Understanding KPIs and What You Can Do With The Knowledge
When you know your numbers, you can see how success works.
First an explanation of what a KPI is.
Key Performance Indicators
When we plan a trip, we look at maps, decide where to stop for the night, how much gas we may be using, the fastest or most scenic route to get there, and likely how much time we will spend on the road.
And we know why that is important. Not having enough money for gas, or being stuck in the middle of Wyoming with no hotel in sight is bad planning.
This is road trip planning for our business.
How much we need, how we will fare from week to week, month to month. How far is it between gigs and payments received, and what kind of system do we put in place to manage, monitor, and develop our business?
A KPI is a measurable value that demonstrates how effectively you are achieving key business objectives.
We can use them to track progress and evaluate our success in achieving specified goals.
It is important that they align with our overall business strategy and main objectives.
Make them specific, measurable, achievable, relevant, and time-bound (SMART).
Examples of KPIs for photographers:
a. revenue/expenditure
b. client acquisition rate
c. cost per acquisition
d. website traffic
e. social media engagement.When we look at these numbers we can identify areas where we are falling short and make the changes needed.
KPIs are used to evaluate the effectiveness of the strategies and tactics we have employed..
They must be monitored and reviewed regularly to ensure they remain effective and relevant.
They keep the photography team on the same page, aligned with the same goals and strategies
They help you benchmark your performance against competitors and industry best practices.
These are the scary parts of starting your business. The numbers, we call them.
Let's put it to work.
How many clients did you contact last month?
How many of them asked to see your work?
How many of them did you track as coming to your website?
How many contacts do you normally have to make to get a gig offer?
How much does it cost to meet a client that gives you a gig offer?
How many gig offers fell through?
How many gigs did you do last month?
What was the percentage of contacts to showings, and showings to sales?
What capital was spent acquiring each gig?
Can you see how knowing this stuff can be super important for your business?
If, for instance, we see that you contacted 30 people, got 8 invites for a gig, 3 fell off, and you ended up doing five, then we have some goals to work with. We want to make the same number of contacts again to see if it really does match up with the number of gigs that have been done.
The next month you do the same amount of contacts and end up with roughly the same amount of go/no go responses.
Cool. Now if we double the contacts, will we double the completed gig rate?
The numbers say yes, although there can be spikes and troughs.
There are far more things we can measure as well.
How much do the gigs pay (average and mean)?
What is the normal amount of capital expended on a campaign (postcards, postage, email costs, etc)?
Where in the area do our most lucrative accounts come from?
What kind of photography are we selling and are we more or less profitable with that kind of work?
How do our clients find us, and can we control that medium?
In-person success vs online success.
Establishing objectives:
KPIs can assist us in establishing precise, quantifiable, and doable objectives. We can concentrate our attention and resources on the most crucial aspects of businesses by setting clear goals. For instance, we may decide to aim for a 20% increase in earnings over the following six months. To monitor our progress toward this we can utilize KPIs like total revenue, average revenue per client, and client retention rate.
Monitoring progress:
We need to be focused on monitoring progress toward our main objectives. We can spot trends and patterns in performance by routinely tracking KPIs, and charting them if need be. We may decide to increase investment in search engine optimization if we see the number of visitors to the website has been rising. And we know how much that costs, and also how much each client costs on average to bring in.
We can use them to assess success and pinpoint areas for development.
Using measurable numbers, we can find out if we are on pace to meet goals by comparing actual performance to goals. If we aren't meeting expectations, we can look to the KPIs to find possible underlying causes and make adjustments. Perhaps we opt to develop a loyalty program or enhance our customer service if we aren't keeping our clients or have too many unhappy ones.
We need to have data-driven information about our business. That improves decision-making.
Photographers who analyze their KPIs can spot trends and patterns in their performance. And that makes for happy photographers because we can SEE how our ideas and marketing strategies are working. Maybe we change it up and do three postcards in a short time, or develop a marketing piece that is sure to turn heads.
Benchmarking against competitors:
We can simply rate our performance against that of our rivals.
What are they doing that we are not? How can we change up what we are doing to make us more competitive? The data may show us a way.
Key Performance Indicators can assist us with goal-setting, progress monitoring, success evaluation, decision-making improvement, and benchmarking against rivals.
Here's your competitive edge.
Most photographers will not do this. “The numbers” scare them. I’ve heard them say that they didn’t want to learn the numbers because they may get too discouraged, or face the fact they are not viable. Or even, sadly, that it is too boring and all they want to do is shoot.
Some of them do make it, but most don’t. All it takes is a bad decision based on bad numbers to derail what could have been a good start to a career.
Take some time and start tracking where you are making and spending your money. The insight can help you grow faster than you think.
THIS WEEK’S PHOTOS:
Clockwise from top left: Jennifer Moore, Mary Roberts, Rob Scamp, Jan Sohlke.
My newest book: In Desert Stillness is available at Blurb.
Thank you for reading In The Frame.
Again, another helpful post! In fact, there is so much to unpack in here it's difficult to find a place to start responding. I'd never heard of "KPI" - but I do recognize that I was doing most of the things mentioned, just not as focused as a "thing." ("Thing" being a system approach or a business performance tool.) But, being a STRONG believer in the old saying, "That which is measured improves," - you can bet I'll be much more focused on those you listed: revenues/expenditures; client acquisition rate; cost per acquisition; website traffic; social media engagement, and others. Love the section on Objectives, Monitoring, Evaluating & Tweaking for further Development, etc. I've been much more focused this year on the business side of Photography than ever before, and it's paying off in increased work. This post affirms that, gives me more tools to work with, and gives me "Go sic 'em boy!" encouragement. Kick ass!