Determine KPI’s To Strengthen Your Business
At first glance, it is easy to tell how your alarm business is performing: are sales up or down? Are you retaining customers or not? Are you turning a profit or losing money? But in order to discover the driving factors for your success and areas for improvement, you must use key performance indicators (KPIs).
KPIs evaluate specific activities and processes to see how successful they are in achieving your goals – a.k.a. critical success factors. A KPI could be monthly unit sales, your market share percentage, on-time installation, client retention, or product quality. Since these indicators are often the responsibility of one team or department within your company, measuring their performance will allow you to see if a team is doing well or not. KPIs can help you indicate an issue – with a specific department, employee, product, etc. – so that you may quickly resolve it.
How can you identify KPIs for your business? Try following the SMART criteria: Specific, Measurable, Achievable, Realistic, Timely:
- •Specific – a clear statement of the goals for your company (ex: increase your market share)
- •Measurable – you actually quantify the value of this goal for your business (ex: sales increase)
- •Achievable – it is possible to reach these goals; not a “pie in the sky” dream
- •Realistic – you have the employees and resources to accomplish the goals
- •Timely – a timeframe in which you will reach these goals.
So, what might a KPI look like for you? Here is an example: one critical success factor for an alarm business is the quality of the product; ensuring that a customer’s installation is done correctly and the alarm is working correctly.
To see how your business is performing in this one key area, quality control, find a past situation when a new customer filed a complaint that their new home alarm did not work. Review the process from beginning (the initial sale) to end (how the client’s complaint was handled). You may find one or more of these issues:
- •the installation technician was in a rush and did not take the time to test if the system was working or not
- •the technical assistance representative did not evaluate all possible causes for the service disruption.
By taking the time to evaluate the issue, you will be able to pinpoint the breakdown and create a process to avoid a future occurrence.
You want to create a KPI to anything you can identify as being an important aspect of your business. Another example, if you have a call center or a central station, might be around attendance and/or tardiness. By evaluating the percentage of absences and/or tardiness, you may find you have a higher percent than you’d prefer. You might then develop incentives for employees around metrics tied to attendance and prompt arrival. Employees could potentially earn extra compensation for hitting the targets you set.
For each critical area of your business, determining a relevant KPI will alert you to small issues before they become large problems. If you haven’t incorporated KPI’s into your business yet, start by selecting three or four KPI’s to review regularly. To learn more about KPI’s, download our Standard Operating Procedures whitepaper.