Understanding KPI's

Understanding KPI's

Tuesday 7th November 2017

By Michelle Hammond

Key performance indicators (or KPI’s) allow a company or organisation to determine the effectiveness of various processes in adhering to the company’s overall aims. They are a way of measuring how successful, or unsuccessful, an approach is in helping attain profits and goals.

There are many varying KPI’s which help to track a range of processes such as profits, staffing levels, customer satisfaction and marketing. It is important to understand that one company may benefit from using a certain set of KPI’s but another company may need to look to a completely different set. It is vital therefore; to understand which KPI’s your business needs to address in order to help you on your way to achieving your end goals.

KPI examples

Some of the most common KPI’s are those used by the sales side of any business. These may include overall profits, new revenue, average deal size and how many new customers are being brought in.

The customer service side of the business will want to employ KPI’s which look at overall client satisfaction, wait time for client, number of complaints and also which services result in post call surveys.

Human resources need a completely different set of KPI’s such as staff turnover, employee engagement and also how long it takes to fill an open position.

In order to judge the effectiveness of your marketing strategy, KPI’s such as leads generated and conversion of sales leads will help managers to gauge whether the best strategies are being used in order to garner the best leads.

Developing the best KPI’s for your business

Once you have identified which KPI’s to use in order to help you reach your goals it is important to ensure that they work well together and are understood by your entire team. If your business aim and ethos are not well communicated through all aspects of the business then you may find your measures allowing too much focus solely on the financial aspects. This offers a rather imbalanced and incomplete view of your business.

You will also need to ensure that all areas of your business are working in harmony so that KPI’s deemed important in one area of the company are also viewed as important by others who may have different priorities. For example, your front of house and sales teams need to know that their targets are just as important as those set for your marketing team, and vice versa.

Development of an effective set of KPI’s involves hard work by all involved. It may be a good idea to ensure that your staff and managers feel free to revisit and amend the measures in order for your set of KPI’s to be most effective.

To deepen your insight in to the best KPI’s specifically for your Spa & Salons jump in on one of our ‘Manage What Matters’ Masterclasses or FREE Webinars.

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