Whether your performance improvement objectives relate to inbound marketing, sales or any other aspect of your business, choosing the right Key Performance Indicators (KPIs) to focus on is the first step towards measurable improvement. But how do you go about choosing the right KPIs?
Choose KPIs that are directly linked to your business objectives
KPIs are quantifiable measurements or data points used to measure your company’s performance against an objective. For example, a KPI might be linked to your objective of increasing sales, improving the return on investment of your marketing efforts, or improving customer service.
Focus on a few key metrics, rather than too much data
As you begin to identify the key performance indicators for your business, you should bear in mind that it’s generally best to concentrate your efforts on a few targeted points. Rather than choosing dozens of parameters, you should just focus on the few key indicators that will really make the difference. Always keep Pareto’s law in mind. On the other hand, if you try to track too many KPIs, you might as well track nothing at all. In most cases, you should aim to identify between four and ten KPIs.
Take into account your company’s growth phase
Depending on the stage of your business (start-up or established company) certain metrics will be more important than others. Early stages of development generally focus on metrics related to business model validation, whereas more mature organisations concentrate on metrics such as cost per acquisition and lifetime customer value. To choose your KPIs wisely, you need to know which category you fall into and bear in mind that the key performance indicators you used in the past may no longer be relevant today.
Identify delay and peak performance indicators
Selon le stade auquel se trouve votre entreprise (start-up ou société établie), certains indicateurs seront plus importants que d’autres. Aux premiers stades de développement, l’accent est généralement mis sur les indicateurs liés à la validation du modèle d’entreprise, tandis que les organisations plus matures se concentrent sur des indicateurs tels que le coût par acquisition et la valeur de la clientèle à vie. Pour choisir judicieusement vos indicateurs clés de performance, vous devez savoir dans quelle catégorie vous vous situez et garder à l’esprit que les indicateurs clés de performance que vous avez utilisés dans le passé ne sont peut-être plus pertinents aujourd’hui.
Understand that KPIs are different for each sector and each business model
The KPIs you choose will be greatly influenced by your company’s business model and the industry in which you operate. Here are a few examples of some of the industry-standard KPIs:
KPIs in a Saas (Software as a Service) model:
- Monthly recurring revenue
- Cancellation
- Cost per acquisition
- Average revenue per user
- Lifetime value
KPIs for booking professional services :
- Reservations
- Use
- Delay
- Loss of income
- Effective billing rate
Online media, KPIs in publishing :
- Unique visitors
- Number of pages visited
- Share ratio
- Growth in shares on social networks
- Average time spent on site
Distribution KPIs
- Capital expenditure
- Customer satisfaction
- Sales per square metre
- Average customer expenditure
- Stock rotation
These are just examples; it’s more important to take the KPIs that fit your business rather than those used by the rest of your sector.
