“How do I measure the success of my business?”
Anyone who ever asked this question probably already knows that the answer depends on several factors. For instance: What industry you’re in; what business model you’re using; what your target market is, to name just a few. Each of these factors corresponds with different business goals that should be measured and analyzed.
The truth is that there is no one simple answer to the question of measuring your business’ success. But don’t worry. We are here to help you with that.
There is one acronym that is hugely important in measuring performance: KPIs (Key Performance Indicators). Think about a compass that helps you stay focused on your destination. KPIs are like a compass. They guide you towards your business goals.
Key Steps to Finding the Right KPIs
Define your Priority
Start by asking what will be the one improvement that will mostly impact the business? Although this is a tough question, it will bring you more clarity and focus on your goals. Another important point is to define your Secondary KPIs. But this topic will have a separate article later on.
Adapt KPIs for Specific Departments
Each department has its own KPIs. To be truly effective, you need to measure performance not only of the company as a whole, but also break it down to the various departments. The Support department may measure the number of calls; Marketing would like to increase exposure and improve conversion rates; while the Finance team would like to know the Collections and Churn Rate.
Keep Your Eyes on the KPIs
There are many measures that are interesting to know but monitoring too many will just cause distractions.
Ask yourself: If you had all these different metrics set side by side on a dashboard, what could you accomplish with each of them? Would it be possible to somehow improve each and every one? If not, is it at all effective to keep track of all this data? Don’t measure just for the sake of measuring. Do it only if you want and can improve the metric in question.
Define Triggered Alerts
While business KPIs aim to improve your business’ main measures, monitoring KPIs aims at triggering anomaly. In this case, our goals can be minimizing downtime, reducing frauds, identifying broken links, bugs, etc. For these issues you can set up alerts that will be triggered when traffic drops or spikes occur. Find out what the minimal time duration is (minute, hour, day), as well as the threshold that will be sensitive enough. But watch out for false positive alerts!
Some KPIs give a satisfying input even when you measure them quite broadly, but others require a more precise drill-down into relevant segments
Example 1: What if overall sales are great, but in England they are actually dropping? will you be able to see this decline without country segment?
Example 2: when measuring funnel, we can measure overall conversion rate (from entry point to the last step). But what If we have a drop in one step and actual improvement in the other? The overall rate will not reveal that.
One last question
I would like to leave you with one last question: Is there one main KPI for all companies in the world?
Most of the companies I know select sales as their main KPI. It’s true that sales is a good reflection of the company’s performance, but I would suggest that they are a mean rather than a goal.
I believe the main goal is to reach the right people and make a positive change in their life. But then again, try to measure that. (-:
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