6th: Figure out your KPIs and prepare a plan
Mar 27, 2023
Key Performance Indicators are measurable targets that you can use to decide if and how your business plan is working. The targets are quantifiable and can be used to measure your success rate.
KPIS are not fixed; they vary from business to business and objective to objective. You can set your own KPIs that you find most relevant or choose the ones mentioned below.
- Net Profit/profit margin- Calculate the net profit/profit margin you made this quarter and determine how much you want to make in the next one. Set realistic expectations and prepare a plan that helps you achieve them.
- Cost of customer acquisition- Find out how much money you have spent to acquire one new customer and keep comparing it every month or quarterly. The lesser the cost is, the better your business is doing.
- Funnel drop-off rate- This refers to the percentage of people who interacted with you but didn’t choose your business. Find out why the leads didn’t mature and fix the issues. Make the percentage drop and you will see more business.
- Upsell and cross-sell rates- Upselling is the process of convincing the buyer to buy a more expensive product or service than what he initially wanted. Cross-selling means convincing the buyers to buy an add-on product that they may not have wanted initially. These are highly popular, free-of-cost sales strategies. Decide how much revenue you want to generate from them and track your performance every month.
- Customer Retention- This should be the top-most priority of small businesses. Find out how many repeat customers you have and how you can increase the number. The bigger your loyal customer base is, the easier it will be for you to survive and grow.
Number of social media followers, on-time delivery, shopping cart abandonment, year-on-year growth, website traffic, and employee retention rate are some other popular KPIs for small businesses.
While selecting KPIs, make sure they are simple, straightforward, and logical. They should give you a clear vision of where you are and what you can become.
