Defining and using your business’ KPIs

by Sean Boyce
KPIs discussed at a business meeting. Handshake ensues.

Every business owner has goals for their company.  Defining and quantifying goals for your business can be the difference between success and failure. Before you act, the best approach to create and adhere to objectives is by having KPIs.

What are KPIs?

A Key Performance Indicator is a measurable value that indicates how well a company is achieving significant objectives. KPIs are used at every level of an organization to evaluate success at reaching targets. High-level KPIs generally focus on the big picture – the business’ overall performance. But there are also KPIs at every other level such as sales and marketing departments. This is why KPIs are helpful for everyone in a company; owners, managers, departments and employees. 

Defining your KPIs.

Every company has unique needs as far as determining goals and objectives. That is why using industry standards or averages is rarely a good idea. If a specific industry average for increased sales per year is 5%, using that same percentage as a KPI for a company with a large sales force and a product that is just moving past early adopters, is probably underestimating potential sales.

Well-defined KPIs need to be specific, measurable, realistic, relevant to the company’s goals, and achievable in a specified time period. C-Suite executives need to know exactly what they wish to achieve and its significance to the company. Is the goal to increase profits by a certain amount designed to grow the business, or provide immediate increased monetary compensation to owners? Who will be responsible for meeting the goals, and how?

Communicating KPIs throughout the organization

Once the difficult task of determining the overall KPIs is set, keeping them locked up in a drawer in the President’s office defeats the purpose of the exercise. KPIs need to be shared with every person involved in running the company, from managers and department heads, to salaried workers. Making everyone in the organization aware of specific objectives not only brings them on board in understanding the business’ goals, but also gives them ownership in meeting those goals.

For example, if the goal of the business is to sign 100 new clients in the next 12 months – once the resources necessary to sign each client is determined – a new set of KPIs needs to be developed for the non-executive departments of the company. Moreover, the analytics continue to drill down to where the sales department head may need to require each salesperson to make 25 cold calls each day, and the Director of Marketing must develop 10 direct mail campaigns this year to hit goals. When done correctly, having reliable KPIs in place allows all the stakeholders to know exactly what is expected of them, how exceeding expectations might result in moving up in the company, and not meeting goals may result in the loss of income or even their jobs.

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Moving forward with KPIs

One thing is always for certain in any business environment, and that’s uncertainty. Nothing inside or outside the company is ever stagnant, and for that reason KPIs should be reviewed and revised on a regular basis. If too many people aren’t meeting their minimum tasks, you may want to revise requirements downward. If outside government or economic forces change the way you have to do business, that too may affect your stated goals. 

In the end, the use of KPIs is the best way to gauge your company’s performance and success in meeting its goals. 

Do you need help with defining your organization’s KPIs? NxtStep can help reach out to our experts at or contact us at hello@NxtStep.io.  

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