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Keys to Performance
Understanding KPIs
Jessica Wolf
March 21, 2024
Tony is working on a RFP (Request for Proposal - This is like a client making a job description for another company before putting them through an interview process) with a question asking about his company’s KPIs. What’s that? Do we have those? Immediate scramble.
Ever started working on something without knowing what you’re trying to achieve? Key Performance Indicators (KPIs) are created to determine how well you’re really performing. Many small organizations or newer service lines may not have thought to create KPIs, or put much effort into it yet. That might be important, right? There you go.
While this article won’t answer if you have them, it will answer what they are and why they’re important. Hopefully someone at your organization has a clue if you want to dig deeper internally. Disclaimer: If you are not in a role that is involved in sales, it is not advised to randomly ask about your KPIs. You don’t want to make your manager uncomfortable if they don’t know what you’re talking about or question your intentions.
KPI Defined
Key Performance Indicators (KPIs) are the critical (key) quantifiable indicators of progress toward an intended result. KPIs provide a focus for strategic and operational improvement, create an analytical basis for decision making and help focus attention on what matters most.
Why is a KPI important?
Think of a KPI like a SMART goal (Specific, Measurable, Achievable, Relevant, and Time-Bound) for your business. How will you measure client satisfaction? How will you define timely responsiveness? What’s your contingency plan if there’s a natural disaster? If you were your client, what would you want to know in order to have peace of mind?
In general, five of the most commonly used KPIs are:
Revenue growth.
Revenue per client.
Profit margin.
Client retention rate.
Customer satisfaction.
Example #1: 90% of current customer monthly renewals during FY2024
Example #2: Increase NPS (Net Promoter Score) by 5 points in Q3.
Example #3: Monthly ticket close rate of 85% by the end of FY2024.
Even if you’re not in a position to define your KPIs, members of the management chain and sales professionals should be aware of the organizational goals. This is where those goals come from. Everyone at every level makes an impact on the business whether they realize it or not.
Coming up next: Evolution of a Startup
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