What exactly are KPIs?
A KPI (key performance indicator) is a metric that measures the level of business performance. It can be used to measure any aspect of a company’s performance, but often refers to the measurement of financial success.
One type of KPI that keeps coming up is success metrics for social media campaigns, such as average engagements per post and average impressions per campaign over time.
Why does social media management matter, and how can KPIs help you get the most out of your marketing strategy?
Generally speaking, KPIs are a way to quantify knowledge and information. Using data, one can glean insight into an organization’s performance and identify opportunities to improve it. But don’t confuse that with measurements of real impact.
KPIs are only as accurate as the data used to measure them. For example, the average engagement per post metric is one that you can’t trust too much. The real reason why a company has engaged with its audience on social media might be something as simple as a Facebook ad campaign. That doesn’t make the previous campaign useless, of course — it does mean that you could’ve used an ad to get more people to click without the reward of engagement.
If KPIs aren’t related to the business strategy at hand, they are potentially disastrous. But this doesn’t make them useless.
The importance of selecting the right KPIs:
Knowing which key performance indicators to measure can be the difference between a successful business and one that may not survive. This blog post will highlight how selecting the right KPIs for your business can not only increase its performance but also save money in the long run. We’ll go over some of the most common KPIs, as well as some best practices on how to have success with them. By reading this blog post, you’ll see that there are many different aspects of your business that an incorrectly selected KPI could ruin.
For the sake of this blog post, we’ll be focusing on consumer-facing businesses. But the same principles can apply to business-to-business as well. With that being said, let’s dive right in:
In my opinion, there are two major KPIs that every business should monitor:
(1) profit margin and (2) customer satisfaction.
Profit Margin: Profit margin is one of the most important KPIs to monitor. It shows how much money your business makes after paying operating expenses and taxes. What’s interesting, however, is that every business is different so there are no exact standards in place for what profit margin should be. However, if you want to continue growing your business, then you should aim for about a 50% profit margin.
Customer Satisfaction: Customer satisfaction is one of the most commonly monitored KPIs for businesses. In my opinion, this KPI can easily be broken down into three fields:
(1) customer service, (2) product quality, and (3) price competitiveness.
It’s worth noting that no business is perfect, so you shouldn’t expect to always have high levels of customer satisfaction. For instance, if you offer a product or service that has limited availability and/or is more expensive than the competition, then you may receive lower satisfaction scores from your customers.
However, if your customers are receiving a higher-quality product or service than the competition and/or don’t have any issues with your customer service department, then your customer satisfaction scores will generally be higher.
KPIs as key decision-making tools:
If you are in management, you must be cognizant of the key performance indicators (KPIs) that measure your success. KPIs are a set of acronyms that reflect one or more goals and objectives. Some common KPIs for managers include:
● TPS – Total Productive Share
● Net Promoter Score
● Return on Equity (ROE).
These metrics should be tracked directly with quantitative data on a regular basis. However, despite having a firm grasp of the numbers involved, it can still be difficult to understand why certain numbers are going up or down. For example, you may know that TPS is important to your success, but how exactly is it relevant to your job?
KPIs can be a significant factor in dictating the daily operations of your business. Depending on what they are measuring, they can potentially represent the future direction of the company. Think about your company in the past year. What did you focus on? Was it keeping the doors open? Or was it getting more customers or market share? It is essential that your management team understands these KPIs and make key decisions based on them.
Problems while tracking KPIs
A big problem when trying to track KPIs is that they are subjective. This means that each manager’s goal differs from another’s. For example, a TPS may be high for one manager and low for another. One manager may be happy with a low product cost, while another manager may want to reduce it.
Another problem is that management teams can get obsessed with KPIs. For example, if your company is struggling to get higher profit margins, then you may focus on TPS rather than profitability. In this case, TPS becomes uncoupled from profitability and becomes just one of many KPIs that managers track. This can cause problems because different KPIs are directly related to different goals and priorities of the management team.
Wrap up:
KPIs are a way for managers to measure their company’s success, usually in the form of numerical data. They tend to be used in business and marketing where there’s a goal that needs to be achieved, and they are often gauges of how well an activity is progressing towards that goal. For example, creating a new product or reaching certain sales numbers could be seen as KPIs.