Grow Your Numbers – Activities and KPIs
We promise not to talk Accountanese to you through these blogs so what on earth are KPI’s?
Quite simply a KPI (Key Performance Indicator) is the result that can be used to measure the effectiveness of different activities in your business. Put another way, if we want to define what success looks like from our business activities, we need a way to measure success i.e. a KPI. Likewise, if we want to measure if a team member is performing well or not, we need some form of measurement; called a KPI.
The best way to illustrate this is in the table below.
|Example Activity or Task||Example Measure of Success or KPI|
|Running client or networking events||Client retention percentage >95%
Number of leads generated >15 per month
Number of proposals requested >10 per month
|Regular meetings with clients||Annual fees per client >$5000 measured quarterly|
|Updating website||Number of new leads generated >15 per month
On-line sales made per month >$1500
|Team sales training sessions||Proposal conversion rate >75%
Labour sales by salesperson > 300% of salary
|Referral programme established and maintained||Internal (10) and external leads generated (5) per month|
|Maintain ordering system||Stock turn by product > 6 times per annum|
|Prompt and friendly customer service||Sales by customer >$5000 per annum|
|Reduce wastage or rework||Gross margin by product >50%
Number of jobs completed within budget >80%
|Maintain debtors||Average debtor days <45
%age of clients outside normal trade terms <10%
The tasks your team perform should be recorded in individual job descriptions with the relevant KPI noted as well. If you set the KPIs in conjunction with the team members you get a much higher level of buy-in. The team members then know what their definition of a great day’s work is – essentially hitting their 5 most important KPIs.
KPI’s don’t have to be complex but every team member (and you) need to know what they are, your 5 most important KPIs and how to measure them.
Talk to us about how to define a great day’s work for everyone in your business.