If you want your company to succeed, you need clear targets — which is why we are diving into non-financial business KPIs.
Setting key performance indicators (KPIs) can unlock the potential in your operation and set you on the road to success. From strategic objectives to practical steps, business KPIs will help you monitor progress towards your chosen goals.
Your accountant has probably told you all about financial KPIs, likely with various ratios based on income and costs, but non-financial KPIs are just as essential for SMEs that wish to grow and prosper. So get out your pen and paper and start creating some goals for your business…
1. Customer satisfaction
How happy are your customers with your products or services? Satisfied clients are the lifeblood of any business, so you need business KPIs to track performance to prevent losing market share to your competitors.
You might think that you do what you say and deliver on time, but how do you know? Clever software, surveys and polls can all be used to gather feedback from clients. If you go down the survey route, obtaining a Net Promotor Score (NPS) from your customers can be beneficial, as this is a satisfaction score that’s used across many industries so it will also help benchmark you against other similar companies.
It’s cheaper to sell to your existing customers as it is to retain an existing customer if you offer a recurring service vs winning a new one, therefore tracking customer satisfaction will help you with generating repeat business and reducing customer churn. If your business relies on word of mouth and referrals too, tracking customer satisfaction should be an even higher priority.
2. Maximising productivity
From SMEs to multi-national corporations, everyone wants to perform key tasks better or quicker. It’s all about making the most of your resources to generate greater returns by keeping overheads low and profit margins high.
So how can your operation perform better tomorrow? Try establishing what activities you undertake internally that you can track and that help drive your business performance. For example, do you rely on outbound calls to generate sales? If so, the number of calls per hour would be a productivity indicator, as would products produced per day in a manufacturing company.
Setting these business KPIs can help to develop a culture of continuous improvement in your organisation. If you can focus on doing the right things in the right way, your business will have a greater chance of success. However, often quality is more important than quantity…
3. Quality control
You might think that you deliver a quality product or service, but how do you know? Nothing will annoy customers quicker than being late or delivering poor service or product, so you need to set stringent business KPIs to maintain standards.
Calculate a performance metric to accurately monitor your desired quality level, so you can check that customers are getting what they expect. For example, do you have a complaints procedure? Do you track the number of complaints you get? If not, you could be missing alarming trends that can snowball into bigger issues. However, once you have the right data, you can aim to raise the level of success.
4. Employee satisfaction
Your staff are the ambassadors of your brand, so you don’t want unhappy employees to hurt your business performance. Focus on creating a positive workplace with a culture of engagement and inclusivity and this in turn will help with productivity.
Employee engagement/satisfaction surveys and regular 1-2-1’s can help provide you keep track of this and enable you or your line managers to resolve any employee issues quicker. Happy, motivated staff can then help in all areas of your operation which will move you closer to achieving your other business KPIs.
5. Marketing performance
It’s likely that one of your main financial objectives for the year will be growth. It’s also very likely that one of the ways that you aim to grow your business will be through marketing activity and there’s a wide range of financial/marketing KPI’s such as customer acquisition cost and digital marketing ROI.
However, if you go back a step, there’s also a range of non-financial marketing KPI’s that you should be tracking involving traffic from different channels and their associated conversion rates throughout your lead to customer process. It’s important that you track these on an ongoing basis to constantly test what works and what doesn’t as often improving these metrics by small percentages can result in large upsides in revenue.
These are only a few examples, but there are dozens more ranging from product development to customer/user growth. Hopefully you can now see how financial and non-financial KPIs are both important if your business is to achieve its short and long-term goals. Developing KPIs should be part of every company’s strategy which also includes the overarching mission, vision and values.
Do you need help?
We’re experts in providing regular management reporting packs to our clients that incorporate your non-financial KPI’s, as well as the financial KPI’s, with commentary that provides you with actionable insight to drive your business forward. If you require support with this, you can contact our friendly financial experts on 0845 606 9632 or email email@example.com.
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