What are KPI’s
KPI stands for Key Performance Indicators. KPI’s are ways of measuring your company's performance. By doing this you can set realistic business goals and plan ahead for the future success of your business. It also gives you a way of comparing yourself with competitors in your market sector.
The most commonly used measurements for a businesses KPI’s are;
Revenue per client
Revenue is the amount of money coming into your business from sales. If you sell a product then this would be the amount you sell each item for. If it’s a service you’re selling it’s how much you charge your client for each service you sell.
Revenue per client
It’s good to break down how much revenue is generated from each of your clients. Having an overview of each client means you can prioritise those clients who are bringing in the most money, making sure they get the best service possible. You can look at ways of increasing revenue from those clients who are not generating as much income for you, maybe you could upsell to them, or maybe they don’t know about everything you do. It’s also good for future forecasting because you will know how many more clients you need to get on board with you in order to increase your overall revenue.
Your profit margin is the amount of money you make when you have taken into account any costs. You can work out your profit by deducting your expenses from your revenue. This gives you an indication of how profitable your business is and will determine any changes you need to make in order to increase your profits.
Client retention is really important for your business. The more repeat business you get the more likely your customer is to recommend you. Clients who stay on board with you will build more trust with you the longer they are with you and will always refer potential clients to you. That trust you have built will mean they are less likely to go to one of your competitors. Client retention is extremely important to your business so make sure you make your customers your priority.
Customer satisfaction determines your client retention. Always ask for feedback from your customers or clients. Just because someone doesn’t complain doesn’t mean they are happy. Sending out regular customer surveys is a great way to measure this. Check in with your repeat customs and ask them of ways in which you can improve your products or services. They will be genuinely happy that you’re taking their thoughts into consideration.
Feel free to get help with your KPI’s from your bookkeeper or accountant. They will be able to show you the best way to measure and forecast so that your business is moving in the right direction.