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Affiliate Tracking - Chapter 1: What is it?

(And why do you need it?)

KPIs
Key Performance Indicators

Introduction

KPIs – Key Performance Indicators are measurable values that demonstrates how well a company achieves key business goals. Organizations use KPIs at multiple levels to evaluate their success in reaching goals, they help companies gauge their degree of success where it matters most.

Indicators or key performance indicators (KPIs) in the business environment, are primarily quantitative information; Illustrating the structures and processes of a company.

There is great importance to this analyzed data, in many levels, among these are:
  1. Supervision of sectors and activities in the organization
  2. Planning and controlling using supporting, real time information.
  3. Making relevant business decisions.

KPIs are helping to assess which actions are successful and where there is potential for optimization and saving money. KPIs should be chosen and monitored depending on your unique business goals. Certain KPIs support some goals while they’re irrelevant for others.

Regular evaluation of process performance in companies is not only important for management and regulation; It is also used in content marketing. Regularly review activities and results according to content goals, using clearly defined metrics, is essential and will help the business growth.

KPIs vs Metrics

Not all metrics are KPIs but all KPIs are metrics. This means that metrics are very broad criteria but KPIs are reduced to the most important keys that match the goals and objectives you have set for your business. Think of this as the main characters of a story. However, unlike KPIs which are quantitative metrics, with the help of which certain insights can be gained, metrics in general can be quantitative or qualitative, predicting the future or providing a picture of what has happened in the past. If a metric tracks your performance over a key business goal, it’s a KPI.

Some companies will need at certain stages of development to rely on quality data rather than quantitative data.

Numbers are just like letters; They can tell a story, if you know how to add them up and tell it. This is exactly what we, in Kronoseal, are doing. We tell your business’ story, and we are doing it by taking the numbers and turning them into insights and to your next marketing strategies.

Developing the most effective KPIs for your business

For most businesses’ goals there might be many associated performance indicators, some of them are very essential, others less, therefore often marketing managers and business’s owners will narrow it down to a few impactful data points known as key performance indicators. KPIs are those measurements that most accurately and succinctly show whether or not your business is in the right growing path

It is important to remember that KPIs track key business objectives. But since every business has different goals and objectives, their KPIs might change as well.

However, there are other variables in the choice of KPI. Different companies may use different KPIs to measure the same goal.

If the goal of two different businesses is growth, Business A can use a number of units sold as an indicator of growth, while Business B will choose the amount of monthly revenue.

There are endless types of KPIs in the business world.  KPIs for marketing and sales, for customers, financials, and a lot more. The key will be to determine which are the most suitable for your needs. Which will give you the most valuable information for your business.

Now that we know how important KPIs are to understanding and achieving your business goal, many times businesses will choose to use the most common KPIs available. This is without checking how suitable they are for the goals of your organization, and this comes down to results that are not fully understood to the business owners and that do not give a correct prediction of future results.

Defining the KPIs is not a job to be taken lightly, and each KPI should address a specific business outcome, so it is very important not to confuse business metrics with performance metrics. 

There are many questions that need to be asked and answered in order to get the key you want. When a business owner, along with a manager and marketing team sit down to formulate the right KPI for them, they need to start with the basics, understand what the goals are, break them down into units of measurement, address them and then use the KPI to measure success or failure at a chosen goal.

Here is an example of questions need to be asked and answered, when starting a process to set a KPI:

  1. Desirable goal?

   Increasing annual profits by 15%.

  1. What is the importance of this goal for the business?

    Declaring the business as profitable.

  1. How can this progress be measured?

    Increasing profits over expenses.

  1. What tools are needed to achieve this goal?

    Increasing the number of sales platforms.

  1. Who is in charge?

    The marketing and sales team.

  1. How will you measure the goal achievement?

    The company’s annual profits will increase by a minimum of 15%

    etc.

If it is measurable – it can be controlled!

Once questions have been collected and answered, and specific and measurable goals have been set, you can determine what specific information you need , and what KPI will be the right for you to understand if your business meets those goals. You will also know at what stage an optimization is needed, or if there is a need for new goals and strategy.  

Remember – writing a clear objective for your KPI is the most important  part of developing KPIs.

A relevant, good KPI will not only meet the business goals, but will measure specific success points. KPIs need to be more than just arbitrary numbers. They need to express something strategic about what your organization efforts are focusing on. Looking at a company’s KPIs will tell you a lot about their business model.

This process must be done interactively with the managers, data analytics and marketing personnel and with full and ongoing feedback after each decision  made regarding one business process or another. Once this process is done, it will be possible to set up a KPIs dashboard that will reflect the results and insights of the goals you have chosen to test, and decide with whom you share this information.

Last but not least is checking in on your KPIs regularly.

Keeping track of your progress against the KPI is very important. Not all KPIs will be good and relevant all the time. Some have objectives that are unachievable or fail to track the business goal they were supposed to achieve. Only by checking in regularly you will know if it’s time to change your KPIs. Every time a new decision is made in the business you should re-evaluate the need and accuracy of your KPIs. Fine tuning will keep you on the track of always finding more efficient ways for the goals you have set.

More about KPIs and more specific tools in the next articles.

GROWTH

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