How do you know if your business is a success?
You need to be able to measure your achievements to adjust and adapt your business plan to the company’s needs.
To do this, you need to use key performance indicators.
These handy metrics can give you the data you need at just the right moment to make a critical business decision. Follow our guide below on how to make use of KPIs in your business.
What is a KPI?
KPI stands for Key Performance Indicator, and it is a metric used to measure whether business objectives (or any objective for that matter) are being met.
They can be powerful tools for inspiring a positive change in an organization and, when used correctly, can guide people towards their goals. However, used poorly, they can hurt morale and so must be chosen properly.
How to Define a KPI
There are different types of key performance indicators, and you must make sure that you are choosing the right KP metrics for your chosen objective.
A KPI should be specific to the goal you are trying to achieve. You can do this by applying a defined number of steps to the process. Ask yourself the following questions:
- What is the desired outcome of the goal?
- Why is this goal important?
- How will you measure the progress towards the goal?
- What impact can you have on this outcome?
- Who will be responsible for achieving the goal?
- How will you know when the goal is achieved?
- How often will you review your progress?
With each of these questions in mind, you should start to form the basis of the KPI. So for the KPI examples given above, you might decide on the following responses:
- To increase customer engagement by 15%.
- Achieving this will raise awareness of our company brand.
- Progress will be measured by customer engagement through our communications channels.
- By hiring the necessary staff to communicate our message.
- The Communications Manager is responsible.
- Customer engagement will increase by 15%.
- We will review this weekly.
These are just some ideas on how you can define your KPI. Don’t forget to set review dates for all your KPIs. This is an important part of the continuous improvement process.
Making it SMART
It is important to apply the SMART goal setting methodology to setting KPIs to make sure they are realistic and achievable. Depending on the methodology you follow, the words can be slightly different.
SMART goals are:
- Specific – Is your KPI specific?
- Measurable – Can you measure it?
- Achievable – Is it possible?
- Realistic – Is it something that you have the means to achieve?
- Timely – Do you have deadlines defined?
This is a proven project management methodology for ensuring that goals and KPIs are within the realms of possibility and can be tracked effectively.
If you would like to learn more about Project Management methodologies, then click here to find out from the experts.
Use Key Performance Indicators to Achieve Your Goals
Key performance indicators are powerful tools that help you navigate the tricky waters of goal setting. If you follow the outline set out above and you should find them a great way to help you make essential business decisions.
If you found this article useful, please take a look at our blog for more business advice.
