Keeping an Eye on your KPIs

Key performance indicators, or KPIs, are strategic objectives that measure performance against an organizational goal. Sounds like something only BIG companies need to do, right? Wrong..

Key performance indicators, or KPIs, are strategic objectives that measure performance against an organizational goal. Sounds like something only BIG companies need to do, right? Wrong.

Any business of any size that tracks its KPIs is always going to have a better grasp on the overall performance of its company, 100 percent of the time. So, if you aren’t tracking KPIs today, the first thing you need to do is define some high-level goals you want to understand (health of your business) and then put in a process to make sure you capture these numbers. Using these numbers will help you make better-informed business decisions that will lead to improved outcomes to the challenges your company faces each day. Like the canary in the coal mine, they give you a warning sign before issues become too big to overcome.

Ok, so you I see your eyes glazing over, but I know with your head nodding that you understand you need the KPIs. Now that you agree with me, let’s take a look at some things you would want to begin tracking.

Efficiency

If you want to understand where time and money might be wasted, you NEED to measure efficiency. Put a process in place to capture things such as customer information, contract performance, time to service a customer and how many calls you get each day. Once you understand these numbers, design solutions to begin driving down call volume or realigning customer agreements that are more profitable. If you’re having problems with your efficiency, check out our free eBook, 5 Tips to Increase the Efficiency of Your Service Team (especially if you are utilizing a help desk—and if you aren’t, you should be!). There are some great tips in there about increasing the efficiency of your team.

Utilization

Understanding and achieving appropriate employee utilization rates is essential to ensure your operations are running as effectively as possible. This can be done by making a few simple calculations. First, multiply the number of employees on payroll by 40 hours (or your standard work week). Ok, so there are those of you who think 40 hours is not enough—and in some cases too much—but we had to pick something. Next, add the number of hours each employee actually worked during that given week. Finally, divide the total number of hours worked by the available hours, and boom, there’s your utilization rate. We believe that anything less than 80 percent means you need to take a serious look at your strategy, your people and the work you have agreed to do. And if you happen to sell services, check out a blog I wrote a few weeks back discussing how to maximize your utilization rate for billable hours.

Customer Satisfaction

You would be hard-pressed to find any company out there to tell you it doesn’t care about customer satisfaction. This is one of those indicators that could determine the success or failure of your business, and it needs to be monitored closely. Online surveys are good for tracking the high-level number but simple phone interviews along with some face-to-face interaction will give you color on the numbers. Don’t be afraid to leave the bubble you live in (your office) and get out there to actually talk to your customers. Find out what they really think of your performance and how it affects their business.

At ConnectWise, we take a page out of the concept that nothing interesting happens in the office—we believe that, so we make it a point to put a KPI on customer visits per month. This will keep you on track.

Profitability

Ultimately, the goal of every organization is to be profitable, so it’s a no brainer that this should be No. 1 on your list of KPIs to measure. But being profitable today doesn’t mean that you will be profitable tomorrow. You need to understand the reasons why you were profitable, analyze what you think the future state of business will be, and strategize to ensure your company stays in the green. This KPI should truly be forward-looking, and not just into next year but into the next five years.

So, now you know it’s important to keep up with your KPIs, and you need to make sure you’re paying attention to them on a frequent basis. Watch for trends, and react appropriately. If you understand your KPIs and address them when necessary, there’s no reason you should ever be caught off guard by your business performance. Feel free to let me know if I missed anything, or if you have any questions about KPIs, just shoot me a note.

Brian Troy is a product marketing manager for ConnectWise, the industry leading business automation software for technology service providers. Monthly guest blogs such as this one are part of The VAR Guy’s annual platinum sponsorship.