The latest buzzword to be getting a lot of attention from business managers is KPIs – key performance indicators. More simply known as metrics, these bits of information are the keys to proactively managing your business, instead of just reacting. When you aggressively look at how all the important aspects of your consulting business are truly operating, you can then make better and more effective decisions. Using this guide to setting KPIs for your consulting business is a good place to start.
The first step to identifying your most critical KPIs is to understand the workflows of your business. You can map out each major business process. Doing so visually can be particularly valuable. Once you’ve done this, you’ve set out all the critical steps that make your consultancy operate.
You next need to understand exactly which role is responsible for each business process and each step along the way. Measuring metrics hasn’t much value if you can’t create a clear line of accountability for meeting that metric. In this step, you allocate responsibility. However, if you’re going to hold a role (and thus the person in that role) accountable for a particular step, or even an entire workflow, that role should also have complete control over it.
At this point in the process, you should have mapped out workflows with roles attached to each one. Now you can start quantifying what means success for each workflow and step. Say for example one of your workflows is prospect response time where you measure how long it takes for your consulting business to respond to a prospect’s inquiry. Here you might include things like the time frame, the content of the response, and getting the commitment back from the prospect to move to a next step.
After you’ve identified important metrics, you can then create a quantifiable KPI based on their analysis. Using the same example, you might decide that you expect a certain conversion ratio of prospect responses to next step commitments. If you see that this KPI falls below expectations, you now know to dig deeper into the underlying metric data. Perhaps your team hasn’t been responding within the expected time frames or not providing the expected content to the prospect.
Once you’ve set out the quantifiable metrics you expect to be met for a workflow, you need to be able to measure accurately what’s really happening. You can use either manual or automatic reporting tools. The important point here is that whichever tool is selected is collecting accurate data. Otherwise, your KPIs fall into the garbage in/garbage out trap. With good data collection, you get good KPIs and your consulting business can operate more successfully.
