5 ways to introduce more effective business KPIs ready for 2017
The sense of uncertainty caused by the ‘Brexit’ vote earlier this year won’t necessarily translate into economic turmoil. In fact, according to a report from the British Chambers of Commerce, 2017 is set to be a period of steady growth.
The report, which quotes the Bank of England’s own growth forecast, paints an unexpectedly positive picture of the economy. This is also backed up by the latest figures from the Office for National Statistics, which confirmed that the UK’s economy expanded by 0.5% in the July-to-September period in 2016.
For business owners, their visions won’t have changed that much. The goals remain the same, and for better or worse, profit remains paramount.
The question is – how do you maximise said profits? What tools can be used to monitor growth? You might know that your net profit for this year is a little more than last. But, how did you get there?
Understanding your KPIs (Key Performance Indicators) will not only give you a clearer idea of how your business is growing – it also helps you to devise future strategies that build on your strengths and improve on your weaknesses.
Tracking business growth requires precision and a sharp eye for detail. With this in mind, here are five ways you can refresh your KPIs in time for a fresh start in 2017.
1. Maximise the use of data from tools like Google Analytics
As businesses become increasingly reliant on digital technology, there are a whole range of tools at your disposal, and you’ll want to make use of them.
You don’t have to be an Internet wizard to use them – with a little reading around you can see where your successes are coming from.
For many companies, their website is now the main driver of sales. As such, it’s vital that you know how to use the data presented by tools such as Google Analytics, as this gives you an idea of how many people are visiting your site, which pages and products they are interacting with, and where they might be dropping off and taking their business elsewhere.
Commenting on the use of Google Analytics is Director of Refused Car Finance, Craig Rutherford. According to Craig, Google Analytics has paved the way for new and accessible ways of tracking performance.
“One of the most powerful tools for our business is Google Analytics, which allows us to monitor our goals, website traffic, the devices our customers use and much more.
“As we have over 80% of our traffic browsing our site on a mobile device, it is important for us to monitor our website to ensure it is fully mobile optimised.”
Such tools are tailor-made to help you set tangible KPIs. If you’ve launched a batch of new products online, for example, you can set clear sales targets based on your current website traffic trends.
2. Get to grips with your online advertising metrics
Based in Glasgow, we spoke to Melissa Lang at Smarter Digital Marketing, who let us in on some key methods to help you keep an eye on your performance.
“Advertising has moved online, not just through Google, but social media too. Many of our clients have seen great success through Facebook advertising.
“With Facebook advertising, you will be spending money when someone views or clicks on your ad. The more relevant your advertising is; the less money you will be wasting.
“Facebook has recently launched a feature in the Facebook advertising platform that gives your [campaigns] a rating. Facebook has taken notice of other platforms, such as Google AdWords and now rates your ads and gives you a relevance score.
“We recommend that our customers are Facebook friendly. The more relevant your ad image, ad copy, and destination page is to your audience, the more favourable you will be to Facebook.
“Facebook have picked up on the desire to have analytics and by enhancing their strategy, we are sure to see businesses investing more in their social media advertising.”
Online advertising campaigns can drive huge amounts of business, but they can also fail spectacularly, costing you significant sums of money in the process.
ROI is key, and it’s vital that you learn lessons quickly. Trial and error is all well and good, but not when your ad tests are costing you hundreds of pounds at a time! If you know what works and what doesn’t, you can set much clearer KPIs, giving you the best chance of running cost-effective campaigns.
3. Set individual KPIs - but make sure they're positively weighted
Instead of having a generic set of targets per department, it may benefit you to delegate them to individual team members.
By tracking the growth and development of individuals, you can monitor their successes and how they relate to the wider team.
If a person is not meeting goals and fails to complete tasks, for example, then you can easily diagnose problems within the team.
This shouldn’t be seen as a stick to beat employees with, though – difficult targets can quite easily cause undue stress and resentment across a workforce. KPIs should instead be used as a method to fuel each employee’s progression within the company.
Rewards should be handed out when targets are hit and clear plans should be put in place to ensure each member of your team has the necessary skills to work towards hitting their own KPIs. Regular reviews are vital in this regard. If a target is being missed every month, maybe it’s too high? Likewise, if the team are all hitting their goals within two weeks of the month, you might not be challenging them enough to improve.
It’s a delicate balancing act. One that every business needs to master.
Here at Love Energy Savings, we are great believers in teamwork and know that a great customer experience means impressing at every stage and level of the business; this is not just an individual responsibility. Phil Foster, Managing Director of Love Energy Savings is a great believer in this:
“We always ensure that, while individuals are recognised for outstanding work and hitting their KPIs, teams are also encouraged to work together to reach collective goals. It is important for both employee engagement and a seamless customer journey that all members of the Love Energy Savings family have visibility of our company mission, to save as many businesses as possible as much money as we can on their business energy bills. Specific KPIs are important for focusing energies in the right direction but it is also vital that we ensure there is no ‘blame culture’. We work as a team to provide the best possible customer service and if even one customer is let down, we take that as a team and work as a collective to make sure mistakes don’t happen twice!”
4. So, you’re selling well? Don’t stop there!
It may seem like a job-well-done when you see your sales rates improve. And it is, of course.
However, there is more you can be doing. Many businesses are almost blind to where their successes come from. What department is responsible? Who deserves a pay rise?
Sam Williamson, CEO of Ace Work Gear, commented on the range of KPI methods he finds the most useful.
“As an online business, we probably measure commercial success slightly differently to other companies in our industry. Because we spend a significant portion of our marketing budget on online advertising through search engines and social media, we like to make sure that it is worth our investment by tracking the customers that have found us through our online adverts and those that have found us through other means.
“We can use this data to assess our commercial success, and whether it is worth increasing our online advertising budget.”
Getting to the root of your success will help you to set budgets accordingly heading into 2017.
This is where attribution modelling comes into play. In a world where many businesses operate online and offline, it helps to cut through any uncertainties in your sales journey.
Just because a customer has purchased an item in-store, who’s to say that they hadn’t heard about your brand via a Facebook ad? On the flipside, if a customer makes a purchase online, how do you know they hadn’t been into your store to try on the item first?
Attribution modelling is tricky and it’s one of the biggest challenges that business owners face. But if you get it right, you’re on to a winner!
5. Supplement your KPIs with 'KPDs'
This CFO article by Michael Blake, founder of Arpeggio Advisors, highlights the deficiencies of traditional KPIs.
In the piece, he makes an interesting point that KPIs are “backward-looking”, and he’s right. When you set KPIs, it’s tempting to let things roll along until the agreed deadline passes, before looking back and assessing how things went.
Mr Blake suggested that KPDs (Key Performance Drivers) can be more effective. These, he wrote, are the day-to-day activities that are required to produce the desired KPI results. With the right tracking systems, KPDs can be easier to monitor in real time, allowing you to jump in and make changes if things seem to be going awry.
Also, he noted that KPIs can be influenced by luck or scenarios that are outside the company’s control. This can cause inaccuracies when setting KPIs in the future – leaving you scratching your head when you fail to hit projected targets.