I like to think of KPIs as signs on the road. They are part of your company’s roadmap, and they benchmark your company’s journey. Depending on your business vertical, your overarching business strategy, and your annual goals, the benchmarks that need to be monitored differ, but what is essential is that you have KPIs as part of your business management.
Many business owners have the false belief that they can monitor their financial performance month over month from the financial statements alone, but that leaves much of the story of what is happening inside the business at the side of the road. Financial statements focus only on profitability and different account balances at a point in time; they may show your accounts receivable are increasing but will not tell you why. KPIs can solve that problem.
Here are some critical KPIs that should be measured and monitored for Marketing, Sales, Service, and Finance. The KPIs that you choose should match your business goals. The KPIs will then allow you to benchmark whether you can reach those goals and where you might be going off track.
You may have noticed that Churn Rate is listed under three departments (Marketing/Sales/Service). This is because keeping a customer long-term takes more than (1) marketing to the customer (2) turning that lead into a sale and acquiring the customer, and (3) providing the customer with the product or service. Stopping a customer from leaving and buying elsewhere requires a cross-departmental focus.
Monitoring your KPIs has many benefits. They can give you advanced notice when something is going poorly and act as an early detection system, giving you time to adjust and fix issues before they become major. They can assist with performance evaluations, goal tracking, accountability, and communication of objectives across the organization.
KPIs can assist with informed decision-making by giving vital information on where resources are required, highlighting areas that need improvement, and verifying alignment with strategy.
When I think of organizational excellence, I think of getting the entire team on the same bus on the same road. It is leadership in action and using the tools required to move the business forward. KPIs are one of those tools.