Key Performance Indicators: 10 to Track.
What key performance indicators (KPIs) are critical to a catalog business? What can you learn from tracking them? And how can you make changes and implement improvements based on your results? In this article you’ll learn about 10 KPIs that are critical to any catalog business.
KPIs vary by catalog, as each has specific objectives and needs. You may have a KPI of, for example, the gross margin ratio, contribution ratio or net income — whichever best reflect your company’s goals.
When selecting KPIs, choose ones that are quantifiable and therefore can be tracked. For example, a KPI to improve customer service can’t be accurately measured. Pass on the “so what” KPIs that might be measurable but little, if any, corrective action can be taken from them. And don’t try to track too many, either. It isn’t about the number of KPIs you can identify to impress your boss; it’s about the quality of the KPIs critical to your business.
Let’s look at some KPIs common to catalog businesses. I’ll suggest ways to track them so you know if you’re on target or if you must take corrective action. For purposes of this article, I’ll assume you have an annual budget in place and you want to identify ways to measure and track against predetermined objectives. You’ll want to track these KPIs against budget and against the previous year. Please note, however, that tracking against your annual budget often is more important than comparing to last year’s results, because the budget defines where you must be to meet financial objectives.
1. Gross demand. Dollars and orders obviously are an important KPI to measure daily. Measure this against your budget rather than your prior year due to changes you may have made in your plans (e.g., circulation, merchandising).
2. Twelve-month buyer file count. Typically a catalog business will grow by the same percentage as its 12-month housefile increases. For example, if your 12-month buyer file increases by 15 percent, your revenue should increase by about the same percentage. (The reverse of this also is true.) When you focus on growing your 12-month housefile, your business also should grow. The 12-month buyer counts must be tracked on a monthly and annual basis.
