In business, what can be measured must be measured. There’s no excuse for neglecting metrics that inform you and your team how the business has performed in the past, and where it might be headed in the future. The data available to compile can say a lot about what you’re doing right and where your best efforts are falling short. This critically important process should never be ignored.
Here are tips on creating actionable KPIs that measure what really counts:
Know your outcomes.
The most essential metrics are known as KPIs (Key Performance Indicators). KPIs are inextricably linked to business outcomes and should be primarily measured with this focus in mind. When deciding whether a particular metric is worth measuring, ask these questions:
- What is your chosen result?
- Why is this outcome important to your business?
- How will you gauge progress towards this outcome?
- What can you do to influence a favorable result?
Let’s say you’ve established the objective to boost revenue by 10% in 2024. The next step in creating actionable KPIs—metrics that genuinely pertain to achieving this goal—and to instruct individual departments to define what aspects of this broader goal can be measured and quantified for a better grasp of progress.
Use SMART principles.
A commonly accepted method for designing actionable KPIs is through the lens of SMART principles. To make the best use of this approach, consider these actions:
- Determine a SPECIFIC outcome.
- Ensure you can MEASURE advancement towards that goal.
- Be certain the outcome is genuinely ATTAINABLE.
- Confirm that the goal is RELEVANT to the growth of your organization.
- Establish the TIME-FRAME needed to attain the objective.
Adhering to these principles paves the way to measuring what’s truly important.
Create a KPI dashboard.
Making a commitment to gather and evaluate relevant KPIs is one thing. Being able to follow through on this objective entails other steps, including creation of a KPI dashboard. With this online function, you’re able to take in a wide-ranging array of data at a single glance (more or less) and move forward from there.
Designed effectively, “KPIs inspire direction and action for decision-makers to take to increase profitability, to lower costs, and to take advantage of emerging opportunities,” notes Business2Community. This dashboard also enables users to “correct more quickly if the outcomes aren’t up to expectations or if the rate of change is too slow.” All in all, KPI dashboards keep the focus on “staying competitive, improving processes, being more efficient and cost-effective, and otherwise on course for success.”
Create a workable KPI dashboard through the use of data visualization tools (easily available online) that automate relevant data in close-to-real-time. Then make sure everyone in the organization has access to this dashboard, with instructions to enter key data at the earliest possible time so all team members can leverage the information and make critically important decisions for their individual departments.
Focus on KPIs that matter.
Of all the possible metrics to track, how does a company determine where to spend the most time and effort? Generally speaking, the best KPIs focus on the following areas:
Sales. Virtually all elements of the sales process are measurable. Some of the most important metrics to track include:
- Sales opportunities
- Sales conversion rate
- Sales per representative
- Sales closing ratio
- Sales by region
Measuring these KPIs paves the way towards improved sales performance in both the short- and long-term.
Digital marketing. A well-coordinated digital marketing campaign offers little of value if the results aren’t closely measured. Track these metrics:
- Cost per lead
- First-time visitors
- Website traffic leads
- Rate of returning visitors
- Purchase funnel
- Online conversion rates
- Click-through rates
- Customer lifetime value
Armed with information compiled from these metrics, you can more effectively design who and how to target prospective online customers.
Social media. Every business should have a vibrant social media presence. To assess how well you’re performing in this area, track the following:
- LinkedIn and Instagram engagement and followers
- Facebook page and people talking about you on Facebook
- Social events monitor
- Social traffic and conversions
- Social shares
With this data, you can identify the channels where performance is most successful and how to craft your next social media marketing campaign.
Today’s tracking technology carries with it the risk of obtaining too much information, so it’s critical to identify and focus on KPIs that really matter.