The Importance of KPIs When Entering a New Market
The Importance of KPIs
In New Market Entry and Exporting
OpenVentures can help ensure a success new market entry with their export services.
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KPIs are the critical indicators for performance and progress towards the desired objective.
KPIs are important for any organisation but they are imperative to any organisation that is looking to scale and enter new markets. As new market entry and exporting are quite risky, the need to have a view on what is happening all the company and especially what is happening in your new markets is the key to success but also if anything goes wrong, it is quickly visible and can be amended or stopped, thereby reducing your companies exposure.
Measurement of each division’s activities is core to the success of any organisation. The lack of adherence to maintaining core metrics is the primary reason for companies not meeting their objectives and revenue targets. It is also necessary to measure all divisions so that you have a 360° view of the company. Most companies do have some measurements but regularly metrics are not implemented in every division and often are not measuring the activities that will help a company meet its objectives. Time and again companies without strong KPI adherence wonder why their company is stagnating and where the problems lie.
KPIs allows managers and owners to have an overview of the business. They help you understand success and failures.
With the information from the KPIs, it allows you to define the problem, analyse the problem, solve the problem, implement a new solution and it gives you the data to review the new solution.
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Org Chart
Make sure that you have a clear org chart that explains functions. It must be that clear what each function is responsible for.
Review and list all the processes that keep your clients coming back to you, as this is the reason you are in business. This exercise will also help you increase awareness of the company’s value proposition. A common mistake is that CEOs believe that everybody knows what they are responsible for and often, in reality, the responsibilities for certain activities are unclear and can lead to underperformance and conflict.
Go into detail about what each function is responsible for so that when you implement KPIs, each function understands whether s/he is responsible for that KPI.
Key Success Factors (KSFs)
Identify which KSF are relevant to bring value to your company. What does your client perceive as value? These are factors where a customer perceives that a company excels in. A Unique Selling Point is what makes your product/service better than your competitors and which are unique to your product/service.
· Cost/price
· Quality
· Productivity
· Delivery
· Training
· Culture
Lead and Lag KPIs
There are two types of KPIs that must not be confused and both need to be tracked. Lead KPIs, the cause of your actions and lag KPIs, the effect of your actions. Often companies focus only on the lag KPIs which shows them the picture of what is happening but does not give them any insights into why this is happening. Even if everything is going well, an organisation needs to track lead KPIs as this data will help with future activities. What happened, the effect and why the cause? Measuring only lag KPIs will not give you a complete picture. You will see how your sales are doing but you have no data on what is driving those sales or in some cases not driving those sales
Lead KPIs
The cause of your actions
The number of marketing campaigns
The number of emails sent and the open rate
The bounce rate
Lag KPIs
The effect of your actions
The number of visitors to your site
The number of conversions /leads
Sales revenue
The number of customer complaints.
SMART
Ensure that with each KPI that you understand what success means and what is an indicator of success. Make sure that your KPIs are SMART.
S- Specific. That the chosen KPI measures a specific activity. It cannot be vague and intangible.
M-Measurable. That the chosen KPI can be measured. For example; you cannot measure motivation using a KPI but you can measure sick days, the number of hours worked etc.
A-Achievable. It is important that the KPI is achievable. It can be challenging but the team needs to feel that they can reach the target.
Relevant- The KPIs need to reflect the company’s overall objective
Time – There needs to be a clear timeframe by when the KPI needs to be met.
Conclusion
KPIs are a guide to helping you achieve success. They will depend on what your overall goal and objectives are. They will give you a good picture of what is happening in your organisation and if you have the correct KPIs, it will show you why, the cause or the reason for your success or failure. KPIs need to be an integral part of every company and should be implemented in every division. A company without strong KPIs will struggle especially during turbulent times or when a company wants to grow. They are imperative for any company that is going international either by exporting or setting up in a new market. Monitoring of the KPIs can mean the difference between success and failure as you now have the information and you can act accordingly.
If you are interested in learning more about how OpenVentures can help you enter a new market and/or grow your exports. Contact Us : sales@openventuresconsulting.com