This article was written by Erez Shilon, who is the Senior Product Manager of Leverate.
Growth. In the last few years and especially in the startups scene, all you hear about is growth. ‘Growth hacker’ has in fact become an adjective used both by individuals to describe themselves as well as by companies writing job descriptions when seeking talent. But in the very essence of things, what is growth? What drives it forward or enables it?
Nothing can bring more growth to your organization then the proper use of KPIs. KPI stands for ‘Key Performance Indicator’. “KPIs evaluate the success of an organization or of a particular activity in which it engages.”
But it is not just a form of measurement, it can actually be a way of life (both organizational and personal) and define the way in which the organization works, behaves and succeeds. In other words, I would like to explain in this three parts series how KPIs are not just a measurement tool but a way to create a success-driven company culture.
The best way to begin is by explaining how KPIs help the business grow and what kind of results you can get when defining clear KPIs. In the next part I will describe how to set KPIs, the two different types of KPIs (strategic and operational) and how to get the data to measure them. The third and final part of this series will describe what to do with KPIs once we have them. I will try to give as many examples as I can which are relevant for forex brokers, but in fact, each example can be extrapolated to any business doing online B2C sales.
Why use KPIs?
So first things first: how do KPIs help the business grow? I believe that the most important question when it comes to growth is ‘where to’? In order for us to enable growth, we should first define it, and measure it. And that’s exactly what KPIs do. By making a decision that you want to grow your incoming cash flow (aka Topline Revenues) you can define a KPI: ‘Increase sum of FTD from X to X+Y’.
Good KPIs should be of critical importance. For example, it may be important for your business to solve clients’ issues in less than 24 hours (SLA) but if you don’t have any clients right now, you probably won’t set this as an important KPI. This is an interesting issue that we’ll talk about further in the 3rd part when we learn how KPIs are live and vibrant and should be in touch with reality and not stay fixed.
They should also be used as a way to deliver critical information to decision makers in different management levels of the organization.
FBS 12 Years Promo Giving Away $300k, Mercedes-Benz to ClientsGo to article >>
Another great strength of KPIs is that they can be used to drive employee focus towards the important success factors of the organization and even be used to encourage steps to success (i.e. an ‘engage with X amount of clients per day’ KPI can increase retention and LTV).
So now that we somewhat understand what KPIs are and how they can be used, I want to give an overview of what the immediate benefits of KPIs are.
Every once in a while you go into a meeting (no matter what level) and you really don’t understand what was talked about, and what we should do next. In order to define KPIs well, an organization should reference them in as many meeting as possible. This will help you make sure everyone is focused on the same goal and create clear action-items for follow up meetings.
This is just half the problem, however. In today’s fast-paced startup environment, many employees complain that they don’t even understand if the organization is doing well or not. Are we ‘winning/losing’? Once you have a clear and measurable KPI for success it’s very easy to understand.
This leads us to the final and maybe most important factor of all. KPIs really help you manage your company both ways: down by rallying the troops and making sure everyone is aiming at the same target, and up by being able to explain success or failure to your board.
Implementing KPIs creates the same terminology for all levels of the organization, such that a junior sales person and a board member may be looking at the same numbers having the same feeling and being able to make decisions that will impact the same goal in the same way.