Key performance indicators are a metric that businesses use to assess their progress. Typically, they’re set annually, but they can be reviewed daily, weekly or monthly as required. Identifying KPIs that align with your long-term goals for the business is crucial. You want your short-term goals to feed into your long-term ones. This process, however, can be tricky.
Sifting through a sea of metrics searching for a meaningful one can be a long, arduous journey. So to help you identify relevant, valuable, and genuinely helpful KPIs, we’ve highlighted some of the pitfalls of the KPI identification process.
We’ve also included some tips you can use that’ll put you in the best position possible to find metrics that are worthwhile measuring.
Small business consultants Growth Idea had this to say:
“Choosing the correct metrics to analyze can drastically improve your business’ long term outlook.”
Avoid empty metrics that do nothing for the bottom line.
Vanity metrics like engagement on social media may seem like a decent choice for a KPI at first glance, but when you dive into the impact of that stat, does it garner genuine change and development for your business? For example, if your goal is to increase brand awareness, does increase the number of interactions with the same few followers significantly further that goal?
You have to ask yourself that question when evaluating the strength of a key performance indicator.
I’d compare it to an athlete lifting weights solely to build the size of their glamour muscles – purely an aesthetic choice that doesn’t translate into functional strength that’d genuinely help them create an advantage over the competition.
If you’re serious about achieving your long-term goals, you have to prioritize metrics that make a discernible difference to your bottom line – not opaque metrics that do little more than provide false hope to stakeholders.
Are your marketing campaigns helping?
Business development is defined as efforts that result in an improved future for the business. It culminates in the creation of long-term value.
One crucial way businesses can realize their long-term goals is through marketing. Many businesses uncover new revenue streams by expanding their operations – targeting a new demographic with tailored messaging or ramping up their efforts to acquire their competitors’ customers.
Generating brand awareness, bolstering the number of leads you can create, and gradually improving sales are all factors that directly correlate with continued business success. Therefore, identifying and analyzing the KPIs that give you the most clarity about this aspect of your business’ performance is the best way to evaluate your progress successfully.
Focus on the stuff that truly matters
Your KPIs when first starting a business will be completely different to those 5 years down the line. Dialing in on the metrics that really move the needle for your business is an important process for any company. Look for statistics that stimulate growth and genuinely impact the bottom line. The number of potential customers reached with a marketing campaign is one such example.
You have to expand brand awareness, gauge the interest of potential customers and ultimately measure how that interest translates into sales.