the workplace. A KPI-driven culture will ensure your business goals are met and that growth occurs within your staff and organization. Wolf Creek Business Growth Institute offers business coaching that can help reorient your team and achieve your business goals with tailored advice on creating a KPI-oriented workplace. For professional advice and coaching, contact our business coaches today.