The Strategic Importance of Company Key Performance Indicators (KPI’S) by Matt Smith

Article by Matt Smith as posted on Bellingham Wallace

A good KPI should act as a compass: a measurement of where your business is, relative to where it has come from and where it is going. KPIs translate your business strategy into manageable, operational actions, based on the data you collect and monitor. They are an important component of the information needed to understand a company’s progress. However, many businesses aren’t leveraging the power that comes from understanding their data.

Failing to invest in compiling accurate business data, beyond the usual financial statements and reports, means business owners will continue to rely on “gut feelings” and assumptions when it comes to making decisions. But there is no substitute for concrete numbers when it comes to measuring the health and understanding the direction of your business.

The old saying, “What gets measured gets done” rings true.

With the wealth of data and insights available to businesses in the digital age, CEOs and managers should be honing in on this valuable resource. Now more than ever, businesses need to be collecting forward-looking insights that shape overall strategy and inform daily decision-making.

What is a KPI?

A KPI (key performance indicator) is a quantifiable measure that can be used to determine how well company goals are being met.

Lead Indicators

Leading KPIs are generally “input” oriented and signal future results. They normally measure intermediate processes and activities, which affect the performance of lag indicators.


  • Number of leads created
  • Customer satisfaction
  • Contracts in negotiation
  • Sales closing ratio
  • Brand recognition

Lag Indicators

Lagging KPIs are typically “output” oriented, easier to measure but harder to improve or influence. Lagging indicators trail behind your goals, capturing data that directly relates to your activities.


  • Sales volume
  • Net profit
  • Return on investment
  • Sick days taken
  • New customers

Financial and non-financial indicators

KPIs are often skewed towards financial measures, but non-financial indicators are just as important. Typical non-financial KPIs include measures that relate to customer satisfaction, health and safety, quality and a company’s supply chain. They can also include web analytics, such as traffic, time on site, and click-through rate.

KPIs support strategy execution

Think of a sailing trip from Auckland to Sydney. The skipper aims for the journey to take two weeks. Once they’ve set sail, the skipper and crew rely on data to navigate. The most useful KPIs might include the GPS location, weather information, heading, and speed. These KPIs allow the skipper to understand whether he is on course for Sydney or veering off course. Without those important KPIs, the skipper would have to rely on his instincts and past experiences at sea.

It’s possible that the journey will be delayed, or they could run into serious trouble, putting the boat and its crew in danger.

The analogy helps to illustrate how businesses can have a strategy (get from Auckland to Sydney in two weeks on a sailboat), and how specific KPIs support managers and staff (the skipper and crew) to execute that strategy, both in real-time and in the future.

Implementing KPIs for your business

Always select KPIs that are aligned to your strategy and have clear links to the overall performance of your business. Having too many KPIs can actually be harmful to a business, as it weakens focus and makes it difficult to communicate the plan to staff. Businesses should look to implement no more than five key KPIs, although it is common for different departments to have their own specific KPIs. It’s better to keep them simple so that they’re easier to measure and communicate to the wider team.

Why KPIs are important

Not only are company key performance indicators critical for monitoring financial performance, they can also help to improve employee morale, customer satisfaction and other, more personal objectives important to the growth and success of your business.

The reasons why KPIs are important:

  • Goal measurement: KPIs are the measurements by which you know if your business is achieving its strategic goals or not.
  • Providing information and feedback: They provide a simple, insightful snapshot of a company’s overall performance, as well as reliable, real-time information for effective decision-making.
  • Education: KPIs create an atmosphere of learning in an organisation as they generate conversations between staff that can lead to innovation and a better understanding of the business strategy.
  • Staff morale: Receiving positive feedback or incentives for meeting KPIs can be rewarding and motivating for staff. Without measuring outcomes, quality work can easily be overlooked.
  • Consistency and continuity: People, priorities, and goals in a business may change over time, but the measurement of a KPI should remain consistent. This is essential for monitoring long-term strategic goals.

6 Tips for Winning Back Lost Customers

Sooner or later every business loses a valued customer. Needs change, problems occur, personalities differ. But nowhere is it written that a lost customer must stay lost. In fact, the mark of a successful business is its ability to determine why customers stray and to take action that, over time, effectively brings at least some of them back into the fold.

Here are six tips to keep in mind when you decide to focus your energies on regaining customers lost to your business in the past:

1. Reach out to former customers.

Some businesses just write off lost customers, as though they’ve disappeared or gone into hiding. On the contrary, those customers are still out there. It’s up to you to reach out and re-establish a connection. If possible, approach them via a more personalised route than email. A phone call or even a written letter may prove to be the “pleasant surprise” needed to get these customers to respond to your inquiries.

2. Determine the reason for defection.

Customers don’t stop purchasing a company’s products or services for no reason. While their departure may have nothing to do with the quality of your offering, nonetheless, it’s entirely possible that they left because of some related element of dissatisfaction. Your business can only improve if you clearly understand why this happened.

Business author Geoffrey James recommends asking two key questions of former clients: (1) Why have you decided to leave our business? (2) What can we do to bring you back as a happy customer?

It’s a “no-lose proposition,” James contends. Ideally, “customers will be so impressed with your curiosity and concern they’ll reconsider their decision to leave.” At the very least, “you’ll learn what’s driving customers away so that you can make corrections.”

3. Apologize sincerely and take responsibility.

If the cause for defection relates to the quality of your product or shortcomings in customer service, it’s time to issue a sincere apology. But don’t stop there.

“Saying ‘I’m sorry you’re unhappy’ isn’t enough,” writes business owner Vladimir Gendelman. Even if your company isn’t technically at fault, “make it clear that you can understand why they would be upset, and that you’ve taken steps to make their next purchase more satisfactory.”

4. Reassess your business operations.

It’s not easy taking criticism, justified or not, but learning what drove a customer away means looking objectively at the way your company conducts business. Sometimes you can achieve this goal on your own, but for many CEOs and business owners, getting clear-headed advice and guidance from outside sources can make all the difference in the world. (Joining TAB and attending Business Owner Advisory Board Meetings guarantees you’ll receive honest, insightful feedback on your customer service and all other business operations.)

5. Begin the process of re-establishing relationships.

Lost customers aren’t “found” overnight. It may take awhile to win back the trust of a customer who feels they’ve been short-changed in the past.

One viable strategy is to ask permission to resume contact and regularly share key industry information with a former customer. Learn more about their particular needs and challenges, and begin sending on articles, white papers, blog posts, etc. that can help provide solutions to those challenges. In this way, your business takes on a new identity as a “trusted partner” in helping customers grow.

6. Land a one-off project and prove your worth (again).

A former customer may be understandably reluctant about hiring you on a full-time business resource. Instead, bid competitively on a single project—or offer to provide a different product or service altogether—and do everything in your power to “wow” the former customer. If things go well, you can move forward incrementally and demonstrate with certainty that you’re fully committed to satisfying the newly-found customer in every way possible.

Acquiring new customers if far more costly than retaining the ones you have. The ROI of reclaiming a lost customer, therefore, is well worth the time and effort involved.

Think your business could benefit from a TAB Board? Apply for membership today!