By Frank Sivilli, Compliancy Group
Key Performance Indicators — or KPIs — are a tried and true method of tracking business employed by some of the most successful firms in the software industry. And applying KPIs to your business can be much easier than you might imagine.
Loosely defined, KPIs are metrics your business identifies and consistently tracks and monitors to determine the overall performance of your firm. Common KPIs include the number of new leads your firm attracts each month, the amount of time it takes to implement or rollout your product to new clients, sales conversion stats, and many more. Essentially, think of KPIs as any metric you can measure within your firm that will give you insight into how well you're achieving your stated goals.
KPIs are easy to employ within your own business and can be scaled down on a project-by-project basis or scaled up to determine the overall health of your firm. They can be broken down by individual or department, or tracked on a companywide basis. They can be measured weekly, monthly, quarterly, yearly, or any combination of the above. Once you've established a set of solid KPIs you've tracked over a longer period, you can start to identify trends and make forecasts into the kind of growth that you're looking for.
Identifying and setting KPIs is an important part of creating a long-term growth strategy for your software firm. And whether you already have a set of KPIs that you can rely on, or you're crafting your own for the first time, this quick guide should be able to provide you with some tips and tricks to get started.
Sometimes learning how to identify the wrong KPIs can be just as valuable as identifying the right ones. For instance, a KPI measuring social media engagement may be helpful to see how many new eyes you're bringing to your content or to your site. But that's not the full picture. Here, you're identifying one metric, but failing to look at its consequences for growth.
Instead, think about if that engagement is converting into sales. Do you have proper lead capture methods in place? Are you vetting or tracking closed deals to understand if your social media presence is providing value? Engagement may still be an important stat to track but, as a KPI, it may fail on several fronts if it does not actually indicate your current (or forecasted) performance.
When analyzing KPIs, don't expect to trigger growth just by setting them. You need to set them, analyze them, and then act accordingly to move the needle one way or the other.
For example, if you find you only have a 10 percent conversion rate on new deals and this number stays consistent month after month, that indicates you need to change some of your processes to move that number up.
Make sure you document when you've made the necessary changes, and then track how much your conversion rate metrics shift thereafter.
What do we mean by this? Well, your executive team may have an idea of where they want to see growth. These should be guiding forces behind your high-level strategy — the goals motivating your actions.
But by giving your sales and operations teams ownership over some of their own KPIs, you can give them incentive to develop their own initiatives to drive growth at a grass-roots level.
When people are dislocated from organizational KPIs, it's easy for these to become just another number on the board of targets to hit. If you allow people to feel their performance will be directly tracked and can lead to real growth, they will feel empowered to do more to help your company grow.
If you find a KPI is in decline or stagnant you may need to look at some of the reasons behind that, beyond simple process improvements. As unfortunate as it may be, slumping KPI metrics could point to a member of your team who is not performing up to the level required for the growth goals you've set.
But by keeping KPIs you can point to a concrete metric when you're having difficult conversations with staff members, and ultimately create a more constructive outcome.
By couching your discussion in growth metrics and KPIs, you can give concrete advice to improve your team and keep those team members accountable. Ultimately, you can use KPIs more punitively if you must, but opting for an enthusiastic or constructive approach may suit you better in the long run.
Regardless of the KPIs you decide to track, you must ensure you're tracking them consistently over a set period. Of course, goals are subject to change and more KPIs may be needed over time.
However, the real value of KPIs comes from the ability to track your growth potential over the long term and forecast how the changes you're making in your business will impact your performance.
Keep these tips in mind moving forward. Remember: Growth doesn't just happen overnight. But by instituting KPIs now, you can set yourself up for smarter, more actionable growth in the future, giving your team the tools they need to succeed.
About The Author
Frank Sivilli is a writer and editor based out of Queens, NY. He regularly reports on cybersecurity, ransomware, data security, and healthcare regulation. He is the director of content at Compliancy Group, the industry-leading HIPAA compliance SaaS company.