Most business owners have heard about key performance indicators, but very few I come across really understand key performance actions. In todays video I wanted to talk about the difference between the two and why you need them both.
The difference between KPI’s and KPA’s and why they’re both important
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A lot of you have probably hear of the term KPI (Key Performance Indicator) and the reason why it’s important in a business is because it gives you the ability to measure certain things and make sure they are consistently happening. By being able to measure these things it gives you the ability to have a growing business that is healthy and profitable and scalable. The reason most people most people know about KPI’s, it’s one of the first things you learn in management. It’s also one of the main things business coaches and business resources focus on. KPI is all about the results that you are receiving; how many clients have you signed on, how long did that member of staff stay before they left, or how many leads is your marketing generating? These are all things that can be counted. When they are counted, they represent the number of things that have actually worked.
Now let’s talk about KPA’s – Key Performance Actions. It’s not about the end result but the actions that need to persistently taken to achieve the results you want. While a KPI may be looking at the number of clients that have signed up, a KPA looks at how many prospects where contacted, so the action is to contact the prospect. Just by contacting the prospect the end result hasn’t been achieved but that action is so important so that you will end up achieving what you are aiming for. If you just focus on KPI’s then you won’t get all the insight on what’s working and what isn’t in your business, so that’s why KPA’s are important too.
For example, just focusing on the end result doesn’t mean everything along the way is working the way it should be. Let’s say you don’t have enough new customers coming onboard, is it because not enough prospects were contacted? If you don’t have the KPA’s to say the right number of prospects were contacted, then you won’t understand where the issue actually lies. Because, if you contact the right number of people and you’re still not getting enough customers in your conversion, by measuring both the KPI’s and KPA’s then what it lets you do is understand exactly where things are working in your business and where you need to pay more attention.
That’s why a business needs both, whenever you are trying to measure or monitor something in your business, then think about what will indicate its success and the actions that go into creating that. You should also make sure those actions are being counted and taking place every week. If you want to talk more about scaling your business, so that you can achieve a better lifestyle then get in touch with me or arrange a quick strategy meeting so we can talk more about KPI’s and KPA’s or any other questions you may have.