The Importance of KPIs for Business Growth

Nothing is ever guaranteed in the world of business, and there are just as many paths to failure as there are to success. That’s why understanding the fundamental value of processes and how to utilize KPIs for your business is imperative for its growth. A process is a set guide that helps you achieve the result you desire, but these are just motions without stats to support them and goals to achieve.

Our owner/CEO, Derek Sommer, recently spoke about this very topic at Vision Conference 2019. He not only shared his experiences but discussed in detail several processes that have helped our company succeed over the years. Below are a few steps Derek provided at the conference that we wanted to share for anyone who was unable to attend.

Set Business Goals
First you must determine the behavior you’re trying to change or improve. For example, as a business owner, you would like your sales team to have X number of calls each week. Start with a reasonable goal. Maybe that means 30 calls each week. As they achieve these goals, increase that number until it reaches a cap, but don’t stop there. Start increasing other items like face-to-face meetings or actual sales.

TIP: You can talk to your CPA to get the figures for companies in your industry. Use this information to exceed industry standard. Determine the steps needed to make those numbers, put together the goal and timing, break it down into smaller goals and timing, track it and update as needed.

Define KPIs

Why do you need KPIs? KPIs, Key Performance Indicators, help you reach the company goals and targets. There are usually smaller goals that need to be reached first, and KPIs help you understand those. Once you have your goal set, work backwards. Treat this as you would a marathon: You don’t just walk out the door and run 26.2 miles without proper training. You run a mile one day, a few more the next week and so on until the big race. The KPI in this example would be “miles ran each day” with the goal being a marathon.

Because humans are competitive by nature, people like challenges and objectives. KPIs communicate to the team where things stand. This in turn increases morale, as they can see how they’re participating in the bigger picture. When employees can see how their part contributes to the company, you can expect an increase in productivity. Employees can better hold themselves and each other accountable.

TIP: If you’re overly ambitious with your goals, it may have the opposite effect on your employees by discouraging them when they can’t meet the goals. Remember to be reasonable with the progression.

Maintain KPI Relevance
When you’re receiving dozens of emails and reports a day, it’s easy for things to blend in and become white noise. For this reason, it’s important that your reports are easy to read, something that you can glance at and understand where your business stands. We encourage you to understand that KPIs should always be evolving. It doesn’t make sense to keep track of KPIs that aren’t relevant to your business as it grows and evolves. These charts show the evolution of tracking our sales team from the first version to the fourth and most recent. As our business evolved, our goals evolved, and therefore we needed KPIs to reflect the new goals rather than the prior goals.
 
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TIP: Place monitors around your office to display the KPIs you’d like to know at a moment’s notice. As a quick example for placement, Spud Software has one monitor displayed at the top of the stairs to show hours worked and hours billed. The graph displays red for every hour under what is expected and green for hours worked over what is expected. The green and red are easy to spot, even from halfway down the stairs, so it’s clear where the business stands even as passing.

Spud Software would love to help you find a business software solution that helps track your KPIs, achieve goals, allows for easy access to reporting and keeps your processes in place. Give us a call at 810-695-0001 or fill out a form when you’re ready to start the conversation.

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