At Seagrave French, we have a system to help our clients improve their business; in fact, it is a system that aims to improve all aspects of your life. We call it The Way. For ambitious clients, it is a step-by-step process to transform your existence.
We work with clients to help them through the process if they want to.
It is a very detailed process, but one of the essential things we set up early [after the initial goal setting and detailed planning] is how we will measure whether the process is working.
This is very important because we need to see what works and continue with that, identify what doesn’t, and change the plan.
We use KPIs [Key Performance Indicators] to measure this, and we recommend all businesses do this one thing even if they are not following the complete process.
So, what are KPI’s?
KPIs are simply a way to measure how a business is performing by setting and then measuring against a target. The targets can be a number, a percentage, or a monetary value.
A business should set a target to be measured and decide how regularly it should be reviewed. A team or team member should then be made responsible for this KPI, which can form part of their performance measurement. They can be rewarded or managed if they meet or don’t meet the target.
What are the types of KPIs?
KPIs can measure many things – here are a few examples under the various business core areas.
Marketing Performance
- Number of website visitors
- Number of leads received
- Number of social media followers or likes
- Number of articles or videos posted
Business development performance
- Client conversion rate
- New work won
- Pipeline
- Number of proposals issued
- Order book
Financial Performance
- Gross Profit Percentage
- Cashflow
- Debtor Days
- Stock Days
- Sales per employee
- Overhead by employee
How do you keep track of KPIs?
Depending on the number and complexity of your KPIs, you can either keep it simple and report on a spreadsheet, or many apps can automate the process.
With the apps, you can program them to access parts of your other systems and then report on them automatically. With the app approach, you can have a screen or monitor showing the live position of the KPIs – motivating the whole team that things are going in the right direction.
Some clients have a one-page monthly report showing the results to the team.
Are KPIs worth it?
They are because they are a great way to ensure you achieve what you want. Let’s look at an example. This is a monetary-based example but can apply to many other areas.
Say you decided to increase your sales by £20,000 per month.
THE WAY says that you need to work back from that to determine what action to take to achieve that.
We think that our average sale per customer per month is £2,000, so we need ten new customers per month.
We think that our conversion rate is 50% of every qualified lead. So, for ten new customers, we need 20 qualified leads.
For every 50 website visitors, we get one qualified lead. So we need 1,000 website visitors per month.
We’ve just worked out our KPIs to achieve our goal of an additional £20,000 per month.
KPI Metric Target Measurement Period
Website Visitors Number 1,000 Monthly
New Leads Number 20 Monthly
Conversion rate Percentage 50% Monthly
New Customers Number 10 Monthly
Average Spend £ £2,000 Monthly
If we successfully achieve all of the KPIs above, we will achieve our target of extra monthly sales of £20,000; there is no doubt about that.
How many KPIs do I need?
As you can see from above, it’s easy to get to quite a large number of KPIs if you’re not careful, but we would suggest that you pick three or four for each core business area that you want to focus on and that there should be three areas to focus on at any one time.
So you probably don’t want more than 10 KPI’s
Do you want to learn more?
If you’re interested in transforming your business with THE WAY, click here to arrange a no-obligation free meeting with Jason Seagrave, the author of THE WAY.
About the Author
Jason Seagrave is the founder of Seagrave French and has been advising business clients for 35 years. He is never happier than when helping ambitious clients transform their businesses.
