How to Use KPIs to Grow Your Business
Key performance indicators can be a key to business success—if you know how to use them.
You don’t have to be the graduate of a top MBA program to know that a lot goes into making a business successful. Whether you’re running your own small shop or helping manage a large company, growing a business requires making good decisions. But for the vast majority of us, relying on instinct alone isn’t a good plan. We need ways to methodically assess and manage our business’s growth. That’s where the concept of key performance indicators (KPIs) comes into play.
In short, KPIs are the quantifiable measurements that you can use to assess the performance of individual factors critical to your organization’s success. Understanding the smaller elements that contribute to a business’s larger success is an essential component of effective management. But KPIs aren’t magic. Whether you hold a business degree or not, KPIs won’t do you much good unless you know how to make proper use of them. Here are some tips that can help.
Make Sure Your KPIs Reflect the Company’s Goals
What does it mean to you to “grow the business?” Are you looking to maximize profits or improve customer satisfaction or speed up delivery times or achieve a different goal? You need to decide on what your most important goal is in order to measure the proper indicators. If you want to increase profits, you will want to focus on fiscal measurements. If you want to improve customer satisfaction, you will want to focus on measuring complaints, survey responses, etc. For speeding up deliveries, you will have to measure how long it takes between the order and the delivery of a product. The point being: you need to focus on the indicators that are most directly tied to your goal.
Make Sure Your KPIs Are Quantitative
It’s hard to measure something you can’t count. If you’re going to measure customer satisfaction, for instance, you have to formulate a way to adequately measure that satisfaction. And you have to decide on the scale you will use. Will you adopt a customer service response form? Will it use a satisfied/unsatisfied binary, will you have customers rate you on a 1-to-10 scale, or will you use some other method? You can’t know how close you are to meeting your goals—or how much you’re falling short—if you don’t know how to accurately measure your progress.
Make Sure Your KPIS Are Actually Integral to Success
There are many things you can measure. In the case of improving customer service, a response form can give you some good data, but should you also be counting the customer complaints on review sites like Yelp? The answer depends on the reliability and actionability of the data. While any given goal may have multiple KPIs, you should make sure all the KPIs you choose are providing you with measurements that can actually help you know whether you’re progressing toward your goal.
Make Sure You Know What to Do With What Your KPIs Tell You
A measurement is just a measurement. To fully utilize KPIs you need to understand what your measurements are telling you and how you can use them to reach your business goals. Staying with the customer satisfaction goal, knowing that customers are dissatisfied does you little good unless you also know what to do to improve things. Unhelpful clerks may require you to institute better training. Limited selection might lead you to stock more products. Poor quality might lead you to revise production methods. KPIs let you know whether you’re progressing toward your goals, but they can’t get you there by themselves. You have to know how to interpret the measurements ... and what to do next.
How Can You Learn More?
One of the best ways to improve your business acumen is by earning a business degree, particularly a master’s in business administration. MBA degrees are the most popular master’s degrees in the U.S., and there’s a good reason for that.* When you earn a business administration master’s, you can learn the skills vital to successful business management.
The question is: do you have the time? You very well could if you earn an MBA online. With an online MBA program, you can take advantage of all the convenience and flexibility offered by online education. This can be of particular benefit if you are running your own business or are managing a company you love. When you enroll in an online MBA program, you can earn your degree while you continue to work full time.
Thanks to online graduate degree programs, more and more people are gaining the education they need to be successful. You can too—and learn even more about KPIs—by earning an MBA online.
Walden University is an accredited institution offering both a traditional online MBA degree program and a competency-based MBA degree program. Expand your career options and earn your degree in a convenient, flexible format that fits your busy life.
*J. Byrne, Why the MBA Has Become the Most Popular Master’s Degree in the U.S., Fortune, on the Internet at http://fortune.com/2014/05/31/mba-popular-masters-degree.
Walden University is accredited by The Higher Learning Commission, www.hlcommission.org.