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  • [ F R E E W H I T E P A P E R ]

    KPIs 101: How to Improve your Business

    with KPIs

    brightgauge.com

    http://www.brightgauge.com/

  • 1KPIs 101: How To Improve your Business with KPIs 2014 brightgauge.comKPIs 101: How To Improve your Business with KPIs 2014 1

    About the AuthorEric Dosal has experience in just about every area of small business growth and development. A graduate of Babson College in Wellesley, Massachusetts, Eric immediately put his Finance and Investments Degree to work on Wall Street after graduation. In 2002, Eric returned to Miami and joined his familys IT Services Business, Compuquip Technologies. Starting in sales, Eric worked his way up through the company, eventually becoming President and CEO. During his tenure, Eric and his brother created and developed the Managed Services Provider Division of the company, which they eventually sold to Konica Minolta. Now Co-Founder and CEO of BrightGauge, Eric enjoys talking with customers as part of his responsibility managing Global Sales and Marketing.

    Eric DosalCo-Founder, CEOBrightGauge Software

    Connect with me at:Twitter: @EricDosalCompany Blog: brightgauge.com/blogPersonal Blog: dosalbrothers.comLinkedIn: linkedin.com/in/ericdosal

    brightgauge.com

    http://www.brightgauge.com/http://www.compuquip.com/http://www.compuquip.com/it-services-blog/2012/08/compuquip-technologies-divests-managed-it-services-division-to-all-covered-continues-to-operate-internet-security-cabling-and-software-businesses/http://www.twitter.com/ericdosalhttp://www.brightgauge.com/blog/http://www.dosalbrothers.com/http://www.linkedin.com/in/ericdosal

  • 2KPIs 101: How To Improve your Business with KPIs 2014 brightgauge.comKPIs 101: How To Improve your Business with KPIs 2014 2

    Table of Contents

    Click Chapter Title to jump to that section.

    What Gets Measured, Gets Managed ..............................................................3

    Where to Start? Types of KPIs ..........................................................................4

    Finance ..................................................................................................................5

    Customers .............................................................................................................6

    Sales .......................................................................................................................8

    Marketing ............................................................................................................10

    Operations .......................................................................................................... 12

    Employees ........................................................................................................... 14

    Numbers Dont Lie ............................................................................................. 15

    How BrightGauge Can Help ............................................................................ 15

    brightgauge.com

    http://www.brightgauge.com/

  • 3KPIs 101: How To Improve your Business with KPIs 2014 brightgauge.comKPIs 101: How To Improve your Business with KPIs 2014 3

    What Gets Measured, Gets Managed

    Identifying, measuring, analyzing, and evaluating your programs, processes, and procedures, and then implanting solutions is an important part of your growth and development. Understanding how to leverage appropriate metrics will go a long way toward making good business decisions. In business school, you learn that you cant manage what you dont measure, and identifying important metrics are the first step in your corporate benchmarking.

    Key Performance Indicators (KPIs) are necessary and useful tools for businesses and organization that want to track and monitor their growth and progress or identify their weakness and opportunities for growth. A business that has a well- defined mission and vision, clearly defined goals, and strategies for improvement can use KPIs to evaluate and measure its progress. While every business has different priorities, the tools they use to measure their success and progress are often very similar. Generally, businesses are looking to evaluate their performance in the following areas:

    n Financen Customersn Salesn Marketingn Operationsn Employees

    In addition to reflecting your business priorities and goals, your KPIs must be quantifiable. Your data doesnt mean anything if you cant measure it, analyze it, and use the information to fine tune your strategies. Make sure your KPIs are clearly defined, transparent, measurable, and include a targeted goal for each indicator. n

    brightgauge.com

    Focus on Awareness, the Results will Follow

    What we Measure, we will Improve

    http://www.brightgauge.com/

  • 4KPIs 101: How To Improve your Business with KPIs 2014 brightgauge.com

    While businesses and organizations tend to organize their Key Performance Indicators around similar themes, the specifics of their data and metrics vary by industry and business. Common KPI models include:

    n Quantitative Indicators, which are measured by a number.

    n Qualitative Indicators, which cannot be measured by a number. These are sophisticated pieces of data, but can be very valuable if you need to get a handle on the why as opposed to the how of your questions.

    n Leading Indicators can be used to predict the outcome of your process

    n Lagging Indicators are used after the fact to reflect success or failure of your initiative.

    n Input Indicators measure the resources used during the process, like staff time and cash.

    n Process Indicators gauge the efficiency of the process, and are effective when measuring customer service initiatives, shipment strategies, and training.

    n Output Indicators measure the success or failure of the process and are good KPIs for establishing marketing, sales, and human resources benchmarks.

    n Practical Indicators work within existing company processes or infrastructure, and explore pieces of the corporate puzzle.

    n Directional Indicators evaluate a companys trend information; are they improving, declining, or maintaining. These benchmarks are often used to evaluate your companys position in the industry and relative to your most director competitors.

    n Actionable Indicators reflect a companys commitment to change and course correction, and includes commitment to cultural change, environmental sustainability, or political action.

    n Financial Indicators measure the economic stability, growth, and viability of the business, and are a good place to begin your KPI experiment.

    With an understanding of what types of measurements are available, and a clear plan for implementing an evaluation tool, you can fine tune your KPIs to measure specific areas of your business. Key Performance Indicators and metrics are not one size fits all, so youll need to adjust and fine tune your metrics to get the results you need and accurately reflect your business priorities.

    Lets take a look at some of the most common metrics used to establish KPIs. When opting for metrics, choose KPIs reflective of your business model, and be sure to grab some from different areas of operations. You cant measure in a vacuum, so choosing one metric from each category gives you a fuller, more complete picture. n

    KPIs 101: How To Improve your Business with KPIs 2014 4

    Where to Start? Types of KPIs

    brightgauge.com

    http://www.brightgauge.com/

  • 5KPIs 101: How To Improve your Business with KPIs 2014 brightgauge.comKPIs 101: How To Improve your Business with KPIs 2014 5brightgauge.com

    $ FINANCE

    Your financial data points are arguably your most important metric and easiest to measure. Customers, investors, financiers, potential customers and your management team will use this information to assess your stability, viability, and growth potential. Your financial KPIs easily quantify your current financial health and can forecast any long and short term trends. By comparing your financial KPIs with others in your industry, you can benchmark your progress and identify areas for growth and improvement. When you benchmark your company against yourself, you can start collecting trend data and begin to forecast growth periods, slow periods, and overall performance. Depending on your priorities, there are a number of KPIs from which you can choose.

    n Current ratio of debt to assets: This KPI measures your ability to pay off any debt of a set period of time, balancing your assets against your outstanding liabilities. While it is not uncommon for businesses, especially start -ups or those experiencing a period of growth to operate in the red for periods of time, getting a handle of your debt to asset ratio will allow you to make more informed decisions about where and when you spend your capital.

    n Revenue Over Equity (ROE) or Revenue Over Investment (ROI) both measure your ability to secure revenue per project, shareholder, or customer. ROE and ROI gives you insight into how much you are spending per customer or project, taking both hard and soft costs into consideration, as related to how much youre earning per project of customer. By measuring your ROI and ROE, you can identify if your spending aligns with your businesss growth and cultural priorities. Some businesses use a variation of ROI, opting to measure the Overhead Rate of each project. This KPI takes all non-project or customer related costs into consideration and compares it to all project or customer related expenses. The lower the Overhead Rate, the higher the profit margin.

    n Gross Profit Margin measures revenue per client or project before expens