Business Development By Way Of KPIs

KPIs For Business

We all know that we need good business development throughout our companies, and one of the most efficient ways to do this is by creating KPIs (Key Performance Indicators) to measure the opportunities we create in our everyday business tasks. But what should I measure? What should I spend time developing? What in the world is a KPI, because it doesn’t sound friendly? No worries, you are in luck, and we are going to take you through it together.

As a business owner, we know that we have room to be more efficient, but how do we track how we are doing versus what we could be doing? We know that once we have that information, we can begin our plan to elevate our output. This is where KPIs come into play. KPIs are nothing more than a way to track your performance in different areas throughout your business and consolidate it down to specific performance metrics. What we are trying to answer with this information is what is normal, what is possible, and where we are trending.

Let’s think about a few different real-world performance metrics examples so that we can dive a little deeper into them. If we own a coffee shop, we might want to know how often our employees sell large drinks over the small ones. All we need to do is add up the number of large drinks versus the number of small ones during a shift. Simple right. If we sold 25 large drinks and 50 small drinks in a shift, our ratio is 25/50, or 33% large and 66% small. Knowing that we make more profit on large drinks, we should try and achieve our goal states that we need 66% large drinks and only 33% small. Now we have created a goal that is trackable and quantifiable that we can have our employees strive for. If we are a rental company, we can use a KPI to understand our average number of rented items per sale. Taking the average amount of rented items in a given time period, against the number of customers, we may find that our rental rate is 5 per transaction. If we want to push for more sales, we could create a goal for our staff that says we need to be at 7 rented items per sale on average. This is now giving us something to track our key metrics and monitor our progress.

Bonus points for finding out what your best rate historically was and ensuring that your KPI goal is equal to or above that number. Look up the data for the area you want to track for the past year. Go month by month and dive into each employee. When you find your best numbers, then you already know what is obtainable because your company has done it before. Stive to do that or better from now on.

We have a handle on KPIs, but which ones do you choose to focus on first? Great question. We need to find KPIs that align with our current business goals. If our main goal is currently increasing sales, we could have a KPI that tracks how many sales calls come in versus how many are closed based on the salesperson (sales conversion rate). If our goal is operational efficiency, we could measure how many times we get the job done right on the first try versus needing a second attempt to correct it (error rate). If our goal is employee timeliness, we can track what time our employees clock in versus what time their shift starts (adherence rate). You can find hundreds of KPIs that will align with your goal, but start with just a few to improve on first.

Once you have a few KPIs that you are ready to execute, the next mission is to train, track, and talk about them. Train your employees on what you are looking for. Remember the example about tracking small drinks versus large ones? Have we ever told our employees that the large ones make the company more money? Train them to ask the customer if they would like a large drink for just a little more.

KPI tracking then takes place constantly. You don’t need some crazy expensive software to do this; you can easily just use Excel or even a notepad. How many small drinks did we sell today? How many large drinks? Who was the salesperson? What is their percentage? Keep it as simple as possible, especially when it comes to an area that you want to train your employees in. Make it into a game, give out rewards for a high percentage of large drinks, but track it!

Once you have your KPIs established (I told you they weren’t scary), you have trained your employees who are in charge of them, you are tracking the results to see where you are versus where you want to be, and then make sure to close the circle by talking about them. All of this work is worthless unless we are communicating a plan to your team about them and creating a goal with them. Let’s go back to the sales conversion rate we spoke about before. Salespeople typically love competition, and if they don’t, they probably have low scores on their KPIs. Post a huge printout of each of the salespersons’ conversion rates in the office. Let it be something that they are proud of and can feel excited about. If there is one salesperson who has a much higher rate than the others, have them train the team in what they are doing differently. Establish a goal of where all of the salespeople need to be at or better than. If your top salesperson has a conversion rate of 65% and your others are around 30%, give them a goal of at least 50%. After each week, we can continue to see the progress made by each salesperson to know if they are increasing in their conversion rate or not. If they are not increasing, then we have other work to focus on as to why they aren’t able to get to the company standards. This is all thanks to the KPIs that we have established. Woo Hoo, great job!

Establishing KPIs can be done in every area throughout your business. Each employee should have a few KPIs that they are being evaluated on at any given time, which will also make reviews and evaluations much easier for you when that time comes. The power of KPI tracking is to ensure we are always pushing for more efficiency within our company for the best possible outcome.