Have you ever been to your car mechanic, together determined a problem, drove away, and later realized you hadn’t fixed the right issue? This scenario can be extremely exhausting, frustrating, and expensive.
This same experience can happen in business when trying to improve operations or fix a nagging problem. Often, we will guess what the problem is, try a fix, and not realize until after resource and effort have been expended that we were focused on the wrong thing the whole time.
The easiest way to avoid this scenario and understand what is going on in a business is to track key performance indicators (KPIs). The term KPI is often referenced and needs to move from theory to practical and consistent use. KPI is not just something to have and talk about but something to determine, watch, and use. Truly if the thing you are tracking is a KPI then improving its performance correlates beautifully with the success of your business. The following steps can help to identify the proper KPI and its usage:
DETERMINE
Comparing your business to like businesses can be helpful in determining your KPIs and identifying where small improvements can be made that will go a long way in achieving success. Sometimes knowing the marketplace has figured out a problem already can provide confidence and a willingness to tackle new strategies.
Looking a step further into tracking common metrics can be helpful. For example, tracking your dollars is beneficial but digging just one layer deeper to understand where the dollars are coming from more specifically, can help to know what to watch, change, or improve.
WATCH
Once you select a KPI, monitor it to make sure it correlates to your success. Have analytics do the heavy lifting to let you know what is going on and potential opportunities for improvement.
As our environment in collections changes, we need to be mindful of our businesses and understand what is affecting them. Monitoring KPIs with analytics can go a long way in helping to identify trends and allow for watching the success or detriment of strategy you have put in place.
USE
The best way to have a positive effect on your organization when implementing new strategies is to test your theories, determined by monitoring your KPIs, in a safe environment. This allows you to confirm your thinking before wasting time, energy, and resources. Once a strategy is tested, and you have confirmed it will improve your KPI, it’s time to apply it more mainstream.
When you properly determine, watch, and use KPIs you avoid expending too much time, energy, and money on the wrong thing like many of us have done at the mechanic. You face our ever-changing industry with confidence and find new successful ways of doing business.
If you have any questions or would like assistance in tackling the proper use of KPIs, please reach out to an Intelitech associate at solutions@intelitechgroup.com.