Key performance indicators, often more commonly referred to as KPIs, are metrics by which a company can evaluate how successfully they are moving towards their stated business goals and ambitions. Obtaining and analysing KPI reports is key for businesses to assess which parts of their business strategy are working well, which ones need improvement and where to divert resources in order to better achieve those all-important goals.
Common attributes of KPIs
While individual KPIs will vary from business to business depending on their size, sector and unique circumstances, there are a few basic principles that all KPIs tend to follow. These include:
- KPIs should be able to be expressed in numbers to allow decision-makers in the company to easily interpret them and adapt their strategy based upon the results. This is true even of more abstract business goals, such as customer satisfaction or employee happiness. In these cases, KPI reports should be obtained which rank satisfaction or happiness on a numeric scale.
- A KPI should be unambiguous enough that it does not overlap on other sections of the business or other KPIs, giving interpreters a clear definition to look out for. It should also be simple enough that everyone in the company can understand it and work towards the common goal based upon its results. Finally, it should be restricted to a certain time period (week, month or year, for example) to obtain finite results.
- Many businesses fall into the trap of amassing reams of data upon almost every metric imaginable, just because they can. While all KPIs are metrics, it’s important to remember that all metrics are not KPIs and that the latter can only provide insight if they are given context within a greater goal or target. The results from a KPI should be used to better direct efforts towards achieving the ultimate ambitions of the company.
Common examples of KPIs
As mentioned above, KPIs will differ from one company to another, but to provide clarity and avoid confusion, here is a rundown of some common KPIs which crop up all in manner of industries and business sectors:
- Conversion of prospects into leads
- Conversion of leads into sales
- Customer retention
- Customer satisfaction
- Delivery times
- Back order rates (how often an order cannot be immediately filled from existing stock)
- Return on investment (ROI) for marketing efforts
- Employee turnover
- Employee happiness
- Call times (even in businesses which do not operate a call sector)
Using KPIs to your advantage
Of course, these are just some examples and there are many other KPIs which can provide insight into how to optimise your business. For that reason, it’s imperative that you tailor the KPIs you intend to use to your specific needs.
At Profile Chartered Accountants, we have over 16 years of experience and a proven track record in helping businesses identify the KPIs that work for them and analyse the results to provide invaluable advice on their future strategies. To learn more about how your company can benefit from our expertise and acumen, give us a call on 020 8432 2289 or send us an email at [email protected] and we’ll be happy to help in any way we can. We’re waiting to hear from you!