What on earth is a KPI and why are KPIs important to your business? A KPI (Key Performance Indicator) is a result that can be used to measure the effectiveness of different activities in your business.

Put another way, if you want to define what success looks like from your business activities, employees, or projects, you need a way to measure success. The best way to illustrate this is with examples of activities and appropriate KPIs.

For customer or networking events, KPIs could include:
Customer retention percentage >95%
Number of leads generated >15 per month
Number of proposals requested >10 per month

For the maintenance of an ordering system, a KPI could be:
Stock turn by product > 6 times per annum

On website management, KPIs could include:
Number of new leads generated >15 per month
Online sales made per month >$1500

For the management of debtors, KPIs could include:
Average debtor days <45
Percentage of clients outside normal trade terms <10%

On the management of a referral programme a KPI could be:
The generation of 10 internal and 5 external leads per month.

Managing waste or rework could include the following KPIs:
Gross margin by product >50%
Number of jobs completed within budget >80%

KPIs for the management and training of a sales team could include:
Proposal conversion rate >75%
Labour sales by salesperson >300% of salary

KPIs provide a clear expectation of performance around activities and tasks. The tasks your team perform should be recorded in individual Job Descriptions with corresponding KPIs.

If you discuss and set KPIs with your team members, you’ll get a much higher level of buy in. Your team will know what the definition of a great day’s work is for them – essentially achieving their KPIs.

KPIs don’t have to be complex, but every team member (including you) needs to know what their five most important KPIs are, and how to measure them.

It’s remarkable how simple changes to your business processes can improve your key drivers. Contact us today to see how we can help you establish, measure and improve your KPIs.

“It is much more difficult to measure non-performance than performance.” – Harold S Geneen

This information does not constitute financial or legal advice and is for general information purposes only. Please contact DLA Partners for specific advice relating to your particular circumstances.

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