The most successful business owners don’t stay in the game by accident or chance.
There’s no secret recipe for their success, but one thing’s for sure: they don’t make arbitrary decisions.
Companies, no matter how niched or diverse, often rely on key performance indicators (KPIs) for marketing or overall business efforts.
KPIs are essential metrics for driving growth, especially for small to medium businesses.
In this article, we’ll walk you through the definition of a KPI, which KPIs you should focus on, and how you can hone in on the metrics that matter the most for your business goals.
Why Are KPIs Important?
KPIs are essential for tracking how your business is performing.
They provide a quantitative measure of how you’re achieving your goals and how your efforts are paying off.
By monitoring the right KPIs, you can identify areas for improvement, such as specific campaigns that need more attention or opportunities to create better customer experiences.
You’re on the Right Track if Your KPI…
- Aligns with business goals
- Keeps employees and partners on track with objectives
- Empowers teams to contribute to business goals
- Provides actionable milestones or standards
- Tracks performance effectively
KPIs, Metrics, OKRs—What’s the Difference?
There are several types of metrics, and a KPI is just one of them.
A metric is an umbrella term for numbers that gauge the progression of your business or marketing efforts.
A KPI is more specific. It tracks where you are with your long-term business objectives.
Here’s a scenario:
You’re an email marketer tasked by the sales head to generate leads through engaging campaigns.
How do you measure success? You know you were asked to increase the number of leads, so you make this your KPI.
But you’re also aware that other metrics exist, such as open, unsubscribe, and bounce rates. Since these are all good indicators of engagement, you also keep these in mind when writing and building the email campaign.
OKRs vs KPIs
Objective and Key Results (OKRs) are essential to organizational goal-setting too. You outline what you want to achieve (Objective) and how you will accomplish it (Key Results).
While not all KRs are quantifiable, they often incorporate actionable and measurable KPIs.
Going back to the email marketing example, here’s the difference:
Attract email prospects for my renovation business in 2023.
|While open rate is an important metric, the KPI here is the 20% increase in sales-qualified leads.|
Key results can include:
|To track results, the marketing department will monitor email sign-ups and determine if each of them is sales-ready.|
How to Determine Your KPIs
To get started, set up a meeting with key people in your organization and review your company goals, vision, and past efforts.
1. Align KPIs With Your Goals
Reflect on your company’s vision, key challenges, or areas of improvement to develop key targets that impact growth. Use the SMART framework when setting these targets.
What Is A SMART Goal?
SMART stands for specific, measurable, attainable, relevant, and time-bound. Instead of “Get more customers.”, go with “Increase new customer acquisition by 10% within three months.” instead.
2. Consider Your Current State
Whether your small or medium business is just starting out or is already established, KPIs can help push you forward. In the beginning, you could focus on increasing website traffic and acquiring more leads. With a steady customer base, targeting customer-focused KPIs such as retention and satisfaction would be recommended.
3. Identify Lagging & Leading Performance Indicators
Lagging indicators measures current or past business conditions, such as website visits in the last year and how much revenue you made last month.
Leading indicators are more forward-thinking. They are benchmarks to be met, such as conversion rate, and help organizations forecast success.
Both KPIs are crucial for goal-setting, measuring brand health, and identifying growth opportunities.
4. Focus On Relevant Metrics
You don’t have to analyze every piece of data you get. You want to put your efforts into metrics that matter the most to your business goals.
Once you have identified essential indicators, track and monitor them regularly to get the most accurate results.
Increase returning customers by 20% through digital marketing by the end of the year.
|Generate 2,000 leads by Q3 of 2023 using display ads and search engine marketing campaigns.
The marketing department will track Click Through Rate and Return On Ad Spend for SEM efforts. They will use Display Impression Share for display ads.
These will be checked quarterly and handled by the Marketing Head.
KPI Examples Across Departments
KPIs for your small or medium company can still vary depending on several factors, such as your industry, target audience, or organizational culture.
Below are key metrics that businesses usually track, but keep in mind that these are generic examples. As stated earlier, your KPIs should always be specific, measurable, attainable, relevant, and time-bound!
KPIs can help you measure campaign performance, evaluate social media platforms, or even determine colours to use. Examples include
- Conversion Rate
- Cost Per Acquisition
- Website Traffic
- Return on Ad Spend
- Return on Investment
- Lifetime Value of A Customer
Most sales metrics are quantifiable, from staff performance to revenue. By analyzing sales data, you can track which products are popular or how effective teams are. Consider these KPIs:
- Sales Volume
- Gross Profit Margin
- Average Order Value
- Close Rate
- Lead to Close Ratio
Keep an eye on customer experience to gain insight into how to manage your reputation. Here’s how to measure how much your customers love your company:
- Net Promoter Score
- Response Time
- Customer Satisfaction Rate
- Average resolved tickets
Whether you’re a startup or a conglomerate, HR KPIs will help you achieve your people management strategies and monitor if teams are empowered enough to contribute to company goals. Here are a few things you can track:
- Retention Rate
- Turnover Rate
- Cost Per Hire
- Employee Productivity
Bonus Tip: How to Get Everyone Involved
Everyone in your organization should be aware of KPIs to ensure all teams are aligned and focused on the same goals. Here’s how you can achieve this smoothly:
First, Finalize Your List of KPIs
Again, focus on the crucial numbers—2 to 4 KPIs—and prepare the required data. Consider sharing other relevant metrics as well to provide more context.
Prepare a Presentation
Strategize how best to communicate the KPIs and how they help manage your business and organization. Consider creating exciting visuals to engage your audience.
Set Goals After Your Presentation
Be open to adjusting KPIs by the end of your presentation. You can also set other goals, such as how to keep teams accountable, how to encourage success, and how to reward high performers.
Focus on Data That Matters to Improve and Drive Growth
By tracking the right KPIs, you can identify areas for improvement and gain insight into how to improve your small or medium business.
Companies can achieve their goals faster and more efficiently with a data-driven approach.
So, start setting up those KPIs today to improve your organization’s performance!
Work with an organization that puts your business development goals first. At Beanstalk, we make use of KPIs to help you create success. Drop us a message today, and let’s discuss how you can drive growth with the right numbers.