Entrepreneurs should ask questions about their results and strategy. I believe improvements start with measurements, even when it comes to tech or business, so let’s focus on a way to take such measurements.
What is KPI?
KPI is the acronym for key performance indicator. A key value is something that is relevant for any business or to achieving a goal. For a business, key values include income and profits.
Secondly, a team’s work, or performance, is intrinsic to business success. Performance can be measured over a fixed period.
Thirdly, the measurements provide a real indicator for future decision making.
Generally, income and profit data are not enough to understand fully how a business works or discern how to make improvements. Defining, measuring, and evaluating other indicators are key for making decisions.
What to measure?
KPI can be specific for each team. Sales KPI might include:
- How many calls are made each week?
- How many calls turn into opportunities?
- How many opportunities turn into wins ?
- How is the sales maker performing in these categories compared to others?
For a project manager, KPI might be:
- How much time actually was spent on a project in comparison to what was listed on the original quotation? Did the project meet the deadline? If not, how much was it delayed?
- What was the global project cost compared to a previous, similar project?
- How many issues happened on the project?
For a development team, KPI might be:
- How many bug reports came from the test team?
- How many bug reports came from the customer?
- How much time actually was spent on developing features in comparison to what was listed on the quotation?
- How does the development speed compare to a previous, similar project?
How to measure?
KPI are really implicit for every field. Today, CRM helps sales people to collect KPI from their software. Software developers are able to use bug trackers and other project tools to gather indicators.
Project managers can use the tools to merge data from sales, developers, and so on to give upper management an idea of work efficiency and project status.
Depending on your company size and the number of KPI you’ve decided to work on, you should gather data, whether manually or automatically.
If you’re a small business, a simple Excel sheet can be sufficient to gather relevant data.For larger businesses, it’s better to use a dashboard to gather KPI data in real time. The following dashboards are useful: ducksboard.com, geckoboard.com, saasmetrics.co, cyfe.com, gooddata.com, or the lastest French one, bittle-solutions.com.
Why should use KPI?
The answer is pretty simple: decision making. Every businesses, even small ones, need to make decisions – which lead to work on, which customer to focus on, or which market to focus on. I believe data can help solve many problems. The challenge is to present information in a way that fosters making the right decision.
What if data is difficult to gather? It could be quite simple to create some use case, surveys, or other form to gather information. The thing that matters is not how information was gathered, but what can be learned from the data.
What about you?
I’m very interested to know which KPI you follow?
How often do you check your KPI?
Feel free to comment or ask some questions.