# KPIs 101: How Much Can Your Business Improve?

Every quantifiable Key Performance Indicator that has ever been devised falls into the following categories:

Size - how big is the deal?

Count - how many deals are on the table?

Velocity - how fast does the deal take to work through?

Capacity - how many deals can we actually do?

Statistics - averages, conversion rates, ratios, standard deviations, skew, correlation etc. etc. etc.

**Everything else is a Dimension...**

Time, Geography, Products, Projects, Customers, Resources, Suppliers, Processes, Cost Centre, Account.

For example, some would call frequency a group of KPIs. However, frequency is really just a count across a time period.

**...Or a Comparison.**

Comparisons are when a KPI is compared across a dimension or multiple dimensions e.g. Sales $ by Sales Person by State.

**The thing with KPIs, is that if you use them together, you can quickly work out how much your business can improve.**

For example, if you have 10 people working for you, and each one works for you for 200 days a year, you effectively have a capacity of 2000 days each year.

If the average deal velocity is 5 days, you can only process 400 deals per year. If the average deal revenue (size) is $1,000, then the gross revenue you can earn in a year is $400,000. If you pay each one of your team $30,000, and have no other costs, then your profit will be $100,000 p.a.

**The key to growing your business from here is to work out how to change these numbers.**

For example, if you could reduce your deal processing time (i.e. increase your velocity) by 10%, then you could process an extra 44 jobs per year. If you could increase your deal size by 10%, then together with the increase in velocity, you could earn an extra $88,400 p.a. - all of which would go straight to the bottom line.

*That represents an 88% increase in profit.*

**The beauty of the interplay between KPIs is that small changes in multiple KPIs can have a big impact on the net result.**

In the following KPIs 101 series, we will look at how each KPI type impacts on the others in closer detail.

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