KPI stands for Key Performance Indicators…. Nope? Still WTF?
You’re not alone!
Why is it that Accountants and Business Advisors go on and on and on about these things? It’s serious Accountanese!
It’s because once KPI's have been established, you can set targets and action plans to improve your business and achieve your goals! Then you measure and track them so you can monitor and improve as you go.
KPI’s are the critical indicators of progress toward your intended result… Ever heard of “ What gets measured gets done”?
KPI's may be financial (e.g. gross profit margin or average annual customer spend) or non-financial (e.g. customer satisfaction ratings).
A (relatively) simple example:
Say you want to take drawings (pay yourself from your business) of $1k per week. You are very clear on your costs and know that if you increase your sales to $15k per month you will definitely be able to take your required drawings.
You decide the best way to increase your sales is to convert more prospects. Your prospect conversion rate is your KPI.
Prospect conversion rate = Prospects won/prospects approached.
It currently sits at 70% and to achieve your sales target of $15k per month you need it to be 85%.
Once you have determined your KPI and where it needs to be… you can set mini goals and actions around this to improve your processes and reach your goals!
Simple…. Right?
We love talking KPIs, goals and action points here at Pulse. So if this still sounds like a foreign language to you, get in touch because we can help!
