We Improve What We Measure: What Are Your Top 5 KPI’s?

Tom CoffinsmartPRENEUR Blog Series

Businesses must leverage strategic measurements to enhance their performance and drive growth.

Strategic decision-making is essential for growth and sustainability. Key Performance Indicators (KPIs) act as guiding beacons, offering valuable insights that enable businesses to measure progress, identify areas for improvement, and drive success. By focusing on specific metrics, companies can make informed decisions, optimize processes, and ultimately elevate their position in the market.

What are the top 5 KPIs that your business should prioritize?

Well that depends on what you are most interested in improving. There are a many consultants out there today that have the “key to your success” or so they claim. Standardization is a great thing. In the smartPRENEUR Blog and Podcasts our guest faculty have discussed in many different ways the basic starting points; decide what you want to achieve, write out a plan to achieve your goal, write out the processes that your company must follow in order to implement your goals, and develop KPI’s to measure your results.

Where is your focus? Below are some examples to consider.

  1. Customer Satisfaction (CSAT): Monitor customer satisfaction to gauge the success of your installations and services. Regularly collect feedback through surveys or reviews to identify areas for improvement and ensure a positive customer experience, fostering long-term relationships. You may also want to look into NPS (Net Promoter Score) which measures your customer’s loyalty or even CES (Customer Effort Score) which will help you improve the ease of doing business with your company.
  2. Conversion Rates: Track the percentage of leads that convert into actual sales. Analyzing conversion rates helps identify the effectiveness of your sales and marketing efforts, allowing you to refine your strategies and allocate resources wisely.
  3. Installation Time: Efficiency is key in the home automation business. Measure the time it takes to complete installations from start to finish. Streamlining processes not only improves customer satisfaction but also increases your team’s capacity to take on more projects.
  4. Employee Productivity: Keep an eye on the productivity of your installation teams. Monitoring the number of installations per technician or the time spent on each project helps identify bottlenecks and areas for improvement in training or workflow.
  5. Inventory Turnover: you may not think you are carrying inventory, but you are. For businesses involved in product sales, optimizing inventory turnover is crucial. Aim for a balance between having enough stock to meet demand and avoiding excess inventory, which ties up capital and warehouse space.
  6. Social Media Engagement: In the digital age, social media is a powerful tool for customer engagement. Track metrics like likes, shares, and comments to evaluate the effectiveness of your online presence and adjust your social media strategy accordingly. Personally, the jury is still out on this one for me. My guess is most systems integrators get most of their business from builders, architects, and referrals still today.
  7. Service Call Resolution Time: Efficiently resolving service calls is crucial for maintaining customer satisfaction. Measure the time it takes to address and resolve issues reported by customers, aiming for quick and effective solutions.
  8. Revenue Growth Rate: Revenue growth is the lifeblood of any business. Monitoring the percentage increase in revenue over time provides a clear indication of the business’s financial health. Calculate the revenue growth rate by comparing the current period’s revenue to the previous period’s and expressing it as a percentage.
  9. Cash Flow: Cash is STILL King! Maintaining healthy cash flow is essential for day-to-day operations. It ensures that a business can cover its expenses, invest in growth, and weather unexpected challenges. Regularly assess the inflow and outflow of cash, taking into account operational expenses, investments, and any outstanding payments.
  10. Profit Margin: Understanding how much profit you need to operate your business is critical. Set standards for your material, labor, and parts margins. For guidance on what those percentages should be check out our friends at Vital LLC.

By consistently measuring and analyzing these key metrics, your business can adapt to changing market conditions, enhance customer satisfaction, and position themselves for sustained success. Remember, improvement begins with a clear understanding of where you stand, and these metrics serve as your compass in the journey towards growth.

About the Author

Tom Coffin

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Tom Coffin is CEO/President/Co-Founder of Simply Reliable. He has owned and operated companies in retail, security, Audio/Video, Systems Integration, and Home Automation product manufacturing sector.

Website:   https://www.simplyreliable.com