What is this?
A Key Performance Indicator (KPI) is a measurable value that demonstrates how effectively a company (or person) is achieving their objectives.
The key word is, ahem, “key”. KPI’s work by reducing complex situations to a small, manageable number of key indicators that can help with decision making. If you have too many KPI’s, then they’re not ‘key’ enough – get trimming!
OK, let’s say you’re a holistic therapist.
Or a gym manager.
Or you run a salon / spa.
Whichever wellness area you’re in, your ultimate business goal is almost invariably, to make enough money.
Clearly, ‘enough’ depends on your costs and objectives, but let’s say for each of our intrepid wellness entrepreneurs above, it’s £1000 per month in bookings / subscriptions / product sales etc etc.
This is easy enough to assess – at the end of each month, did they make less than £1000, or more than £1000?
Why > What
Let’s say you have an absolute belter of a month, and make £1500. Good.
Then on another month, takings are down 75% to £250. Not so good.
Over the 2 months, you’re down £250. Definitely not good. But without KPI’s in place, there is no context and therefore no formal understanding of why you did so well / poorly.
Whether you are above or below your target, KPI’s help you understand why – so often more important than the what, and this is no exception.
The following three sections contain example KPI’s for holistic therapists, gym owners and salon / spa owners. Please bear in mind:
- These are just some examples, and nowhere near an exhaustive list by sector. Similarly, nor should you use every one, just because it’s on a list on the internet. Do what feels right.
- If you see a KPI in another wellness area that feels ‘right’ for your practise, then adopt it faster than you can say, “Standing on the shoulders of giants.”
- If you’re entirely new to this, we’d recommend starting with 6 or 7, then adding to them after you feel comfortable with the first batch.
- LESS is MORE. Too many KPI’s means they are not key enough.
Holistic therapist KPI’s
- How many new leads per each main source of clients
- Funnel dropoff rates for each of your main sources of clients
- Average transaction value
- Number of clients booking in a month
- How many new clients return
- The number of Members
- Revenue per Member
- Member Retention Rate*
- Average Class Attendance
- Revenue per session
*Member Retention rate = ((ME-MN)/MS)) X 100
- ME = number of members at end of period
- MN = number of new members acquired during period
- MS = number of members at start of period
Salon / Spa KPI’s
- Customer Count: Total number of customers.
- First-Time Customers: Number of first-time customers.
- Repeat Customers: Number of repeat customers.
- Customer Visit Frequency: Visit frequency by customer and by service.
- Pre-Booking Percentage: Percentage of clients who pre-book appointments.
- Customer Retention Rate
- New Customer Retention Rate
- Existing Customer Retention Rate
- Customer Retention Rate by Employee: Average rate of customers retained, by service provider.
- Customer Satisfaction (CSAT) Score: Measured by customer responses to a post-visit survey.
- Average Transaction Value
- Average Treatment Time: Total number of treatment hours sold divided by the total number of treatments sold.
- Occupancy Ratio: Percentage of available appointments booked.
- Product Units Per Client: Average number of product units purchased per client
How is this useful to me?
1. You measure what’s important, what’s measured becomes important
This is one of the most potent sayings in the realm of business sayings, and one of our favourites…
So much so, we’re going to say it again:
You measure what’s important,
what’s measured becomes important.
By the very act of making something a KPI, you elevate its importance.
KPI’s can be an extremely powerful tool for motivating and managing your team / -self.
Choose them wisely.
2. Seeing the wood for the trees
Whether you run a business or are just making some extra income on the side, it’s easy to get so buried in the day-to-day that you lose sight of where you stand.
The more complex your business process, the more people or capital are involved… the more crucial it is that you have the right KPI’s in place.
Correctly chosen, they are an invaluable dashboard by which to steer your business, a constant reminder of where you are vs your objectives.
Conversely, a lack of KPI’s, and you’re effectively sailing a ship blindfolded. You won’t know you’ve hit the rocks until it’s too late.
3. Identify where to make the most effective changes
- your standard service costs about £40
- you do on average 6 of them every day i.e. 132 in a 22 day month.
If you did what it took to get an additional booking every other day, this is an additional 11 per month.
- 11 x £40 x 12 = £5280 in a year!
(obviously a simplification that doesn’t allow for seasonality)
Let’s add £2 to the price:
- you feel that’s what your customers will accept, given the excellent service you provide
- the cost of room hire recently went up and you’ve been paying the difference
- 12 months x 143 bookings per month x £2 = £3,432 in additional revenue
£5280 + £3,432 = £8712, through two targeted, and therefore manageable, changes.
The KPI’s in themselves didn’t produce that additional revenue. But only by seeing your business process as a connected web of KPI’s, will you see these opportunities to make huge progress through judiciously targeted action.
Want to really get into the detail?
- 4 ways to use KPI’s like a winner
- 9 KPI’s to steer your wellness practise to success
- How to set up a KPI reporting system without spending a penny
- How to set personal KPI’s
- Restaurant KPI’s (it can be fascinatingly insightful to see what another industry considers important)
Other useful Minutes
Bite sized guides to concepts that could help you attract clients, reduce costs, or run your wellness practise more efficiently:
- A few minutes to understand… business systems
- … cash flow
- … the marketing funnel
- … opportunity cost
- … the Planning Principle
- … profit & loss (P&L)