Progress and performance are best measured by objective data. The goal is to remove assumptions and instead use key performance indicators to guide business. All too often, business leaders make decisions based on their feelings or subjective methods. This can be a big mistake that costs time, money, and resources. By using fact based metrics, you are better able to repeat what works and build upon your success.
What are Key Performance Indicators?
Key performance indicators are frequently referred to by their abbreviation: KPIs. They are objective markers, that guide the metrics tracking performance over time. It is an effective way to gauge progress towards a goal. If you read our article on setting goals you are aware of the SMART acronym. The “M” stands for measurable. If you are looking to increase gross monthly revenue by $10,000 over the next 5 months you have a specific, measurable, and time based goal you are working toward. To track progress, you might use a simple metric of a compounding, monthly increase of $2000 in gross sales.
Be Informed to Make Adjustments
The reality is, change usually takes a bit of time to see results. A better plan to achieve the $10,000 increase could be with progressive increments. You would set progress to be slower in the beginning but greater in the later months. If you aren’t tracking this with a repeatable, regular metric you won’t be able to adjust in time. By tracking data, you are able to make a better informed decision on your next step.
Let’s say to increase sales in the first month, you try a cross-selling promotion. A shoe store could try to offer a deal on socks at checkout. Sales receipts for the socks can be monitored daily, weekly, and monthly giving you a way to see how successful this strategy is. If sales only increased by $1000 that month, you will need to adjust for the remaining months. This indicator provides valuable insight on your tactic informing you to better apply it in the future. You might consider combining this with another promotion or rotate it in when you need a smaller boost in sales.
Using Social Media Metrics
KPIs can be used for marketing efforts as well. You saw in the previous example what an in-store, cross selling promotion might do for your bottom line. What about adding an online promotion around the same combined sock+shoe deal? A social media ad promoting your sock sale has a few more aspects to consider, but it will result in several more data points.
First, decide how you are making the offer and what the Call-To-Action will be. Are you going to use a promotion code or a “click to download” coupon? Tracking a social media metric is an easier task due to automation. You ultimately want to determine how many people purchased through your offer to see how successful you were, but there is a lot more data available with this strategy.
Social media offers you a way to track how many people saw your ad and their demographic details. If you review this information, alongside download vs. redemption, you started to build yourself a control. Similar to the “point of sale” promotion, you can compare how a different offer, target market, or ad-copy plays out. When you try a new tactic that results in a better outcome, it can become your new control to compare future strategies against.
Using Key Performance Indicators to Your Advantage
These are just some examples of key performance indicators you can use. There are many different types of KPIs. The most important aspect of using them is to choose ones that are accurate and relevant. They must guide your progress toward the goal you are looking to achieve. We have so much data available to us. Regular, structured methods that report and track this information will be instrumental to your success.
As always, we recommend you start small but start now. The “point of sale” strategy can be expanded to see the time of year it is most successful or which employees are best implementing it. The fact is we can easily get overwhelmed with the job of tracking data, but it is an important job that will get easier as you implement procedures to do so. When you have effectively started tracking one metric, you can then go on to track another and then another. Just make sure you use this newly found information to make objective decisions, and you will find success comes easier with greater regularity to you and your organization.