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Numbers You Need to Know to Grow Your Business (And How to Measure Them)
- 1. Numbers You Need to Know to Grow Your Business And How to Measure Them
- 2. Agenda • Why Bother? • Numbers You Need to Know to Grow Your Business • How to Track Your KPIs
- 3. But first … Lets define a few terms first … What is a KPI or Key Performance Indicator?
- 4. Key Performance Indicator A KPI evaluates a success of a particular activity. Basically, a KPI is used to measures the performance of a strategic business goal. KPIs tend to be very different from department to department within an organization.
- 5. Key Performance Indicator There are several types of Indicators that are used to visually represent a process and its performance. • Quantitative • Leading • Lagging • Directional • Financial
- 6. Key Performance Indicator In practical terms… KPIs are objectives to be targeted that will add the most value to an organization.
- 7. So what is a Metric? Metrics quantify performance and are generally composed of a single number. Many metrics may compose a KPI … or not. A metric may stand on its own if the metric determines the performance of a business goal.
- 8. Here is an example Suppose you have a marketing campaign … The campaign may have dozens of metrics • Pageviews • Bounce rates • Conversion rates • And many more …
- 9. Here is an example … Each of these are metrics • Pageviews • Bounce rates • Conversion rates But … each one individually does not determine if the campaign is successful.
- 10. Ahh…a KPI! Using a group of metrics, we are able to analyze the outcomes and track the PERFORMANCE of our campaign (or a marketing goal)
- 11. How do we know which metrics to choose? While there are a variety of criteria, here are some questions to ask: 1. Do the metrics accurately portray the performance of a specific goal? 2. Do you have access to all the metrics you need to build the KPI? 3. Once the metrics are defined and the KPI is created, does the KPI lead to action?
- 12. Why Bother?
- 13. Would you drive a car without gauges?
- 14. Why Bother? 1. Know how far you are from reaching your goals. 2. Pinpoint and manage key underlying issues. 3. Discover problems before it’s too late.
- 15. Why bother? 4. Quantify success and failure. 5. Offer employees more constructive feedback.
- 16. What to Measure
- 17. What to Measure First thing to know … • All organizations should have some of the same KPIs in common. • Many organizations will have very different KPIs because goals are different.
- 18. Net Profit Margin Growth Net Income / Sales
- 19. Sales Growth Previous Period Sales Revenue / Current Period Sales Revenue
- 20. Opportunities
- 21. Sales by Contact Method
- 22. Return on Investment (Attributable Revenue – Campagin Investment) / Campaign Investment
- 23. Conversion Metrics # visits / # leads and # leads per channel / # wins
- 24. The Basics 1. Identify desired targets for each KPI 2. Business data is assessed against target on a regular basis 3. Implement an executive dashboard that highlights the current state of these KPIs 4. The KPI dashboard must be easy to use.
- 25. How to Measure
- 27. Connect to a KPI Dashboard
- 28. Monitor Metrics in Real-Time
- 29. So what do I need to do again? • Pull data from from various sources • Format the data to make the metrics mean something • Update real-time so decisions can be made quickly • Put your KPIs in the hands of those who need the information
- 30. What Systems Will Help With This? There are several KPI dashboards available. Many are difficult to deploy and expensive to use.
- 31. Nexxtep Dashboards We use a cloud based dashboard platform called Klipfolio.
- 32. If you need help, we are ready! We can help you formulate your metrics out of your data and define your KPIs. Nexxtep is a registered Klipfolio Partner.
- 33. For more information about our KPI services and a free Klipfolio trial, please visit: ncare.com/kpis
- 34. Thank you for attending this webinar! Questions? Stuart Avera 229.671.1513 savera@ncare.com
Editor's Notes
- Quantitative indicators are generally presented with a number.Leading indicators can predict future outcomes – these are generally the most complex of all indicators.Lagging indicators define how an organization has performed in the past and generally how it is currently performing.Directional indicators show whether and organization is getting better or not.Financial Indicators are used to gauge an organizations financial performance** KPIs in practical terms are objectives to be targeted that will add the most value to the business.
- ** KPIs in practical terms are objectives to be targeted that will add the most value to the business.
- Examples of a metric may be page views, unique visitors to your web site, revenue, average order value etc …Alone, one metric may be meaningless unless it it gives a full picture of the performance of a goal. For a marketing campaign however there may be dozens of metrics that encompasses the campaign.
- Again, these are metrics but each individually does not define whether or not a campaign is successful.
- Again, these are metrics but each individually does not define whether or not a campaign is successful.
- So with all this definition, lets ask ourselves, Why Bother tracking all of this?
- How would you know how much fuel you have left?How would you know if something is wrong with the engine?We all need feedback from our vehicles and our business to help us make decisions. No business owner wants to “drive blind”
- Know how far you are from reaching your goals. Scores of research prove that individuals and organizations who set goals are much more likely to achieve them. However, to achieve a goal, you must be able to properly measure your progress. By understanding how your business is doing in both revenues and profits daily, you can tell if you're on track to achieving your goals and adjust your plans as needed if you're not.2. Pinpoint and manage key underlying issues.There are a handful of smaller activities that effect larger results. For example, the following are often key underlying issues for sales:Number of outbound sales callsNumber of live connectionsNumber of proposals givenProposal close rateAverage price per saleWhen sales are low, most entrepreneurs don't know what to fix to see improvement. By tracking each of these numbers, you can instantly know what to fix.3. Discover problems before it's too late.Most entrepreneurs have a bad sales month, then look back to determine what caused it. Had the entrepreneur tracked his numbers on the underlying issues, he could have fixed the problem early on. For example, he might have learned that the number of proposals issued in the first week of the month was low, and made sure more proposals went out the door.
- 4. Quantify success and failure.By understanding and tracking your numbers, you can measure whether your business is performing well. For example, if your sales team made 500 outbound calls already, your number of customer complaints is less than 10, and your average delivery time is less than seven days, then maybe you can rest assured that your business is running smoothly.5. Offer employees more constructive feedback.Tracking and publishing your numbers tells employees what's important. For example, if you track customer satisfaction, number of refunds, and average customer hold times, your customer service manager knows precisely how he is being judged and what to improve.Keep in mind: Don't just look at your numbers to determine what needs fixing. Use them to pinpoint what's working well in your business and do more of that.
- We will show a few KPIs that every organization should track.Remember that KPIs are goal based. So even two organizations selling the same product or service, may have different goals.
- Net Profit Margin. This financial KPI determines how effective your business is at generating profit on each dollar of revenue you bring in. As a measure of profitability, this financial KPI is instrumental for making long- and short-term financial decisions. Understanding this KPI may even give you an advantage in a pricing war with your competitors. Are you making money, and are you making more money than you were in the previous period?
- Sales Growth. This is a key sales metric for any organization since it indicates the pace at which your organization is growing. It's one thing to maintain current sales, another to grow sales year over year, or even month over month. No matter the time frame you are using to measure this KPI, use it to encourage your team to make more sales in each of their sales calls. If one thing is true about sales professionals, it's that they are goal-oriented.
- Opportunities. This sales metric organizes each opportunity your sales team is cultivating and assigns them a status value such as "qualified" or "proposal." Each opportunity should also have an estimated value associated with them, so sales reps can prioritize their time according to the likelihood of a win (status) and the significance of a win (estimated value). Ideally, this sales KPI is monitored in real-time since the status of each opportunity can change at any time, and new opportunities continuously stream in.
- Sales by Contact Method. This sales KPI monitors which contact methods are generating sales, such as email, telephone, or in-person contacts. It goes without saying that knowing which contact method is the most effective at generating sales is important, but it's also important to understand the cost involved in each contact method, as well as revenue generated for each method. This is an essential sales KPI for any organization.
- Sales Campaign ExampleReturn on Investment (ROI). Make no mistake about it: this KPI is the single most important KPI for your team to monitor. It provides an honest assessment of your performance so you know which activities are generating revenue. ROI is the definitive metric that your clients and managers will use when assessing the success of maybe your campaign, so it's imperative that you measure this KPI.
- Website ExampleConversion Metrics. These types of metrics are important because they provide a benchmark for gauging a campaign's success. Although conversion metrics can be applied to any type of marketing campaign, they are most commonly used in web analytics. As important as it is to monitor your ability to convert visits to leads, you should also measure what leads turn into wins (and what channel they came through). This will help tell you which URLs (or campaigns) resonate with people ready to make a purchase.
- Identify desired targets for each KPI. These targets should be realistic and should be set at every level of the organization, thus distributing the accountability for achieving these targets.Corporate data is then assessed against these targets on a regular basis, communicating to decision makers throughout the organization the current state of these key success factors, and whether there is a need to intervene & deploy certain corrective measures.It is highly recommended that companies implement an executive dashboard that highlights the current state of these KPIs. (On Target, slightly Off Target, or way Off Target) Some executive dashboards will also Email Notify users when a KPI falls short of expectations.Recognizing that most decision makers are too busy to learn overly complex tools, the chosen KPI tracking tool/executive dashboard must be extremely easy to use, allowing even the least-technical user to be fully productive in assessing, analyzing and acting on fluctuations in KPI values.
- Now that you know what you should measure, you need to identify where that data resides. It may be your accounting system, CRM, Google Analytics, or an Excel Spreadsheet
- Connect the data to a system to help visual and analyzed the metrics.
- Make decisions based on real-time data. Remember that looking back after something has failed is far harder than trying to correct as an activity is progressing.
- Klipfolio allows us to put the right KPI in the right hands of those who are tracking a specific objective. For example, At Nexxtep, a high level of customer satisfaction is one of our company objectives. We have dashboards in our service team area that shows how we are scoring on surveys, projects and ticket requests. We can identify a problem quickly and respond rather than waiting until an end of month report – which may be too late to satisfy a customer.
- Sometimes mining data for KPIs can be tricky. If we can connect to the data, we can help build the queries needed to bind the right group of metrics to your organization’s KPIs.