Every business needs to set key performing indicators (KPI’s) to keep track of business performance. Retrenched staff, cut back in employee facilities, no pay rises, cut backs in commission leads to employee dissatisfaction leading to lower quality and lower sales conversion ultimately lower profits. Higher customer returns means lower customer satisfaction and again lower profits. The indicators you use depend on the critical success factors of your business. KPI’s will be set for financial perspective such as for sales, profit, return on capital and employee productivity. Customer perspective in terms of customer satisfaction, lost customers, number of customers, sales per customer, frequency of purchase and market share. Internal process perspective for lead time, sales conversion rates, and supplier on time delivery. Innovation & learning perspective monitoring ratio of new products, on time development, training investment and R&D. Setting KPI’s will monitor your business performance and shift your business environment to dynamic. KPI’s will ensure your staff are motivated and happy, your customers are happy and you’re happy because of higher profit potential.
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