Welcome back for the penultimate blog of October 2014 and what promises to be a crash course on what could quite possibly be the coolest sounding of all marketing acronyms – KPI
Perhaps I don’t get out enough but I always think that KPI should be like the little brother of the FBI, cool in it’s own way yet a little difficult to control, and I suppose in some tenuous way I am right as you do need to test and amend your KPIs but I’ll get into that later and focus on the basics first.
KPIs (Key Performance Indicators) or KSIs (Key Success Indicators) are an integral part of the marketing world and will be built into any good marketing plan and strategy as they help a business define and measure progress toward its goals and targets.
Once a business, or a department within a business, has defined its goals it needs a way to measure the progress it makes toward those goals – Key Performance Indicators are those measurements. Or a little more precisely; Key Performance Indicators are quantifiable measurements, agreed to beforehand, that reflect the critical success factors of a business.
Now if you’re new to KPIs then don’t worry they’re not as tricky as they sound. But don’t expect to copy your mate’s either as they will differ depending on the nature of the business they are applied to.
For example:
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A business may have one of its Key Performance Indicators as sales or turnover
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A School may focus its Key Performance Indicators on exam results
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A customer service department may have the percentage of customer calls answered in the first minute as its Key Performance Indicator
Whatever Key Performance Indicators are selected, they must reflect the company’s overall goals, be key to its success and be quantifiable…
…If a Key Performance Indicator is going to be of any value, there must be a way to accurately define and measure it. “Generate More Repeat Customers” is useless as a KPI without some way to distinguish between new and repeat customers. “Be The Most Popular Company” won’t work as a KPI because there is no way to measure the company’s popularity or compare it to others.
I know that those two examples may sound a little daunting if you are a small business or even just starting out but KPIs can be both large scale and small scale. If your company is very small it can still measure lots of things and report on them such as sales, web visits, database size, profit margins etc. You set the KPIs that are applicable to your business.
KPIs are there to guide you on your business performance but not necessarily run your business, you must remember this and not let the numbers specifically run your business as there may be lots of external factors that impact on a KPI.
It is also important to remember that Key Performance Indicators are usually long-term targets set over a month, quarter or year. The definition of what they are and how they are measured does not change often. When you define a KPI you must stay with the same definition from year to year. For example, a KPI of “Increase Sales” should not be measured by units sold one year and by £ value of sales the next because the figures look better! The goals for a particular Key Performance Indicator however may change as the organisation’s goals change, or as it gets closer to achieving a goal. For example if sales are amazing in quarter one then the overall KPIs can change (i.e. the goalposts shift and the targets are set higher). It is therefore important that KPIs are achievable and not unrealistic, but similarly not too easy.
Lastly make your KPIs simple to analyse and view. Make sure you can view your most important in a very easy to read and identifiable way so that you can analyse them effectively. Millions of figures on a sheet mean nothing but making 8 or 9 KPIs stand out on a dashboard can make a real difference.
We understand that overall KPIs can be difficult to establish so let Début Marketing help you do this and help identify a KPI dashboard for your business that you can get your head around.
Next week, as we draw ever closer to Halloween we will look at some of the main horrors and pitfalls that new businesses face when starting out… (ominous) dum dum dum!