Preparing for Q1 involves determining your goals for the next few months, trying fresh marketing campaigns, and gathering data to inform your next quarter. Data about your business gives you an idea of how the company is doing in each of its departments. To help track this data, small businesses should use KPIs to measure their growth.
To learn more about KPI planning strategies for Q1, keep reading.
What Is a KPI?
A Key Performance Indicator (KPI) is a quantifiable performance measure to help you track strategic objectives of your business sets. They help you determine what kind of strategies benefit both customers and the business.
“KPIs need to reflect the fact that value creation is a two-way street and that both sides of the transaction need to get something out of it,” writes Graham KennyCEO of Strategic Factors.
Tracking KPIs gives your business an idea of what works to boost interactions and sales and where they can make improvements. KPIs are an effective tool when evaluating successes and failures later on in the year.
Why Are KPIs Important in Q1?
No matter what quarter you are in, tracking your KPIs is vital to your small business’s success. They clarify which strategies work and what you need to improve. Let’s take an in-depth look at these benefits below.
Measures Performance
To keep a small business afloat and know when (and how) to adapt to your business’s needs, you need to measure your performance in each of your departments. KPIs allow you to track the measures you’re taking to achieve your business’s quarterly objectives.
“Used correctly, KPIs allow you to drive your company’s growth in a meaningful way. That’s because they eliminate ambiguity and confusion. “You no longer have to second-guess whether you’re achieving an outcome that will drive growth,” shares Rem OculeeFounder and CEO of 9Q Ventures and Confidence Wealth Management.
The progress you make will be clear when using KPIs. The impact of those KPIs should help you figure out which areas of your business need work.
Helps Align Your Goals
When running a small business, you may become overwhelmed with all of the goals you want to achieve. KPIs help showcase which objectives you’re actually reaching and which are specifically working towards your goals.
“You can have as many goals as you want, but consider narrowing them down to focus only on what you want to achieve each quarter. KPIs related to sales and marketing will be useful in narrowing in on these quarterly goals,” says Cody Candee, Founder and CEO of Bounce.
When you’re able to see where your business needs improvement, it’s easier to come up with goals specific to improving those shortcomings.
Streamlines decision making
As a business owner, you constantly have to make decisions to help your business and team members. When you don’t have the proper data to make these decisions, you can feel like you’re making changes unthinkingly. KPIs make it so you can use evidence to back up your decisions.
“Sharing the changes you’re making with stakeholders and your team is much easier when you have the data to explain the ‘why’ behind your decisions,” explains Bob Craycraft, CEO of Cadence.
KPIs will make the right choices clearer as the quarter comes to an end. They can help you make decisions about what goals to focus on in the upcoming quarter based on the previous quarter’s numbers.
Improves Transparency and Accountability
You can’t hide from data. If you want to make changes in your departments or don’t feel like a campaign you launched is successful, data from your KPIs will clarify the next steps.
“KPIs allow every team member to stay involved and updated on the progress in the company. These measures are accessible to everyone, so they allow for more transparency and keep everyone motivated,” shares Coley Hull, Founder of Coley Home.
Businesses encouraging transparency and accountability also encourage a more positive and healthy work environment. This boosts your employee satisfaction and improves trust in your team.
What KPI Strategies Should You Implement in Q1?
Your small business should track a few specific KPIs in Q1. These might vary depending on your business and what you offer your customers, but most small businesses can rely on the following options to help drive success.
Net profit
You probably already track your business’s profits — but if you don’t, you need to start immediately. The net profit of your business is your total revenue minus your expenses.
“You should check your net profit monthly. The clearest indication of success is how much you are feeding back into the business after paying your expenses,” says Micaela Beltran, CEO and Co-Founder of Courtly.
Knowing your month-to-month profit will help identify which sales strategies are working and where you are lacking. You can also track your numbers based on different marketing campaigns you attempted or deals you put out.
Profit Margins
A profit margin helps to identify how efficiently your business is making a profit. This will give your small business insight into how effectively you can control costs, pricing, and profitability.
“Keeping track of your profits will open you up to a lot of information. As you track your profit, you should also be tracking how your prices affect your sales and whether you need to make changes to your expenses to maintain profitability,” explains Lance Patterson, CEO of Juice Beauty, a company that specializes in natural skin care.
Profit margins give you an idea of what sales numbers you need to maintain to pay for your expenses. Just remember, profit margins for different products might vary.
Customer Acquisition Costs
Customer acquisition cost (CAC) helps determine your budget to attract and retain new customers. The lower your CAC, the more cost-effective your strategies — and that’s the goal.
“Every business will have to put in the money to bring customers in and keep them interested. From marketing to sales, you need to know what is bringing in your customers and how much money goes into it,” says Ruslan Polinovsky, Sr. Director of Marketing at LUSA.
Aiming for a lower CAC should be one of your goals. You want to spend the least money to attract new customers so your products are selling themselves. The more money you put into bringing people in, the more resources are used to gain attention.
Customer satisfaction
To have a successful business, you need to keep your customers happy. To keep track of this KPI, you can directly send out surveys to customers asking for feedback. Additionally, you can track this information by locating repeat customers and promoting positive customer interactions.
“What is a business without the support from your customers? “Keeping track of your customer reviews and spending time learning about your customers’ needs will keep you heading in the right direction to meet your customer satisfaction goals,” answers Brandon Adcock, Co-Founder and CEO of Nugenix, a company known for their Instaflex Advanced joint supplement.
In Q1 you should be creating goals surrounding boosting customer interactions. When you maintain these positive relationships with your customers, your business gets a social boost. This brings in more traffic without spending money on campaigning.
Lead response time
Measuring your lead response time goes along with customer satisfaction. Especially if you’re noticing a lull in your customer satisfaction rate, you might want to consider what kind of customer service tactics you can improve on to improve your relationships.
“Businesses that rely on their sales reps to communicate with customers and encourage spending need to improve their response time. “When a customer feels cared for, they’re more likely to keep coming back to your business,” says Brianna Bitton, Co-Founder of O Positiv, a company that specializes in MENO menopause supplements.
Hiring more customer service and sales representatives, implementing monthly training programs, and including incentives in the workplace can boost your lead time response efforts. Customers will be able to see the difference!
Website traffic
Some businesses are fully online and don’t have any in-person shopping to supplement their sales. If this sounds like you, you need to be tracking your website analytics to learn about the kind of traffic you bring in.
“Traffic to your page is important, but what happens after a customer gets to your page is even more essential to your business. “How long someone stays on the page and clicks on items is an indicator of how functional your website is,” explains Shaunak Amin, CEO and Co-Founder of ByStadium. “You need these data points to improve your web presence and encourage more shopping.”
With everyone using this digital revolution to their advantage, you have to keep up with online metrics. More people use the internet to shop and find services they need, so your page needs to be one of the first they see.
Social media interaction
Similar to examining your website traffic, you should keep up with your social media metrics to track how your marketing and sales departments directly impact interactions.
“When trying to develop your brand, social media can tell you a lot about who your audience is, what kind of content reaches larger audiences, and what trends are in vogue. “Your social media presence should drive more traffic to platforms you can shop off of,” says Justin Soleimani, Co-Founder of Tumble, a company that specializes in washable rugs.
A sign your social media presence is working is an influx of traffic going to your website directly from your social media pages. You’ll even be able to tell which platforms are bringing in the most engagement and can focus more of your efforts on them.
Use KPIs to Drive Success
Measuring your business’s success also includes noting some of your failures. Instead of using these low data points to discourage you, know they are giving you valuable information to inform your next steps.
Key performance indicators allow you to track your progress and know which goals are more attainable. You can better allocate your resources when you know what parts of your business need help!