The term KPI is slung around often by corporate managers and consultants. But I think sometimes “regular folks” managing businesses don’t really relate to the buzz-term.

To me it is important to HAVE these “key performance indicators” (KPI), but it’s not important to mystify them or make them sound esoteric.

They say that “an army travels on its stomach”, and I think this relates to indicators.

Let’s think about KPI as “KP-duty”. In the army, KP duty was working in the kitchen, cooking food for the troops. While we don’t do a lot of peeling potatoes at Root Deeper, we do peel a lot of onions. But they don’t make us cry, they get us excited!

We work with a variety of nonprofits from multi-million dollar companies down to grassroots nonprofits, and I often find myself playing the “Why Game” like 3-year olds play. This is “peeling the onion” to find out what their strategy is, and what they REALLY want us to do (which is sometimes different than what they think they want us to do).

“I want to hire you to manage our Adwords campaign”
“We aren’t getting a good ROI on our ad spend”
“We were hoping you’d tell us”
“Why are you spending the money? What do you hope to get out of your spend. Online sales? Sales leads? Subscribers? General brand awareness?”
“We want more quality sales leads”
“Why would a customer purchase from you instead of your competitor?” (IE what is your “competitive advantage” or your “Unique Selling Proposition” USP)

In this way, we peel back the layers, and I begin to understand the strategy behind the business. Often business owners will not know the answers to my questions. They have not defined the “pitch” or “value proposition”/USP. If you don’t know why customers choose you over your competitors, you need to figure that out before you invest much in advertising!

The onion we spend the most time stewing over, though, is the Digital Analytics data. Here we also peel back the layers. On the surface we look at the ad spend vs. conversions (sales, sales leads, etc.). Often businesses don’t have conversion goals and values set.

This is where we get into a pickle. If you don’t know what you WANT out of your campaign, and how to monitor/measure it, how do you expect me to improve it? I need to establish what you want your campaign to DO and how to measure it. That is, what are your key performance indicators (KPI again!) . What function do you want the campaign to perform, and what are the indicators that will tell if it’s working!

So we establish goals (EG online sales, sales leads, subscriptions etc.) and put an estimated (or exact) value on them. If 10% of your leads for your widgets convert, and your net profit on each conversion is $300, you need to make sure you’re leads cost less than $30 to generate!

But if the average sale for a New York widget customer nets $1000, and your Jakarta widget customer nets just $40, you want to focus more resources, and more aggressively spend on the New York customer.

If you don’t peel the layers of data, and get to the core of what’s going on, you are going to end up with some weak sauce.

Many businesses, with the entrepreneurial drive, want us to go out and ATTACK their marketing tasks. But often they do not have a viable strategy, and when we saddle-up we’re charging out to WIN! To win, you need a strategy.

So we try to focus the initial stages of work with clients on the KP duty they hate. We have to peel back the layers of the onions of business strategy and market intelligence.

They may complain, but we’re building partnerships of deeper and longer-term value for them. The more deeply we understand the systems, and the more we can even teach businesses about their own customers (!), the greater value we’ll create for them.

We don’t need every client in the world. We want serious and smart clients who want to build things right, and have strategies deeply rooted in competitive analysis and market data.

One recent client kept asking “Is it soup yet?” when they hadn’t peeled the onion back on their business goals and web visitor behavior. We sent them to bed without their supper :-/

Our goal is to grow healthy and strong businesses based on sound strategy. If you don’t have a recipe for success, stay away from the stove 🙂