You need to know if your organization is on the right path with the right pace to meets its goals. You can measure this with the help of KPIs (Key performance indicators). Sales, marketing, finance, and project management are the common departments where you will use KPIs. Let’s take a look at some of the examples for each of these types.
What is a KPI
You and your employees work together in the organization. You might be selling products or providing services to the client. In the end, you want to know how is your business doing. Are you doing ok or not. Is the performance of team acceptable or needs some improvement? All these questions can be answered with the help of KPI. For example, the average time took per case (in CRM) is a KPI, and it will help you to understand how the cases are being resolved in the organization.
However, it is also important for you to make sure that for any KPIs to be effective, they should be relevant to your business objectives. It isn’t unusual that an organization could choose unrelated KPIs and waste a lot of resources in the process. A hardware sales company and a digital marketing agency can’t have the same KPIs to measure their success.
How you choose, your KPIs depends on the industry you are in, what you want to achieve as an organization and what you want the different departments of your organization to monitor.
The most common types of KPIs are sales, marketing, finance, and project management as most organizations (if not all) have these divisions. These divisions have their specific targets set out as well.
Here’s an overview of common KPIs.
Common Sales KPIs
Sales per month
Following up the number of sales at the end of every month has been an old practice.
But thanks to software like CRM now data is more accessible. Based on the data available, it is now possible to track any sudden drop in sales and make informed decisions.
Sales team should be able to compare the difference between the prospects that were available to them and the prospect that they lost. If they are losing a lot of prospects, they can use insights from the CRM and find a solution.
Prospect Outreach tasks
If outreach tasks are not monitored there is no way to calculate how many prospects were approached and which outreach actions were the most effective among other factors. It’s important to know this data to reach the monthly sales targets.
The rate of conversion
Sales team members get information on possible customers from the marketing team. But it needs to be tracked if the sales team converts these prospects into customers. And with that information , you can measure the conversion rate. If it is poor then both the teams can find out what they need to work on.
It’s not unheard of that a business loses customers to a competitor for various reasons. When you measure the number of lost customers, and when they were lost it can give you crucial points to understand how to retain the existing customers.
Common Marketing KPIs
Unique website visitors
Your organization’s website is perhaps your first point of contact with your customer. It also serves as a “virtual shop” for the services or products you offer. It is possible to measure how many people visited your “virtual shop” by tracking the number of unique website visitors. This is one of the best metrics to tap in potential customers.
Time spent on your website
By knowing how much time the website visitors spend, you can get an idea of likely conversion rates. Here’s how: if visitors spend less than a minute you will need to produce more engaging or useful content to generate interest about what you sell.
Cost for each lead
You generate leads through your marketing activities. If you manage to convert these leads into customers, that is an excellent way to gauge how effective your marketing has been. With modern digital tools, it is possible to find out how much your organization spends on every lead. This can help you to understand which marketing tools you can invest more money and where you can cut your costs.
Conversion rate through forms
You can monitor the number of visitors that use the form on your website to get in touch with you. If they are less than the expected number, you can realign your content marketing strategy. This will let you know if your website is helping you to convert visitors into customers.
Retaining old customers is budget-friendly for your organization as compared to getting new ones. If you have a regular stream of old customers (repeat business), that means you can control your marketing costs since you don’t need to spend so much on outreach.
Common Finance KPIs
Unsurprisingly, this is the most significant finance KPI. But within this KPI, many factors like gross and net profits among others need to be evaluated.
All the departments in an organization must recognize the protocol for measuring revenue. How their work is remunerated depends on the organization’s revenue KPIs. Again, various revenue specific metrics need to be factored in like sales, sales by product line etc.
The same logic applies to cost as well. Every department should be on board with the cost structure because of tax legislation and different policies. This KPI is important for determining the costs of the services or products you sell or of any overheads that may occur.
Return on investment (ROI)
This often used KPI calculates your efficiency for the investment made and profit generated.
Essentially, evaluating working capital means measuring the currently available assets to meet any pending liabilities.
Common Project Management KPIs
Project cycle time
If a specific task recurs in a project’s lifecycle then tracking the time taken to complete the particular task helps to give more insight. You can take specific actions to improve time in order to provide better customer service.
If you know the number of people working on a project and the time each of them spends working on the project then it can help you make the most of your resources. You can plan your resources well, and you can also know if any shortage of resources is likely to occur.
The estimated budget and the actual budget for a project can be different. To avoid running into any overheads or put the project in jeopardy due to cost issues, budget variance needs to be monitored.
Cost performance index (CPI)
This KPI is to let you know if you are lagging behind or fleeting ahead of the decided project schedule. It can help you to understand your cost efficiency for the project.
This is to measure the project-specific tasks that you haven’t finished within the approved deadlines. If you find out that many tasks are overdue, you will have to reallocate your resources.
This was just a general outline of the usual KPIs needed to attain certain business objectives. But it is not necessary that all of them may be apt for your organization.
A single CRM or a software system will not usually cater, or be able to provide all parameters or all computation. However, you should select a system which at least offers insight into most of the KPIs. Solastis CRM is your best bet to put such data-heavy metrics into use. It has a lot of intuitive information for making KPI based decisions.