Knowing your Key Performance Indicators (KPIs) is one of the best ways to gauge your business. With no standard of measurement, how can you tell how well your company is performing (or underperforming)? First and foremost, make sure you’re double- and triple-checking your numbers. Faulty math produces faulty results. We’ve been in the industry long enough to see this come back to bite countless small businesses. That’s why it’s important to take your time when identifying your KPIs so that you can tell exactly where you are and where you need to go. With that in mind, let’s take a look at some common KPIs for the best possible information.
For those who aren’t quite sure what it means, your pipeline revenue is your total sales volume if you were to earn every potential piece of business you quoted over a set time. This can be used as a good indicator to see how many lines you need to be throwing out in order to reel in a certain amount of revenue. For example, after trial and error, you could discover that you need a pipeline revenue of $200,000 a month in order to bring in $50,000 in actual revenue. This will give you a good idea of how hard you need to be working to expand your reach.
Your Churn Rate
Having an idea of how many customers you lose each month is just as important as knowing how many customers you’re gaining and retaining. From knowing your churn rate, you’ll be able to tell where you stand in terms of profitability. If you know how much business you’re losing, you’ll know how many new clients you need to bring in next month to make up for the loss and break even, thus keeping your business as healthy and profitable as possible.
Understanding your KPIs will allow you to identify success or failure far easier and far sooner than by steering the ship with enigmatic sales numbers that are only halfway meaningful. As a result, you will be able to see whether or not your business is expanding or dying before it’s too late to do anything about it.
by: Charles Jackson,