Key Performance Indicators (KPIs) 101
If you have been around an office for even a small amount of time, you may have heard of key performance indicators. But often, no one really tells what these are. In short, they are metrics you can use to keep your project goals on track. But of course, there is so much more to them than that. And today, they are essential for modern business, if only to serve as a guide.
So, What are KPIs?
According to Wikipedia, a KPI is a measurement for evaluating the success of a project, program, or product. Often, KPIs are used across an organization to measure all three and other in-house activities. You can set a KPI using field service software, and they are best used in scenarios where you want to measure a repeated action. For example, measuring customer satisfaction with a product on a scale of 1 to 10 but can also include qualitative data as well.
Common Examples of KPIs
KPIs are used by companies because they can be applied to many measurable things. They aim to keep track of data and help keep a project’s goals on task. In a standard business, common examples of KPIs include profit margins, customer retention, and churn rate (how many customers have left). However, you can also use industry-specific KPIs. For example, as a Gp surgery, you could measure average wait time, medical errors, and insurance claim costs.
How Key Performance Indicators Are Not Goals
Some people often confuse KPIs with goals, but they are not the same thing. Essentially, a KPI is designed to help you achieve the goal. One excellent way of putting it is:
“The goal is the outcome you hope to achieve; the KPI is a metric to let you know how well you’re working towards that goal.” – Bernard Marr.
When coming up with KPIs for a project, the KPI is a measurable piece of data that you can use to assess your success towards a goal, like reducing patient wait time by 5 minutes per month.
Why KPIs are Important
Using KPIs correctly allows you to define and then track very specific goals across your company. They can apply to specific projects and to the business as a whole. The importance here is that KPIs facilitate a way to measure real data against your performance. And with said data, you can make actionable decisions that affect the outcome. Often this means holding meetings to decide where to steer company efforts, easily putting everyone on the same page.
Using KPIs for Goals
KPIs are used for realizing goals. But how? It helps to capture current performance data on a given subject. This provides a baseline to work from. For example, what something is right now and where you want it to be. For any given goal, there will be specific actions you need to take to achieve your desired outcome. For example, to get more sales (goal), you need to grow your email list (KPI). This is a measurable piece of data that you can gradually improve over time.
Presenting KPI Data
Data can be hard for some people to read. And you can have a lot of data related to KPI and other performances. Fortunately, you can present KPI data in digestible ways, so pretty much everyone can stay focused. Some of the most common and easily readable methods include:
- Present KPI data in email reports across multiple devices, such as phones and tablets.
- Convert a KPI report into a PDF file so it is compatible with almost all printers.
- Create a classic slideshow presentation to break up large chunks of KPI data.
- Use in-house or third-party collaboration tools to present KPIs on a dashboard.
- Make daily KPI reports easier to access using live links and wallboard software.
- Allow colleagues and senior staff to access your KPI data at any time with access.
- Cater to executives by offering your KPIs via a mobile-based KPI dashboard suite.
It doesn’t matter how small or large your company is; many people will require access to multiple KPIs and presentations. You should always include agreed-upon objectives for data gleaning. But the presentation is key and must be accessible, interactive, and transformable.
How to Define KPIs
Buildable and workable KPIs come from clearly defined objectives set at the board or senior management level. Therefore it is necessary to appoint a core team with the responsibility of setting and tracking KPIs. But how do you define a KPI? A reliable KPI must define easily comparable data such as a then-and-now piece of data. But it must also help you in forecasting a result such as a tenant being more likely to pay rent when they are in steady work and sober.
Measuring KPIs at Work
You can use specific KPIs to help improve efficiencies in the workplace. KPIs can help you manage the day-to-day operations of your company, including employees. For instance, you can develop staff abilities using KPIs such as measuring performance, absenteeism, and even time management. These can then help you work on plans like opportunities for training and upskilling your employees or even organizing rewards and bonuses for exemplary staff.
How Key Performance Indicators Help a Business
KPIs are excellent for assessing data in the past, present and future predictions. Yet you can use them to your advantage in your business for specific tasks. For example, suppose you manage a marketing department. In that case, you want to increase new leads using KPIs:
- Decide on the number or percentage of leads you want to increase by.
- Come up with a timeframe for achieving your overall goal.
- Set smaller KPIs in relation to time that can help the objective.
- Identify engagement tactics that work well for lead generation.
- Measure the current conversion rate and where it can be increased.
There are specific actions to increase leads, and these are defined as goals. But you can use the KPI measurements in the list above to steer your valuable sales team towards the overall objective of increasing leads. The idea is to track measurable data that can be changed.
Using KPIs as a Guide
It is no secret that you can use KPIs to steer the ship, as it were. Solid KPIs allow you to stay focused on specific tasks and measure how you can get there when you know what needs to be done. In short, you can all but eliminate uncertainty in your business with KPIs because data is always available. In the long term, they can help you break down your objective into smaller manageable goals for making decisions and acting upon areas identified for improvement.
Effective KPIs for Managers
As a business owner, you will have to deal with KPIs more as an end user. It is your managers that will use the KPIs on a day-to-day business. If you are a manager, there are some effective KPIs that can help you in your job making impactful decisions. These include Net and Gross profit, average order value, and customer churn rate. These are business focused. Yet there are some solid customer-based KPIs such as retention rate, engagement, and satisfaction.
Key Performance Indicators (KPIs) are an effective way to reach goals based on all manner of data relating to your objective. They consist of measurable data that can be compared between points or used to predict an outcome. KPIs are essential in modern business because they present data you can use to make actionable decisions that impact your company, customers, and employees. Therefore, you and your managers should use KPIs as a reliable guide.