Ask yourself this question: how often do you look at the numbers as a business owner/exec? If the answer is not too much, it’s time to adjust that mindset.
First of all what are KPIs? KPIs are key performance indicators (KPI) which is a business metric used to evaluate factors that are crucial to the success of an organization. KPIs differ per organization; business KPIs may be net revenue or a customer loyalty metric, while the government might consider unemployment rates. It’s important enough for a fast-moving tech startup to stop for a second and create a dashboard with KPIs, your business should be doing it too.
The impact is huge because it helps people hone in on important things. Let’s study them a bit thoroughly now-
Pick a few key metrics that work for you and focus on those. Overloading yourself with too many numbers make it difficult to make sound decisions on what really matters to your business.
The ratio of people who convert from the total number of proposals we sent out.
How are our lead generation efforts going? Do we need to diversify our lead sources? Are we getting too many unqualified leads? Are our lead prospectors doing a good job? This will help give some insight into questions like that.
- Total bookings or revenue (broken out by “New Business,” “Add-On Business,” or “Renewal Business.”)
Sales cures all. How is your sales team doing in terms of meeting quota? How is your upsell process looking? Is your product so good that customers are consistently renewing?
- Number of qualified sales opportunities per month
Generating leads is nice, but you need to have qualified leads that fit your ideal customer profile.
- Total dollar amount of new qualified pipeline generated
Are you’re prospecting team generating enough revenue potential in the pipeline?
- The Top KPIs We Use For Operations
Though there is a lot of debate on the viability of this metric, it’s a good feeler on whether customers are overall satisfied/dissatisfied with our services. Of course, you need to be surveying and talk to your past/current customers to get feedback as well.
What % of revenue we lost for the month. Find out what an ‘acceptable ‘churn rate is (keep in mind that each industry varies so this is very general).
What % of clients we lost for the month.
- Gross Margins (broken out by “Team” and “Overall”)
what’s our overall margin? What are the margins per team?
- Compound Revenue Growth Rate
Calculating revenue growth rate is helpful for any business but it’s not that helpful when you look at things on a month to month/week to week basis because things can be highly variable in such a short amount of time. Instead, we calculate a growth rate over a 6 month period. To do this, we use a formula for compounding growth rate.
The lifetime value of a customer. You’ll want to look at these numbers for all of your marketing channels.
The cost to acquire a typical customer (cost per acquisition or customer acquisition cost). Same thing here – look at this number for all of your marketing channels.
This is simply the number of things done versus the things we said we would do. So if we said we would do 10 things and actually completed 8 of them for a client, it would be 80%.
Bear in mind that this is only for our team and your KPIs will likely vary. It’s up to you to figure out what’s important to look at.
Spend some time to figure out what metrics matter the most to your business and start measuring. Have someone (maybe you?) accountable for making sure you consistently have accurate numbers. Make sure people on your team are helping you deliver numbers they are responsible for in a timely manner. It’s important that these aren’t delayed or else you delay taking action on mission-critical things.