Benefits of using Key performance indicators

Benefits of using KPI's

Objectives can be both general and explainable, for example, “Create a unique work team” is a simple example of such goals. In such a situation, if there is no clear definition of success, in addition to the fact that there is no specific coordination and order to achieve it, then it will not It is never clear whether the intended goal has been achieved or not.

With key performance measures, you can define success from the start and how it will be measured and evaluated. This approach is more subtle and serious, and establishes a culture of documentary performance in the company.

Create, maintain, and strengthen focus

Sharing KPIs with company departments and other employees will make it clear to everyone what you want to achieve. This way, everyone will focus on the things that really matter to you. Plus, if your strategy changes, a KPI can easily point all employees in the right direction.

Effective monitoring of progress

By defining KPIs, you can monitor the progress throughout the project, in this way, you will always be informed about the progress process and which cases are effective or ineffective and even disrupting the progress of work, and you can make the necessary changes in time, for example, if you run a marketing campaign And if you find that your conversion rate is down and that there is something wrong with the user experience, you can solve the problem more quickly and with less loss, because you know very soon.

Motivating company employees

The KPI, by setting a measurable, tangible and meaningful goal, as well as charting a clear policy and future for the business, motivates the company’s employees to fulfill their internal needs to move forward and progress.

Key indicators of start-up success

Realizing what is important for start-up is about identifying the KSF or key indicators of a startup’s success, therefore, the first feature of a good performance KSF is to be linked to the right KSF and accurately measured with high accuracy and reliability.

KSF is defined at a strategic level, the strategic goals of startups are usually described in qualitative terms, and achieving them means realizing the vision of the startup, “Attracting new users in all major cities” is KSF’s important key to startups online taxis. KSF is usually not more than 5 and should be achieved in the 5 to 10 year horizon.

KPIs are an objective, quantitative, and operational translation of KSFs, which are set more flexibly for shorter periods of time. Unlike KSFs, which are qualitative values, KPIs can be easily measured and operating conditions can be changed based on their different values. In other words, KSFs only show the final path and goals, while KPIs are a tool to make sure you’re moving in the right direction toward goals.

The KPI should measure what is important to start-up

Let’s say your startup offers a SaaS accounting service. Using KPIs like daily or monthly active users will mislead you, while for other SaaS or other startups that are not B2B in nature this KPI is important, for B2B startups KPIs related to conversion rates are Customers are much more important what percentage of users have visited the site they are already target customers and as a company in need of accounting software a few of them crawl the different pages of the site and eventually go to the main CTA of the site which could be a registration or a trial order or a face to face meeting .

For a start-up, a myriad of KPIs can be identified, while it depends on the startup business model, and the stage of growth that the KSFs are in, some of the KSFs are very important.

The KPI must be responsive

KPIs should be sensitive to changes due to start-up deviating from the main path and reflect these changes as quickly as possible. This feature is called regressive. A KPI that fails to detect or delays these changes is misleading. In contrast, KPIs that can Showing deviations from the target as quickly as possible is of great value.

Monthly user growth rate is a key performance indicator that reacts quickly to start-up performance. In contrast, the total annual number of users cannot quickly tell us how fit a startup’s product is to market or how effective its user engagement campaigns are. In addition to overall KPIs, indicators obtained from averaging a metric over a long period of time are less responsive than the current state of start-up, KPIs that measure momentum are usually more responsive.

Suppose we use the average rate of successful travel in the past nine months as a KPI for evaluating the performance of an online taxi, the value of this KPI may be well positioned because of the high rate in the first six months, while in the last three months with the arrival of a serious competitor , this rate has a lower number, what really happened is the poor performance of the marketing team in attracting or retaining the user in the last 3 months, while the acceptable performance of the start-up in the first 6 months hid its status in the last 3 months.

KPIs should be sensitive to changes due to start-up derailment and reflect these changes as quickly as possible.

The KPI should be easy to understand

It is best, if possible, that all team members understand the KPI easily, that its calculation is not complicated, and that people’s first awareness of the amount or changes in it is clear, part of the easy understanding is due to the simplicity of how the KPI is calculated and measured and part of the maturity of the startup in using this KPI

In different decisions, the further a startup is from the early stages of growth, the more skilled its employees will be in applying complex KPIs, and everyone will understand the meanings and changes of different KPI values.

For example, Average Return Per User Index (ARPU) and its calculation is very simple and understandable. The revenue of a period of time divided by the number of users in that period shows how much each customer bought on average, in contrast, calculating an indicator such as user lifetime value (LTV) has more complexities and is a bit difficult for startups to calculate and understand in the early stages, on the other hand , LTV‌ is easily calculated by startups in the middle and later stages of growth, and is sometimes one of the most important metrics used for making decisions.

It should be easy to calculate the KPI

It is imperative that the method of collecting data, processing it and calculating the KPI value be easy, comprehensive and at the same time feasible, for example, if you want to measure user satisfaction using an NPS key performance indicator, you need to ensure that users are equally inclined to participate in survey, if users do not wish to do so for any reason, you should not use NPS to measure customer satisfaction, in such cases it may be better to use users’ indirect repurchase rates rather than using NPS‌ to calculate customer satisfaction.

The KPI should be comprehensive

When selecting a set of KPIs, all aspects of a startup should be considered comprehensively. Neglecting KSFs will have a long-term impact on the startup’s overall performance.

If you have a serious startup problem, then this problem should be indicated by a KPI, consider a multi-faceted startup (for example, two aspects of online taxi offer and order: driver and passenger), if all KPIs are related to one aspect One of the users, for example attracting passengers in taxis online, the condition of this aspect may improve and grow well after a while, but there is no guarantee that the condition of other users, i.e. drivers, will be the same.

The main challenge for the mobile app market in the early stages is the size and growth of the content (mobile apps) Therefore, it is natural that KPIs are selected at that stage with a focus on developers and the overall state of the software, if this focus continues, after a while we may face a system Basic has a large number of mobile applications but there is no user to install these applications, so we need to shift the focus on both sides so that all aspects of the startup grow equally and societally.

The calculation of the key performance indicator is based on accurate and valid data

Defining a KPI alone is not sufficient to use it successfully. The source and method of data collection used to calculate those KPIs must be sufficiently reliable and accurate. Both in the definition phase and in the implementation phase, it must be ensured that reliable data sources are available for calculating this KPI.

KPIs must be practical

KPIs should measure objectives where change is within the control of the team. This means that the team can improve the KPI by making changes and adjustments to its operating model.

The target value is KPI

After defining the KPIs for evaluating the startup’s performance and growth, the important question is how much of a target should be set for each of the metrics, in other words, how much should each KPI show for the startup’s health, and if so, what How much should it be more or less? To motivate a startup, what values should we target as a KPI to be hard enough while available?

The ultimate challenge is setting the right target after defining a KPI and observing the data collection and calculation steps, because if the KPIs are defined and calculated correctly, if a disproportionate target is set for it, it can lead to a loss of motivation or energy in the startup team, so In the last step, you should note the amount of target set for each of the KPIs.

If a disproportionate target is set for a KPI, this can result in a loss of motivation or energy for the start-up team.

The fear and hope that arise from the KPI of the start-up team

The fear that if the particle is delayed, it will not be able to achieve the set goals, and the hope that it can achieve those goals with proper planning and effort, because if the KPIs are easy to achieve, it will reduce the efficiency of the team and the growth of the startup and may also motivate the team On the other hand, goals that are too difficult increase tension between teams, pressure, reduce efficiency, and ultimately lead to team failure and collapse.

What is important in KPIs is to review them and their target values at specific intervals, especially for startups that are in the early stages of growth and whose business model faces many uncertainties.

In this case, any element of the start-up model may change, as the customer segment changes, the value proposition, revenue model, pricing and KPIs must also be revised and new target values change according to the conditions of the business model and start-up growth, as well as the target market and competitive environment, as the company approaches Emerging from the end stages of growth, the more confident they are in setting up the business model and experience, the more confident they are in setting target values for longer periods of time.


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