There are many ways to measure the success of a freelance
business. For example, how much money are you getting for your services? However,
there are other aspects to consider where the performance indicators (KPIs)
come into play. techwadia
In this article, we will see:
- KPI
examples for freelancers
- KPIs
types
- What
KPIs to use as a freelancer?
The performance indicators or KPIs (in
English, key performance indicators or KPIs ) to
measure the development of the business and analyze if we are
to evolve appropriately.
If we look for KPI examples, we will find different
aspects that can be considered:
- Number
of clients
- The
income per hour of work
- Profitability
of marketing actions
- Written
words per hour
Each business defines the most relevant indicators for them
precisely.
The performance
indicators or KPIs are a simple way to control the trajectory
of your business in the short and long term.
In addition, they allow you to intervene in a specific area if
it is not working as it should. For example, they will help you identify
if you are spending too much time on something not worth it. So this way, it
will be likely to improve your productivity as a freelancer.
On the other hand, don't forget that performance indicators should
be defined according to the SMART
technique.
That is, each KPI has to be S - specific, M - measurable, A -
achievable, R - relevant, and T - have a deadline. Also, this is the only method
we can measure and compare evolution.
It is essential to remember that KPIs are not results but
a value that tells us why and what an outcome will serve us.
These are values that must be defined in the strategic business plan. They
are often summarized in a dashboard that
shows the various vital indicators at a glance.
An example could be: Increase
sales by 20% thanks to the creation of an online store.
KPI Examples
for Freelancers
# 1 Benefit
The benefit is
a clear indicator of how
your business is running. Of course, be careful because
the user can be very different from the total income.
Profit is the money
that comes into your pocket, after taxes and business
expenses. Controlling this profit will help your business in several ways.
On the one hand, it will help you identify “lazy periods.” That
is those months in which you generally have less work and therefore less
income.
On the other hand, it is an excellent long-term indicator to see
how your business develops over time.
If you discover trouble keeping track of your monthly income,
it may be interesting to use one of the accounting software or applications
available.
Here are some options:
•BonsaiQuickbooks
•Freshbooks
•Zipbooks
# 2 Growth
To identify how your business is doing in the long term, you
will need to measure growth. You
can calculate it by dividing the benefits by month or by year with the previous
period.
Simplifying with an example:
Assuming you earned 100,000 euros last year and 125,000 euros
this year, you will get a value of 1.25. Positive growth, but enough?
Depending on your business situation and objectives, you can
interpret this value and decide if the growth is acceptable.
If you are looking for higher growth, try to achieve an upward
trend year after year (if you analyze it in monthly value, the information will
be too skewed and not as helpful).
So if you are happy with the result, you should not forget about
this performance
indicator either. It helps if you also plan to keep
it constant (or
increase it slightly to compensate for possible financial events like inflation
and more expenses).
# 3 Hourly rate
per customer
We know that we can charge clients a price
per hour, per project, or parts of the project. But breaking down
the hourly rate per customer
can be a good
performance indicator.
Calculating this value when you do not charge directly by the
hour is simple.
Record the time you spend on a particular project and divide the
profit by the hours you invested. By doing this with different clients, in
the end, you will get a list with a wide (or not so wide) range of rates.
At the top will be the clients who pay the most for your time and
services (the most valuable clients).
At the bottom are those clients who consume a large part of your
time but do not help you financially.
Yes, all freelancers have clients they have worked with for a
long time and have not raised their prices.
Of course, your goal
will be to change customers from the bottom to customers from the top.
When you are in business for a specific time, let's say one or
two years, repeat the process to get the hourly price to increase and,
therefore, your profit.
# 4 Social
Networks
With the help of the previous indicators, you can analyze if
your marketing plan
in social networks is effective.
For example, if you use Twitter to attract customers, how
many customers have you gotten through this channel?
Compare this value with that of another channel. For
example, with clients who have come from a freelancer portal such as freelancermap.com.
Also, what kind of clients have you gotten via Twitter? Are
they on your list with lower hourly rates?
In this case, you may be interested in rethinking your strategy
or leaving your plan on that social network.
It helps if you analyze all the social networks that you are
using. You use Instagram or LinkedIn more; what are the results there?
Some examples of performance indicators that
you could use to analyze your social media plan would be:
- Traffic
to the website of each campaign on social media
- Spend-per
click (if you're using Facebook ads, for example)
- Growth
in the number of followers
- Engagement
(How many followers interact with your posts?)
- Direct
messages from potential customers on each network
However, do analyze social media KPIs in a
measured way. There may be a temptation to overestimate specific
parameters that are not so important.
Some of these parameters are included in "Vanity KPIs." For
instance, the number of followers or the number of likes.
These numbers are less important than the number of leads
generated or the traffic directed to your
portfolio. However, many people highly value these numbers.
KPIs types
The above list of some of the ways you could track your business growth using key
performance indicators.
There are innumerable factors that can help you effectively
measure and evaluate its growth.
Other key performance indicators would
be:
- Customer
achievement costs (that is, how much you have
spent on advertising compared to how many customers you have acquired
using these methods)
- Funnel
delivery rate (how many potential
customers leave your website sales to funnel without converting / without
hiring you / without contacting you)
- The regular number of
hours on onboarding clients
- Marketing outside of
social media PPC,
SEO, etc
- Leads
generated/converted to customers (sales KPI)
- Inventory turnover (only applies if
you sell physical products as a freelancer)
In addition, it is common to distinguish different types of these key performance
indicators :
# 1 Diagnostic
indicators
They allow a company to compare its current situation with the
planned situation. These indicators make it easy to identify unwanted
changes.
Some KPIs within this category would be Planning delays,% completion, or cost
variance.
# 2
retrospective indicators
They are metrics that give us insight into what has already been
done. That is, we must look to the past to gather information on the
execution of a project.
Within the retrospective KPIs we could analyze the costs executed in the project so far,
the amount invoiced, or the product delivered.
# 3 Predictive
indicators
These indicators allow estimating the final situation of the
project considering historical data and current data. The objective is to
be able to anticipate possible problems or risks.
Some concrete examples that fall into this typology are
the estimation of
the end date of the project or the cost of financing.
What KPIs to
use to measure the growth of your business?
Deciding which of these KPI examples to use to track
your business growth depends entirely on your objective.
Of course, from a business perspective, it makes more sense to track
your financial
growth through your earnings, cash flow, and hourly rate.
So you could focus on financial KPIs first.
However, once you get to a point where financial growth is not a
key priority, it could change your goal.
At this point, you could focus on efficiency (time over money), customer satisfaction, and conversions. These
indicators allow you to better track the success of your business over time.
Ultimately, performance
indicators can help you determine what is working and what
is not and act accordingly.
Each freelancer analyzes these indicators unconsciously, but
studying with the actual numbers will give you an objective perspective,
without excuses, or seeing everything in a rosy color.
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