Key performance indicators (KPIs) are important weapons in any organization’s arsenal. They are individual units of measurement that not only provide insight into the performance of a business’s various departments and initiatives, but also illustrate where and how a company may be lagging against its goals.
Of importance to remember is that KPIs are not one-size-fits-all. Many organizations’ KPIs fall into the categories of cost reduction, revenue improvement, increased customer satisfaction, and process cycle-time improvement because they provide solid measurable values that show how effectively a company is performing at a high level. But do those KPIs indicate how well an organization is performing against its unique strategic goals and objectives? Maybe. Maybe not.
Let’s take a look at how you can choose the most effective KPIs tailored specifically for your business.
First, Establish SMART Goals.
SMART stands for Specific, Measurable, Attainable, Relevant, Time-Bound. Any KPIs you select should be chosen with these attributes in mind.
Ask yourself, “Is this goal specific to my business? Is it measurable and trackable? Does management feel like the goal is attainable and can realistically be achieved? And how long should it take to achieve the goal?”
Be sure to set up review meetings in which you track your KPI's progress over a specific timeline. Without settling on a reporting timeframe, the whole system breaks.
There are main ways for tracking metrics over time:
1. X-to-date (fixed start date, rolling end date)
2. Historic (fixed start and end date)
3. Rolling/moving metrics (fluid start and end date)
Make Your SMART Goals SMARTER by Adding “Explainable” and “Relative” to the SMART System.
Making “explainable” a key factor in choosing your KPIs is going to make the KPI definition clear to all stakeholders within your company. And if everything is clear and explainable, that is going to do wonders for aligning your cross-functional teams.
“Relative,” on the other hand, is ensuring your KPIs are applicable as your business and/or volume grows. For example, many businesses look at customer acquisition cost as a KPI. This figure always fluctuates depending on the efficiency and efficacy of your sales and marketing teams.
So you’ll want to look at customer acquisition cost in relation to the development of your business. If your business is losing money and your customer acquisition cost remains the same, then it’s not moving relative to your business goals.
Define Metrics by Department.
Business silos tend to implement their own strategies and tactics to align with and achieve the company’s overall goals.
Since all companies are different, it’s best to select department-specific KPIs based on the SMARTER method. Having said that, there are a number of KPIs common to the departments of marketing, sales, finance, and management.
For example, many sales strategies focus on simple but informative indicators like sales growth (a crucial KPI). If you’re diligent and measure it over time, then it provides invaluable insight, such as determining growth trends. You can also look at it under a microscope in order to discern how effectively sales teams and reps are contributing to the organizational goals.
Struggling to get started here? Spider Strategies offers an excellent resource for selecting KPIs by department.
Report on KPIs.
If you’ve settled on the business and department KPIs you feel provide the most insight, then you’re almost done—but not quite.
With any data-driven business, the goal is not only to convert the raw data into insights and information, but to also present this information to your departmental teams, executive team, and Board in the form of regular KPI reporting.
The best way to ensure your KPI reporting is presented this way is with an efficient, interactive KPI management solution. This is where Spider Impact comes in.
Spider Impact tracks your KPIs. Everyone in your organization needs to see your latest KPI data. Spider Impact provides it any time and on any device. Plus, Spider Impact automatically rolls up your weighted KPIs to larger key performance areas so you can see how well you’re executing your overall strategy.
Spider Impact monitors your critical data. Dashboards show your performance at a glance. You can add charts, gauges, text, images, and more. If you want more information, just click to drill down to underlying data, performance trends, and comments.
Spider Impact lets you create interactive executive briefings. Assemble your strategy maps, reports, and dashboards into a multi-slide briefing. It's like PowerPoint, but with live data. As you advance through slides, your data is fully interactive—making your executive meetings interactive as well.
See how Spider Impact helps you define, measure, manage, and report on all of your KPIs. Click for a free test drive or demo.