Keeping track of your key performance indicators (KPIs) helps your business grow and profit.
Learn how to figure out which KPIs you need to look at to actually see growth.
Let’s say it’s the first time you've ever heard of the game Monopoly. Hence, you have no idea how to win. But you decide to just keep playing. You just roll the dice. Move a few steps. And try your luck.
Now, what would happen if all of a sudden, someone came to you and explained how everything works?
This person could explain what the tiny houses were for, how fast the action items are played, and how quickly you could get from one point of the board to another. Of course, it would be easier for you to win, right?
The same is true in business. If you have no clue about what you need to do to succeed, it’s really hard to make it happen. It could feel like you’re grasping at straws. And most certainly, your team would feel it, too.
Here’s the thing…
The person that’s in charge of explaining how the game works is none other than… You. After all, you’re the leader. You need to be the one in charge of leading your team to victory.
One way you can do that is by learning how to maximize the key performance indicators inside your business. So, in this article, I’ll share with you 3 tips that can help you maximize your return on investment (ROI). And you do it by dialing in your KPIs.
What are KPIs?
As mentioned, KPI stands for ‘key performance indicator’. KPIs refer to a set of quantifiable measurements of performance that are used to determine a business's overall performance.
These indicators help give a company direction in various aspects of the business, such as strategy, operations, and finances. They’re helpful because they give each member of the team a target or a milestone to achieve over a period of time.
By tracking and keeping up with KPIs, businesses can achieve growth.
However, it is important to point out that KPIs are different from metrics. The biggest difference is that metrics are quantifiable measures of activities that support the KPIs. While they are related, this means that metrics are much more specific and they do not serve as the most critical measures of your business’s performance.
At the end of the day, KPIs are what matters.
The 3 Tips
Tip #1: Make sure each team member has 3 to 5 KPIs
Since KPIs are essential tools to gauge a company’s performance, it’s helpful to specify three to five KPIs per role in your company. It’s best to have every member of your team – including you – have three to five numbers each week that they report on.
The reason behind this is that it’s impossible to give everyone the same set of KPIs to think about. That would be like rating a particular dish made by a chef, a plumber, and a doctor. It just won’t make sense for everyone.
Now, to determine the KPIs that each role must keep track of, you need to dig deep. Ask yourself:
- How does this position move the needle?
- What would actually help us hit our revenue goal?
Tip #2: Learn how to maximize your people
When it comes to maximizing your people, all you’ve got to remember is that every single person in your business should do either of the following:
- Make the business money
- Assist someone who’s making the business money by removing things off their plate that has to get done
Let’s say you hire someone to direct people where to go and try whatever.
Now, this person might not be directly impacting or making you money. But if you, the CEO, previously had to do this… then adding the director to your team is worth it. After all, they removed some tasks off your plate, allowing you to focus on the needle movers.
If you can’t figure out a position based on these two criteria, then you are not maximizing the people that you have working for you. What you can do is either make sure that they are doing anything of the above mentioned roles… or just let them go.
If you have successfully maximized your people, it makes much more sense to give them a set of KPIs to track your entire business’s performance.
Tip #3: Aim for results by dialing in the right KPIs
To get an accurate or clearer picture of your company’s performance, it’s not enough for you to track the KPIs of each team member. You must also ensure that you’re tracking the right KPIs from the very start.
Let’s say you have a social media manager. And you’ve told her that one of her KPIs is posting on social media once a day.
Now, here’s where many business owners fumble: They think that just posting on social media is a good enough KPI to track.
But are you actually getting results from posting alone? Is your bank account changing? Or is your revenue dropping because you’ve stopped posting for a week? Chances are, the answer is no.
Needless to say, that’s an example of a wrong KPI to track.
Be more specific about what KPIs to track. And be sure that these KPIs are directly linked to how each role is contributing to your company sales. You have to teach your people what you’re really trying to do… and how their role is helping you reach that.
Create Better KPIs to Maximize Profits Today
Now, it’s time to reflect:
Does every single position in your company have a KPI? Are these the right KPIs for them? Can they effectively gauge your business’s performance?
Take the time to figure this out. Enlist the help of your team leads to make sure that you don’t miss anything.
And if you need more help identifying the right KPIs to track for each member of your team, schedule a strategy session with us. Book a call here: www.stacytuschl.com/call.