Do you know what KPIs are? Are you using KPIs to take targeted action?
If you have been in business for at least a few years now, no doubt you have heard of KPIs (key performance indicators). But sometimes, business leaders get to a point in their career that when they hear something they think they should know, but they don’t know it, so then they avoid learning it. It’s the craziest thing! It becomes a pain point that makes them feel like they don’t know what they are doing in their business.
KPIs are values you measure in your business that tell you how effectively you are achieving your business objectives. I like to think of them as any metric that helps me understand the success or misses in my business, the impact a new launch or new initiative is having on my business or something that reflects a change in volume going through my business.
An example of a KPI you probably already have in place is measuring your sales performance to your financial plan, be it monthly, quarterly, annually, or all of the above. How you are performing to that sales plan is a KPI. It tells you how well you are achieving the sales business objective.
Of course, there are financial KPIs, customer service KPIs, internal measures around production time by team, hand-off times between teams, etc. Anything you can measure in your business, you can make it a KPI if it reflects a business impact. The key though is that the KPIs you put into place has to be reflective of your business. You can’t take someone else’s KPIs and apply them 100%, as there will always be some differences from one business to the next. So make the KPIs are your own.
Once you have established your KPIs, you have to decide how you are going to measure them. Where is the data going to come from, can it be validated and trusted, can it be accessed regularly? Then you have to decide when you are going to review the KPIs to understand what they are telling you. Build a routine around reviewing and interpreting them.
Last but most certainly not least, is for you to take action on your KPI results. For each part of the business, you have to understand why the results are what they are. Once you understand how you go through those results, you either have to replicate them or improve upon them. Either pathway requires you to understand how you are currently getting the results you are seeing so you know what to keep, what to change, and what to improve upon.
If you didn’t know what KPIs were before this podcast, now you do! So take what you have learned, decide what KPIs you want to establish in your business, finalize the data, establish when you will review them, then review and take action. Use your KPIs to push your business forward and take targeted action.