With the boom of the technological revolution the advancements in business have been astonishing. We have gone from a trade and barter system, to shopping in our pajamas from the comfort of our homes! Communication has become easier and more widespread across the globe. Even advertising has changed from newspapers, to radio, to television and billboards, and now it is in the palm of our hands on social media. Emails are sent out automatically, customers provide instant feedback with reviews, and social media allows for a direct connection with consumers wherever they are. Our forefathers couldn’t even imagine the fast paced and connected world of commerce that we live in today.
Technology offers many amazing innovations, including the ability to track and evaluate performance information. Data is king, and businesses that track relevant data and use it to make good decisions are the ones who are successful. Businesses should be taking advantage of all of the available data to create key performance indicators (KPIs) to track the success or failure of business initiatives. These metrics provide valuable feedback to allow businesses to compare and contrast current results with the past, ultimately giving them a better view of the future.
KPIs work best when they are developed based on a company goal or initiative. They use quantitative analysis to understand where the business currently stands, and how a change has impacted that business over a period of time. For example, a business might have 10 sales managers generating $100k in sales revenue each month. With a goal of increasing revenue by 50% the company adds 5 new sales managers. The business knows that prospective clients are out there, but their sales managers cannot reach all of them because the workload is too heavy. Mathematically one would assume that by adding an additional 5 staff members, the revenue would follow and go up by 50%. However, this is not always the case, and the business will need to determine why the revenue is not coming in at the expected rate.
KPIs give that business an opportunity to identify where the shortage in revenue is coming from despite the increase in staff. The business can develop software to track how many leads are generated, how quickly they are followed up on, which managers are turning leads into sales, how much lead time is needed, what sales approach customers are more receptive to, and many other factors that could have an impact on sales growth. By identifying the results of each action, the business is able to more accurately pinpoint roadblocks and develop a plan to course correct. It is in this course correction that businesses succeed. KPIs provide usable data, but it is up to the business to take that data and use it to make decisions that will make an impact.
As business owners, managers, or CEOs it is important to identify the most important data that needs to be tracked. Sometimes it is as simple as comparing sales growth before and after a marketing campaign, other times it requires out of the box thinking. With the abundance of information available on the internet, businesses are no longer limited by the data generated within their organization. There are thousands of websites that gather tons of data for almost every industry. They can tell you what types of consumers are purchasing products similar to yours, how they are using those products, and the advertising that drove their purchases. Web sites can tell a business how many of one product was sold, who it was sold to, how much it was sold for, and how long it took to sell.
The information is out there and available to anyone who is willing to look for it. Getting that data is the first step in creating a KPI, the second is incorporating that data into software solutions that give that information relevance and value. Solutions can analyze data, compare it with other information, and in some cases isolate data that is specifically relevant to your business. The key to the success of data and KPIs is the relevance it brings to an individual business. If the data can be used as a tool to measure success it has unlimited value as the business can make the right decisions and focus on growth.
How will you use KPIs to take your business to the next level?
