Achieving success starts with defining KPI metrics. Key performance indicators (KPIs) help businesses make, measure and meet their goals, but not all KPIs are created equal.
KPIs are best used in conjunction with SMART objectives. These objectives help KPIs be specific, measurable, achievable, relevant and time-sensitive, helping the goal be an accurate representation of productivity or success.
These success-oriented goals help keep a business accountable, enhance data-driven decision making and create a direct path for improvement, which ultimately leads to a better, healthier business.
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What are SMART objectives?
SMART objectives reinforce company goals and lay the framework for a successful business. When KPIs align with SMART objectives they are proven to be more effective.
Specific: Being specific avoids ambiguity, which helps a team understand the goal and how to achieve it.
Measurable: Having a measurable or quantitative KPI makes it easily trackable. If it can’t be measured, there is no way to know if the business is meeting its goal.
Achievable: KPIs work best when it’s an achievable goal. If a KPI is unattainable, it can destroy employee morale and cast an inaccurate and poor reflection of the business’s success.
Let’s say a toy company wants to increase its sales of toy trucks by 50% over the next quarter. The toy company is only selling 50% of its stock of toy trucks in a quarter. Since the demand is half of the company’s expectation, a 50% increase in sales will be extremely difficult to achieve. It may be in the company’s best interest to start the percentage increase lower and continue to increase it over time once they’ve assessed the first KPI was met successfully.
Relevant: If a KPI is irrelevant, it won’t be achieved. Many factors must be assessed to determine the relevance of a KPI, and factors vary by industry. Across all industries, it is important to align the KPI with the company’s overarching objectives.
Time-Sensitive: Time constraints allow for a sense of urgency and focus. It also keeps a team accountable for their work and creates a clear timeframe to measure progress.
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KPI metrics that matter
KPI metrics can be applied to any aspect of a business – sales, team productivity, customer service or business health.
To gauge the health of a business, having KPIs in place to track return on investments, profit margins and revenue will be essential.
If a business wants to assess company or team performance, monitoring metrics like productivity, efficiency and quality would be valuable.
Creating effective KPI metrics can be the determining factor in a successful business.
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Need help developing KPI metrics?
KPIs should be obtainable and measurable goals your company can meet.
An experienced firm like Priority Marketing helps businesses large and small identify their target audience before developing a strategic marketing plan that outlines steps to achieving success.
Interested in learning more? Please give us a call today at 239-267-2638 or send an email to LetsTalk@PriorityMarketing.com.
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