KEY PERFORMANCE INDICATORS
Key performance indicators, or KPIs, are quantifiable measurements that can be used to demonstrate a company’s performance, but what these are will depend on the type of business you are running.
THE USES OF KPIs
KPIs can be extremely valuable in demonstrating and allowing would-be investors to determine your business’ operational, financial and strategic achievements. They can show off your overall performance, especially in comparison to other companies in your sector.
And that’s why they are even more important for you: KPIs help you test your assumptions, track your execution, and run your business in an efficient way.
Key performance indicators can be very important but it is vital to avoid using vanity metrics. Instead, you should focus on company progression and core details about your operation. This may include the number of sales you make, the cost of selling your company’s products, the means of selling your products, etc…
Also, KPIs are a fundamental part of understanding your market fit and decide if you need to pivot.
KPIs AND YOUR BUSINESS
The KPIs that will work for your business will be a mixture of channel-specific goals and other more general business aims. They will also depend on the size of your organisation as larger companies may have different channels which will need to be measured separately.
The key performance indicators will vary if you are not running the typical digital business and your company is not internet-based or a SaaS (software as a service) business.
Digital companies may use followers, impressions, delivery rate, referrals, content visits or views to track their performances, while non-digital businesses might use quantifiable data such as sales per square meter, capital expenditure, return on newly-opened shops, same-store sales, etc.
There are also more general key performance indicators, that can be used by a wide range of different businesses. These can include the likes of revenue per client, customer penetration, client retention rate, profit margin, customer satisfaction and quality of assets.
You can find a template with some of the most common Key Performance Indicators on our Download page.
In particular you’ll find how to calculate your runway using burn rate and monthly recurring revenues (MRR), your customer acquisition cost (CAC), your customers’ LifeTime Value (LTV), your Churn Rate or Viral Coefficient.
Our excel file should be straightforward to interpret… but in case, just ask if you have any doubts.
WHICH KPIs ARE RIGHT FOR YOU?
This will really depend on individual businesses and their strategies. Therefore, it is not possible to say how many key performance indicators your business should have or which ones. In general terms, however, it is generally agreed that four to ten measurements may be suitable for the majority of companies. We prefer to stay on the lower end of this number as this may help focus on the quality of the KPIs used.
The number and type of key performance indicators may also change over time and it is important to carry out regular evaluations to ensure that the measurements being used are the most effective and appropriate for your current business operations.
Still confused or not sure about the best way to set up your KPIs? We can help you set up the most appropriate indicators for your company and help you track your success! Contact us here.