Performance tracking or Key Performance Indicator (KPI) tracking is one of the most valuable skills you can develop as a business owner. Without tracking in place, you don’t know what’s going on in your business. It’s the equivalent to no one keeping score at a ball game. It just doesn’t make sense. Why even play the game if you aren’t going to keep score?
If you want to become a master of tracking, start with these 4 areas:
1. Sales – Track your entire sales process from the point someone enters your pipeline to where they become a client. You need to monitor each step of your process so you can see conversion rates at each step. Set a target conversion rate for each step and outline strategies to help you improve them. Additionally, set triggers for minimum performance so you can be alerted to potential problems before they occur.
2. Customer Service – Make a list of all the important things you want to track about your customers. Things like their average dollar sale, frequency of purchase, and lifetime value. Also keep track of returns, complaints, comments, etc. The more you know about your customers’ habits, likes, and dislikes, the better you can serve them and ultimately the more they will buy from you.
3. Team – Each employee should have 5 to 7 metrics that they are measured on daily. Without these metrics you won’t know how they are performing and worse than that, THEY won’t know how they are performing. These metrics are vastly different from position to position, but EVERYONE in the company can be measured on something. Start measuring it!
4. Marketing – The first rule of marketing is: Measure everything! Know how many marketing strategies you are using and what they are producing each month. Additionally, you need to track how much you are spending, how much each lead costs you and your conversion rate from lead to sale. This will ultimately tell you how much each new client costs to acquire.
I suggest creating a KPI Dashboard to track all of this. Whether you use Excel or a CRM, you need to have the ability to quickly and easily monitor what is happening in each of these areas. In fact, if you have to use a whiteboard and slips of paper to start this process, do it!
The end result is to create an easy to manage visual of the numbers so that at a glance you can know what’s happening in the business and make fast decisions. One of the reasons business owners get into trouble is that they don’t have quick access to critical data. Looking at your P&L statements once a month or even once a quarter won’t cut it.