A successful business is a data-driven business. That is the key tenet in these times of analytics, big data and buyer personas. Understanding who our customers are, what challenges they face and what they really want is easier than ever thanks to the trackable nature of all of our online interactions. As a small business, your goal for growth should be to bring data into all your decision making to ensure that you are responsive to market conditions and changes in customer appetites. That all starts with data, which gives you a far clearer picture of what’s really going on and also goes a long way towards removing personal bias from decision making. But with so much data available, sometimes the hardest part is deciding which of it is actually relevant.
Using KPIs To Drive Progress
That is when the role of KPIs – or Key Performance Indicators – comes into play. Your task as a business owner is to gauge the overall health and performance of your venture at all times and make the relevant adjustments to keep things on the course to profitability. You need to look at your progress across a range of metrics to give a clearer picture. KPIs can be useful tools for giving you the measure of a situation. Larger companies tend to be well versed in using them for progress tracking and reporting. In smaller businesses, however, they tend to be less well used – but they can be just as useful. What the right KPIs can give you is an overview of progress towards the goals that you have for your business. The other area they can throw light on is what’s not currently working. And that is crucial for being able to pivot and make changes quickly, where they have a good chance of success. The key to implementing this well is to find out exactly what things you should be monitoring.
Choosing The Right KPIs
So what KPIs should you choose to track for the best chance of business success? Selecting the right ones is highly individual to each organization. In theory, it is possible to track the performance of your business in every minute detail. So should you just monitor everything and hope for the best? Well, that would also be a mistake. Monitoring everything brings a lack of focus to your work and direction of travel. In many respects, it is just as bad as monitoring nothing at all. And if you spend too much time and energy looking at the wrong things, you risk driving your business into the ground through monitoring metrics which aren’t relevant. Identifying your business goals is vital. Start by revisiting your original business plan and your vision and values. These should give you the framework to understand what activities will help to drive your company in the right direction. This action can help you to make the best use of KPIs and use them as a tool to grow.
Using KPIs With Employees
As your business begins to grow, you’ll probably find yourself taking on employees for the first time. Using KPIs to monitor factors such as your employee attendance and productivity helps you clearly see what they are contributing towards, and whether the time they spend is moving your business closer to its goals. After all, if you don’t have a clear picture of employee performance, all your other metrics become a little invalidated. But there are more things you should be measuring than just how productive your new staff members are. You also need to take a holistic approach and get a handle on things like their engagement level, work-life balance and happiness at work. When you think about the significant cost of recruiting and training new staff, both in terms of money and other resources like time, you’ll see a highly compelling case for minimizing staff turnover. If you have no real clue as to how happy your employees are in their roles, and what you can do to keep them that way, then you risk a large drain on your limited resources that you could certainly do without. Today’s workforce tends to take a different approach to success, and there is a lot more understanding that things like implementing flexible working practices, encouraging passion projects and ensuring staff alignment with the company values are increasingly just as important as a salary band in attracting and retaining the right candidates.
Using KPIs For Customer Satisfaction
Your customers are the tool through which your company generates its revenue. And more than ever, in these globally connected times, if they aren’t happy with what you have to offer, it’s easy for them to jump ship to a competitor. Analytics dashboards let you track customer satisfaction rates easily – and can flag up any problems before they become insurmountable. These tools can grant you a highly valuable insight into what makes your customers happy, and what you could improve about products or processes to maintain and increase that. This applies across the board, no matter what sector you operate in. Today, we search for online reviews and ratings on almost everything we buy. If your product or service is failing people in some way, news spreads fast. You could be losing out on highly valuable repeat business and unknowingly putting off new customers. Making a smart investment into the tools you need to collect and analyze this data is absolutely key if you’re aiming for business growth. Whether it’s tailoring product attributes in response to customer feedback, improving delivery times, adjusting charges, balancing stock issues or even issuing invoices digitally with an invoice simple app, there are tech solutions out there to help you meet and exceed customer expectation, and that gives you longevity.
Using KPIs For Profit And Loss
The number one issue that can plague small business and spell the end of many a promising start-up? Cash flow. It’s an awkward position to be in – trying to get a business going means a lot of necessary outlay and investment – all at a time when you may not be generating many returns yet. It’s a precarious balancing act that can go desperately wrong, so it’s important to always be on top of your financials. And that’s an area where KPIs around profit and loss can really help. You create a formal record that pulls in income and expenditure at a glance, and this can inform you as to how your company is performing over time. A good month, or even a good quarter, doesn’t mean everything is rosy. You can use KPIs to keep focusing on the overall picture of your financial health. It helps you to identify what issues are hindering you and come up with strategies to address them. Setting financial KPIs means you’re looking at profit and loss on a regular basis, and that’s a very good thing.
Using KPIs For Revenue By Service Or Customer
Understanding what your most successful services are – and who your most valuable customers are – gives you an idea of where to focus, which is especially good for small businesses without huge resources. You’ll generally find that a handful of customers generate the majority of your revenue, so it makes sense to target these with relevant upsell opportunities, additional added-value items, and flawless customer service. Building relationships with your most valuable customers is highly worthwhile as it increases your chances of keeping their business in the longer term. And when it comes to services, setting KPIs allows you to quickly identify what is a cash cow and what is dragging you down. Knowing which of your services creates the bulk of profits is essential to manage your resources accordingly. Wasting your time and capital on something which isn’t making a return is a trap that a lot of small business owners, unfortunately, fall into. Knowing when to move in and make changes to what you offer is critical. Metrics can help you to be less sentimental about an idea by showing empirically that it’s not working out. And if there are others you have to convince, KPIs give you the cold, hard data to make a convincing argument around what to cut.
Using KPIs For Digital Presence
Another metric that it’s increasingly important to have sight of these days is your digital presence – both the performance of your own website and the social channels you choose to engage in. These avenues are highly valuable for market research and turning interested browsers into brand advocates. Understanding how your customers are engaging with your digital presence – what content they respond well to, what they’re asking for, what channels they use the most – can really help you develop your business plan. You’ll understand the best way to target your audience and pitch your new offers – you could even use social to understand the sentiment around your brand or a rival’s, or crowdsource ideas for new lines. Never forget that your website and social media are valuable tools for business growth. When done exceptionally well, they can even reduce the need for paid-for advertising forms, or allow you to target that spend more accurately.
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