Why KPIs are important? Not only are company key performance indicators critical for monitoring financial performance, they can also help to improve employee morale, customer satisfaction and other, more personal objectives important to the growth and success of your business.
How to choose the right KPIs to monitor?
The metrics that you measure and track depend completely on your organisation’s goals and objectives. First, ask yourself what it is that you want to achieve. Next, consider how you can measure the progress towards your goals. A key performance indicator is a number that shows whether you’re getting closer to your goal or if there’s a lag in progress.
Customer Satisfaction is a reputation metric which can be used as a means of evaluating how clients perceive the quality of your performance, product or service. Strong Customer Satisfaction highlights brand loyalty and increases the likelihood of repeat business or of a recommendation. Conversely, a negative result should be treated as a warning requiring further investigation. An unhappy customer may indicate a weakness in the quality of service provided that could limit future growth.
Customer retention is a good KPI to track customer satisfaction. Customers making repeat purchases indicate quality performance. With current market saturation, it’s easy to move on to a competitor when confronted with poor customer service. This is especially vital in industries where repeat purchasing regularly occurs. If customers prefer to seek products or services elsewhere, you may need to put more effort into nurturing.
Tracking employee morale
Staff Turnover is a good metric to track employee morale as it measures the number of employees who have joined or departed a company within a particular reporting period. A high Staff Turnover under normal operating conditions may indicate an underlying problem with staff retention as well.
There are a number of other KPIs that you should be tracking in order to track a successful marketing campaign. How much revenue has your marketing campaign brought your company?
Understanding your sales revenue is important to know how effective your marketing campaign is. No company wants to spend money on something that isn’t generating money. Most likely you would move that money to other marketing activities.
You can calculate your sales revenue from marketing by utilising the following calculation.
(Total sales for the year) – (Total revenue from customers acquired through marketing)
A healthy business has a relatively high-profit ratio, which can be determined by measuring your sales and investments and by looking at your gross profit margin. Gross profit margin, also know as gross margin, is calculated by dividing gross profit by revenues. As a small business, improving your gross margin should be one of your key goals – increasing sales revenues while decreasing the costs to deliver them. Gross profits are the key to unlocking profitability in business.