How to measure KPIs: 9 steps to increase enterprise business performance

Accurately measuring growth and profitability metrics is essential to ensuring a business’s financial health. But with changing business models and compressed production cycles, traditional metrics like earnings per share (EPS) or revenue growth alone don’t give you a full picture. 

You’ll need to look at other key performance indicators (KPIs) to understand the business’s performance throughout the year, but figuring out which KPIs to measure and how to measure them can be challenging. In this post, we’ll take a closer look at how to measure KPIs unique to your business.

1. Define what success means for your business

Think about what’s most important to the business’s bottom line. If you’re concerned about your customers’ experience, choosing KPIs that measure customer satisfaction can be a great place to start. 

For example, if the business is struggling with products sitting on shelves too long, monitoring your sales metrics through multi-entity accounting programs should be a priority. 

What would you like to see in your company in the next quarter? The next year? The next five years? Understanding your goals will help you better choose KPIs that will help you make informed decisions and ultimately reach those goals.

2. Pick your key performance indicators (KPIs) to track

To be effective, an attainable KPI should focus on a goal to achieve within a specific timeframe and provide a measurable way to track business performance toward that goal. 

However, the most important KPIs will be different for every business. It’s essential to pick the performance indicators you want to measure based on your businesses needs. However, many companies choose to look at factors like:

• Conversion rates: These rates refer to the percentage of customers who move further down the buyer’s journey after learning of your business. The higher the rate, the better. The lower the rate, the more you can improve.
• Gross margin return on investment (ROI): Gross margin return on investment (GMROI) is an inventory analysis that reveals how well your business can turn inventory investment into profit.
• Customer retention: Customer churn rate and repeat purchase ratio are two measures used across industries to determine retention. Churn is the rate at which customers cease their purchases and relationship with your brand. The repeat purchase ratio is the percentage of customers that have returned for a second purchase and is a good indicator of customer loyalty. You can use this information to attract new customers, too.
• Employee productivity: As your business grows, once lean processes can become bloated, and required labor hours are likely to increase.

Track KPIs that impact your business the most and will help you achieve your short and long term goals.

3. Set clear and measurable goals

Before measuring KPIs, you’ll want to clearly understand what you want to achieve over time. Remember, KPIs gauge business health. By examining the data closely, you can set goals for your future growth. 

Look at where you want to be in the next quarter, year, five years, etc. Then, break down those bigger goals into smaller, more actionable tasks. 

Some goals you may want to set could include tasks like:

• Automating your accounting workflow
• Automating your workforce to save on labor costs
• Implementing a project-based accounting system to simplify your books.
• Optimizing your website to boost your conversion rate by a target percentage amount.

Encourage teams to track progress and celebrate your wins. This can help keep employees motivated to continue supporting the company’s growth.

4. Choose the best way to collect data for KPIs

Once you know the KPIs you want to track, you’ll need to figure out how to collect that data. The tools you’ll want to use will depend on the metrics you’re measuring. But some popular options include:

• Using analytics. Tools Intuit Enterprise Suite helps you track certain KPI's, provides insights and advanced analytics. This helps you make more confident decisions on resourcing and budgeting. 
• Ask your customers. You can collect customer opinions through surveys sent to your email list through Mailchimp or another similar service. Following up after purchases can give you insight into what you’re doing right and what you should do differently.
• Observe the trends. Don’t discount the power of observation. By watching the trends of your business, you may be able to identify wins and find pain points that are holding you back. 

You may want to invest in a workflow automation tool that fosters enterprise resource planning (ERP) so you can monitor KPIs and create plans for future changes.

5. Put a data collection process in place

Every business’s processes will be unique, but regardless of the industry you’re in, you’ll want to have a clear data collection process in place. 

Consider creating a structured process for collecting and storing data. This may mean investing in tools like data management systems and cloud storage solutions to house information without clogging your internal computer systems.

You’ll also want to identify your ideal data collection frequency and timeframes. This will depend on the metrics you’re measuring, but many businesses choose to measure and analyze their data quarterly or bi-annually. 

Regardless of your chosen timeframe, you’ll need to perform regular quality checks to ensure your data is accurate. Most enterprise-level businesses need advanced analytics tools, such as multidimensional accounting and AI-powered recommendations.

6. Analyze and interpret your KPI data

After you collect the data, you’ll need to analyze and interpret the information from your KPIs. Using those tools, examine the data and identify the top priorities based on what you’re seeing. Compare the data you collect against your company’s benchmarks or industry standards.

7. Use your KPIs to take action

After analyzing your KPI data, you can put that information to work. Identify the key opportunities for improvement and areas where you can optimize your performance. This information can come from key pain points expressed in customer surveys or aspects of your business that are underperforming.

Once you identify those areas of concern, work with your key stakeholders to develop and implement plans to address those issues. If you find it beneficial to focus on one KPI at a time, create a plan to address the concerns for each KPI.

8. Measure your performance and progress

Analyzing data and developing an improvement plan is just the first step. You’ll need to measure your performance and progress as you go. Use the same data collection and analytics tools that you used to initially monitor your KPIs. 

Compare the data after making your changes against the original data to see how far you’ve come and what else you can do to improve. As your business's needs and goals shift, you may need to adjust your strategies and change the KPIs you track.

9. Best practices for KPI measurement and tracking

Businesses can follow a few best practices to further ensure the accuracy and value they get from the data they collect. Here are a few considerations to keep in mind as you measure and track your KPIs.

• Your data should be quantifiable. Your KPIs need to be measurable and quantifiable so you can track improvements and better meet your goals. 
• The KPIs should be relevant to your goals. Though KPIs can tell you about your business’s performance, they measure all kinds of data. Make sure the ones you’re measuring are relevant to your short and long-term goals.
• They should be clearly defined. Having too broad of a scope can make it hard to measure data. Make sure your KPIs are clearly defined and only measure the things you’re most interested in tracking.
• Consider multiple perspectives. Focusing on a single KPI or perspective can restrict your growth opportunities. By considering multiple perspectives, you’ll make it easier to identify clear and attainable goals that will benefit your business and your target customers.

Remember, it’s okay to adjust your strategy over time. Look at your data, see what’s working and what’s not, and stop monitoring KPIs that aren’t serving your needs.

Boost productivity and enhance profitability for growing businesses

To reach your highest business growth potential, you need to look beyond your top and bottom-line numbers. By tracking your progress using customized KPI dashboards, set templates, and customized real-time reporting tools—like those in QuickBooks Enterprise, your company can gauge growth in all areas of business and inform decision-making moving forward. 

For more complex and growing enterprise, tools like Intuit Enterprise Suite can further measure KPIs, interpret data, and identify your goals to foster long-term growth.