Numbers Don’t Lie: KPIs and How to Use Them
You want to know that your business is running smoothly, right? While the obvious indicators, like sales figures or the number of clients, can help you determine the success of your business, there are also other indicators you can use to keep track of your business. These are called key performance indicators, or KPIs.
What are KPIs?
Like the name suggests, KPIs help indicate performance. They essentially let you know the success of a particular activity or strategy you’ve used within your business. Let’s say you want to know how your recent Facebook ads are performing. There are things like click-through rates, conversions, and impressions that let you know how they’re doing… but which one of those are important?
That’s where the “key” part of “key performance indicators” comes in. Because not all measurements matter for your business or each of your projects.
Which KPIs should matter to you?
Part of my work with clients is to develop a strategy around operations. This influences marketing efforts and how we actually track “success.” For example, many clients need help deciding which product to create or what they should be focusing on to drive revenue.
Well, revenue or product sales aren’t the only KPIs we look at in these instances. We sometimes need to look at email open rates, product page views, social media engagements, and so on. There are plenty of directions a client could take in creating a new product, but once we look at the actual data, we can create a picture of one that can work to the strengths of their business. Metrics aren’t just a standard set used across all businesses. Instead, KPIs are tailored for each unique business and their focus depends heavily on the business, the audience, and the overall goals.
For example*, let’s say a service-based business wants to streamline operations and run more like an agency — with the founder or CEO stepping out of the delivery. This business’s KPIs might fall more in line with the number of deliverables a team member has completed, contact form submissions for new agency work, and profit margins. Things like social media followers or the number of non-ideal client requests would not be ideal KPIs to measure.
On the other hand, if you run an online shop and want to generate more revenue, your KPIs will fall more in line with reach. How many people are you reaching with your ads? What other streams of traffic are working, i.e. affiliate programs or podcast guest hosting? Then, there are also sales tracking needs: Who bought from that sales announcement email? How many clicks did you get from that post? Did that abandon cart sequence work?
*Please note: These are just examples and do not reflect which KPIs you should select in a similar situation. Use your best judgment or consult with a business operations expert.
Each business’s KPIs are unique, and they can change based on what’s a priority at the moment. Right now, if growing your business is most important, your KPIs will look different from a business that wants to sustain operations but is not interested in growth. KPIs also differ by industry.
That’s why selecting your key performance indicators is critical. So you know where to put your tracking and analysis efforts, and so you find the numbers that actually help you make decisions.
How these indicators help you make decisions in business
There’s something I’ve noticed in the online business space especially: Tracking just for the sake of tracking. People can tell you the number of site visits, social followers, email subscribers, click-through rates, revenue, and just about every other data point in the book… but they don’t do anything to turn those into KPIs.
Were social followers likely to purchase more than one product? What percentage of people immediately unsubscribed after making their new subscriber promo purchase?
KPIs are performance indicators — they will tell you what is working and what’s not. Numbers don’t lie. That’s why I believe in a solid tracking process so you get the information you need. Tools like Google Analytics, Facebook Ads Manager, and site features found on Shopify or e-commerce plugins are all great. Most tracking tools I use in businesses (aside from email management tools) are often free and easy-to-use with a little Googling.
(Side Note: If you can’t find a tool to show you exactly what you need, you may have to grab the raw data and create it yourself! In my corporate life, we had entire teams dedicated to data analytics—seriously, there are 516 million search results for “data analyst.” They’d grab the source material from however many systems and compile it together to create management reports… aka, the KPI charts the higher-ups wanted to see so they could make the tough business decisions.)
Of course, I’m not asking you to just track things. Numbers are useless if they’re not followed up by a review and analysis. It also helps to understand basic benchmarks for your KPIs before you institute them.
- What is a great click-through rate in your industry?
- What’s the average email open rate?
- How well do ads usually perform for this audience?
- How much has your email list grown after spending on a paid placement or appearing on a podcast?
- Is that keyword helping you outrank your competitor?
- What’s the average churn rate for your services?
- What’s the average transaction value in your shop or by client?
- How many customers come back a second, third, fourth time?
You can compare your performance against others in your industry, and against your business’s performance over the last year, last quarter, etc. This can show growth as well as room for improvement, and help you prioritize resources.
For example, if an onboarding sequence was getting an email open rate less than the industry average, I know to tell a client that we need a copywriter who can help refresh that sequence. If we’re getting a high churn rate on their monthly membership program, I know that customer service or content needs to be addressed. If a certain product is returned waaaay more than other similar products, I know we need to take a hard look at the listing price and the value delivered (<– an actual project I completed for a client this fall after noticing the skew in the data, and we’ve had zero returns on that product since!).
None of these things are difficult to track, nor are they hard to interpret when using benchmarks. In my experience, the hardest part is knowing which KPIs matter, and that starts by getting clear on your business goals and priorities.
Now, it’s time to start tracking
Selecting, tracking, and analyzing your KPIs can feel like just one more thing you have to do to run your business. I won’t say it doesn’t take some work to decide on your projects and which KPIs will help you determine success, but once you have that, the tracking and analysis part can be a lot easier.
Simply set up the tools, whether it’s Google Analytics, your website dashboard, social media insights, etc., and set a recurring task on your calendar or project management tool to check the details once a week or month. You can also assign this step to an assistant or helper!
Not sure where to track the numbers? You can grab my Metric & KPI Tracking Template and get started here.
I use this with clients in my day-to-day work, and it has helped many teams see — in clear numbers — what they want to focus on. Half the challenge is knowing that your efforts are paying off in your business. Remember: the numbers don’t lie, so make sure you’re looking at (and properly tracking) them regularly.