Financial Management Essentials #2 | Keep An Eye on Your Key Metrics

Key metrics, also known as key performance indicators (“KPIs”) are quantifiable measures designed to assist a company in achieving its goals.

Developing a proper set of KPIs is an individual process for each business, and it requires determining which metrics indicate the company’s most effective pursuit of its individual goals and strategies.

As you would expect, different industries require different metrics; for example, retail operations may necessitate a range of inventory based metrics whereas a service offering would be more focused on KPIs such as number of customers, customer service etc.

KPIs need to be consistent, communicated and actionable. For a company to utilise KPIs successfully, the KPIs need to be clearly phrased in actionable terms, e.g. “make a minimum of five new customer contacts per week.”

We’ve listed some of the many possible choices for measurement with KPIs below:

• Customer retention rate
• Sales contacts
• Production per employee
• Hiring and training costs per employee
• Inventory turnover rate
• Advertising source of new customers
• Operating profit margin
• Customer satisfaction

I hope you found that useful. I have a KPI for this article of 20 views… I will report back on my performance!

As always, if you have any questions or would like to have a chat with us about anything please drop an email to contact@activeaccounts.co.uk or fill in the form on our home page and we’ll be in touch!

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