For a business to be successful, one has to put his best foot forward in all aspects. From marketing to sales, from finance to human resource, from up scaling to risk analysis, business owners have to have a cohesive plan and spot-on management strategies.
A thriving business plan involves strict and regular monitoring and assessment. Here is where Key Performance Indicators (KPI’s) comes into play.
What is a KPI?
KPI is a quantifiable assessment tool to measure progress in business over time. They not only help in assessing the progress but help indicate different business patterns and act as a guide for strategic choices and organizational improvements.
Through this blog, we will identify and explain the most commonly used key performance indicators.
Type of KPI’s
Return on Investment:
It is a relationship of money earned versus money invested. For instance, If you are a small business owner, and you invest (let’s call it Amount A) on an Instagram ad. Let’s say, you are able to reach 50 new customers who help you generate an income (let’s call it Amount B).
This relation between the two is called Return on Investment (ROI). It will simply tell you a figure as to how much return you get on every dollar you spend.
The most important part of any business is it employees. Through employee productivity, you can keep track of individual employee progress. In mathematical language, it is revenue per employee or profit per employee. The use of incentivizing your employees can increase employee productivity
Customer Churn Rate:
It is important to assess the retaining power of your business. Customer churn rate depicts how many customers you lose in a given time. This can be due to reasons on both ends. Probably you are doing something wrong in your business, or the customer has resided to a different alternative.
This helps a business to identify customer patterns and reasons why one has stopped buying or using your services. Low churn rate means high retain rate which is a sign of a good business.
There are hundreds of KPI’s? Do I use all of them?
The answer is no. Every business has different aims, goals and objectives. While there are hundreds of performance indicators, it is not practically possible to use all of them together. Choose a few that relate to you the most depending on the nature, scale and business type.
While it is very important to assess your business growth over time, it is also important to not over complicate stuff. Be very clear about your business strategies and stick with it. Evolve with the changing needs of your customer.
Make a brand out of your business; an identity that stands out. Employ critical thinking problem solving skills to overcome challenges.
For all that you look forward to achieving; a trusted agency is what you need. Direct your questions to PowerCloud Consulting and help your business grow! For more information, dial us at (866) 517 8483.