KPIs – Key Performance Indicators – A term often used in business, but a technique not often utilised by businesses.
This article will enlighten you to the importance of these indicators and how you’re doing your business a disservice if you’re not aware of or tracking your KPIs.
When it comes to KPIs there isn’t a one size fits all – they should be tailored to your business model, type and goals. Their purpose is to identify the metrics that really matter in your business’s performance and to enable clear goal setting, traceability and trackability.
It’s all well and good your Sales Executive telling you that “sales are great” – but what does ‘great’ look like? And can you easily check his assessment is true? Last year’s ‘great’, might be this year’s ‘not good enough’, but unless you measure, you’ll be in the dark.
At Ellacott Morris, we work with our clients to identify their KPIs, often building them into their monthly management accounts, ensuring they receive structured, regular data.
KPIs give you a heads up before the ball hits you in the face! When monitored consistently they enable you to identify trends or flag concerns. As an example, do your sales figures usually take a dive in April? Do you know why? Is that impact manageable? Is there something the business could do to prevent it? Are you responding to that trend in the right way?
If you’re not monitoring and assessing, then you’re potentially missing out on revenue opportunities.
Here at Ellacott Morris, we measure and track various aspects of our business including happiness! Yes – that’s right – happiness. We track the happiness of our clients and our team. We know that if we see a decline in our happiness scores, then there will be a direct cost to our business, whether that’s from losing clients or losing staff.
The cost involved in engaging a new client is far greater than that of developing an existing client. Considering we work to support our clients’ growth; we anticipate their need for our services and support will grow too, so we want to retain our clients and nurture those relationships. Plus, we just love working with happy clients.
The same consideration can be applied to our team. A happy team is a productive team. We invest heavily in the training and development of our staff and therefore, to lose a team member would not only be costly from a recruitment, induction and training perspective, but also from a client relationship standpoint.
Some of the other KPIs we monitor at Ellacott Morris are:
- Team KPIs - Monthly fee income, new clients introduced and clients converted.
- Marketing - Audience growth, new leads, proposals sent and conversion rates.
- Financial KPIs - Monthly turnover, gross profit margin and net profit margin.
Examples of KPIs we recommend to our clients include:
- Monthly Recurring Revenue - Crucial for businesses with subscription models.
- EBITDA (Earnings before Interest, Taxes, Depreciation and Amortisation) - Used for business valuation and long-term planning.
If you’re a start-up, one of your focal KPIs might be new business leads. Whereas if you’re a business that’s grown rapidly, you may be more interested in tracking a reduction in overheads through process efficiency improvements.
Whatever your business model – we’re here to help you identify and embed KPIs that will improve your business! Find out more by contacting a member of our happy team!
