How To Use KPIs To Effectively Measure Your Progress And Achieve More Goals
Life is messy, following your dreams and chasing your goals can easily turn into an overwhelming game of stimulants and triggers, but you can make it easier if you track your progress effectively, be it with business or personal goals. And, to do so, you need to learn about KPIs.
What are key performance indicators (KPIs)?
A KPI or key performance indicator is a measurable factor that changes before a company starts to follow a particular trend or pattern. As it is said, you can’t manage what you don’t measure. KPIs are there for the measuring part, and so to make your life easier.
How can we use these KPIs?
It is a process of 4 steps to go through:
1- Identify relevant KPIs
2- Create dashboards or scoreboards
3- Evaluate how well business goals are being met
4- Change strategies accordingly
Starting the first step, a major question can be:
Are there standard ones to use?
You can surely find KPIs that worked best for a certain type of business or person. To get a better understanding, we’ll share with you two examples of common business models along with their most-used KPIs:
1- SAAS:
Software as a service company sells subscription-based licenses for cloud-hosted software solutions.
Some useful metrics for this business model are:
MRR (Monthly Recurring Revenue): it measures how much you are making monthly, without including one-time or non-recurring revenues such as fees and professional services.
ARR (Annual Recurring Revenue): Measure of revenue that is recurring on an annual basis.
Annual Recurring Revenue(ARR) = Monthly Recurring Revenue(MRR) * 122- Subscription:
A subscription company sells a product or service, usually, to a consumer on a recurring basis.
Some useful metrics for this business model are:
- Gross user churn: total lost customers (canceled subscription) in a given period over prior period total customers.
- Paid CAC: cost per customer acquired through paid marketing channels (total marketing spend in a month / total customers acquired via paid channels in a given month)
But, to ensure that you’re choosing the right KPIs that will work for you, you need to take these points into consideration:
- A KPI should be directly related to business goals.
- To find suitable KPIs, your goals should be SMART (specific, measurable, attainable, relevant, and time-bound).
- Focus on few key metrics that matter the most.
- Consider the company’s stage of growth.
- Pay attention to both lagging and leading indicators.
- Think like a doctor. 👇
1. What are the questions you need to ask your patient to better assess his/her situation and recommend a suitable treatment? 2. What information are you looking for from these questions or indicators?
Can KPIs be used to measure performance for personal goals?
You can use KPIs to track your progress in any goal you wish to achieve. Let’s take an example, if you wish to find your soulmate, you need first to make it a SMART goal. It can be something like I want to find my soulmate that has these specific characteristics in the following two years through having a date each week because I need company.
And then, you can extract your list of relevant KPIs, such as:
- Number of dates per month
- Number of leads per week
- Number of leads per medium
- Conversion rate: Number of dates / Number of leads * 100
- Time from lead to date
Now that you understood what KPIs are and how they’re used, go ahead and make your own list of KPIs to track your performance, both in business and personal goals.
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This article was written by Ghaya khamassi — Skills21 alumna.
