Key Performance Indicator, or KPI. It sounds official. It sounds intimidating. It sounds to me like you are wasting your time and effort if your company is not using them.
A KPI is a measurable value that helps you track what is important to the growth of your company. Companies use KPIs to evaluate the success of business goals and objectives. Some are high-value company wide, while others might be lower-value departmental and more granular. To better help you understand how KPIs work lets first define and develop goals. Remember, you need to establish goals initially in order to evaluate what metrics (KPIs) you need to track them.
Developing Goals and Objectives
A goal needs to be as specific as possible so it is clear to anyone who uses or reviews it. Defining goals can sometimes be bit difficult because they are based on specific business objectives. This is why they need to be measurable. There are general goals, like “improving revenue”, but a goal like that won’t be tailored to your company. And since you want them to be as specific as possible you should develop your own. So, when developing your own goals keep these questions in mind:
- Is your goal specific?
- Can it be measured?
- Is it realistic?
- What is the time-table for completion?
- Who is responsible for it?
- How will you measure it?
Let’s use a concrete example for the sake of clarity. Using the questions above lets create a few goals for our client, a new home builder, and then demonstrate how KPI’s are used to track those goals. The goal is to increase sales…something we all want to do. But how are we going to increase sales? We may want to measure the traffic to our website, clicks on our paid digital ads, traffic to specific communities, contact forms submitted, etc. Let’s break one of these down and to get a better idea of how to develop a solid KPI. We’ll call it “Website Traffic”. This is how we will define this specific goal and identify a specific KPI.
- Goal: Increase the amount of traffic to website by 25% in 12 months
- KPI: Measure site visits by unique and returning users
- Tactics: Use PPC and retargeting to get visitors to the site
- Process: Progress will be measured every month
- Monitor: The marketing and sales managers are in charge of this KPI
When you use Goals and KPIs this way, and you track, monitor and review the metrics on a regular basis, you will be on your way to achieving your goals!
There is no cookie cutter or mandatory KPI for every company to use. These types of measurement tools are unique to each circumstance. Your company may want to increase the sales, others might simply want to keep the same traffic but generate higher quality of leads with better conversion, and still others mage simply need to grow their visibility as they are just starting out. Determining which business goals are most important to you is what really matters. This helps you develop the appropriate KPIs for measuring the success of them.
You should be using KPIs when you need to track progress of a business goal over time. Goals may change and your tactics may need to change along with it so, be mindful to review them periodically. By incorporating this review within the KPI definition you are sure to keep up with any necessary amendments.
The size of your company does not matter at all when it comes to developing and using KPIs. In fact, KPIs benefit all sized companies equally. It’s a way to track your goals and measure their effectiveness. KPIs are an integral part of your overall marketing plan and if you’re not using them you could be missing out on potential business growth opportunities.
If you need help developing KPIs specific to your company, contact Marketing Relevance at 847-259-7312 or visit our website. Our strategic marketing services are instrumental in helping your company reach its goals. Let’s talk about how we can help you with your marketing needs.