Business goals are vital for both helping you improve your processes and bringing you ever-closer to your bottom line. With the working landscape considerably changing all the time, continually setting new goalposts for your long-term business efforts is essential going into the end 2020 and beyond.
When it comes to setting those goals, the words ‘key performance indicators’ should become a daily part of your vocabulary. While often used interchangeably with the umbrella term of target setting, KPIs more precisely focus elevating the success of business objectives so that you can develop actionable and strategic goals moving forward.
You could say, then, that setting KPIs alone is essential for staying ahead in a competitive market. The trouble is that developing a strategic plan on the back of KPI efforts isn’t exactly easy. In fact, the majority of attempts fail due to a lack of focus or understanding. It’s down to you to make sure the same doesn’t happen within your company, and we’re going to consider a few of the ways you can guarantee it.
1. Identify what’s important
You don’t want to waste time tracking KPIs that don’t matter. Before investing in any KPI programme, you need to step back and identify what’s important. Fail to determine this, and there’s no way these indicators are going to lead to the strategic goals you’re hoping for.
A call centre, for instance, is guaranteed to do best with KPIs regarding call length, success rates, etc. By comparison, an in-person retail store is liable to do best with KPIs based around customer satisfaction and other such performance measures. The question is, how exactly do you get specific with KPIs that focus on overall company goals?
Work backwards from your goals
Business goals and objectives aren’t difficult to define, but they can seem impossible to manage or even track when you look at them from the starting line. By instead beginning with specific goals and working backwards, you should be able to see more clearly how you can tailor products or services to suit that need. This then provides you with a more manageable blueprint for KPIs that fit within and work towards your primary focus.
Evaluate existing KPIs
Even if they aren’t effective, your existing KPI reports can help. They’re an invaluable data source, after all, and they alone allow you to understand your business better. So, evaluate your existing KPIs. Consider the data they provide and any gaps they leave in your overall strategic plan so that you can finally fill them.
Know your data
Data is at the heart of any effective KPI as it provides the evidence to either prove or disprove your focus. As well as helping you to set indicators, this is your best chance at tracking their progress. You should, therefore, focus your efforts towards centralisation and analytics surrounding the data you have. With both manual and automated applications, you can determine KPI key-points, and any areas for improvement.
2. Step back and think about tools
As mentioned above, both manual applications and analytics tools can help with your KPI efforts, especially when it comes to data. Both options offer various benefits to different business applications, and deciding which tool to implement can make a massive difference to success. Your choices here should primarily depend on the size and priorities of your organisation. Still, you won’t be able to determine the ideal KPI tool without first understanding your options.
Manual KPI application
A lot of work around KPIs is manual. Starting with brainstorming and choosing priorities, all the way through to tracking results and measuring success — all of these steps can be done by hand. Often that means Excel sheets and pivot tables. For small businesses, this can be perfectly adequate, and saves you from investing in software packages. With that said, it can cost productivity and prevent you from making the best choices.
The problem with a manual approach is speed, complexity and risk of human error. After all, the last two years alone have seen companies developing 90% of the world’s data across various platforms. Although software tools require investment, it can save money in the long run — improving your decision making, communication and tracking of results. The right tool will let you keep on top of real-time reporting changes, and make decisions based on the most up to date information. Ultimately, software helps you make sense of complex data.
Analytics tools for KPI application
Business intelligence (BI) software is bringing big data number-crunching capabilities to an increasing range of industries and sectors. The sophistication of BI software is relatively varied. However, most revolve around the power of centralising data to simplify the cross-referencing of data feeds, and the delivery of that information in a single, accessible dashboard. This makes the assessment of performance metrics far simpler.
Advanced business intelligence tools go beyond simple intelligence and focus on action. You can set KPI goals and view progress within the same dashboard helping you understand which KPIs to target. This helps communicate priorities and maintain accountability.
By formatting data from multiple platforms into a single set of accessible KPI dashboards, it’s easy to step back and observe the larger picture. The bigger the company, the more important this is. Being able to see how specific departments perform is hugely beneficial. For franchises, for example, the ability to sort and filter data coming from a host of different locations is invaluable. But any company can benefit from the simplicity and insights delivered by analytics software to help pick the right KPIs and manage outcomes.
While intelligent analytics can seem like an obvious option, deciding between these two essential KPI tools typically comes down to fundamental factors like:
- Company size
- KPI budget
- Ultimate goals
- Execution capacity
- Data collected
3. Be clear in your communication
As we’ve touched upon, KPIs play a key role in goal development, but communication is vital for ensuring those goals actually achieve their intended targets. To stand any chance at success, your team needs to know specifics. If you’ll remember, specifics are the main reason you’re using KPIs in the first place. Make sure it’s worth your while by explaining everything to your team.
Software, as mentioned above, can be critical here. By providing widespread data access to employees across departments, BI software guarantees that your teams (and team members) always understand what they’re working with. You’ll be able to send specific stats and messages directly to the people in question, thus ensuring that they have the best chance of both setting and tracking useful KPIs.
Even with companies opting for manual KPI implementation, communication is possible with a proper framework. Most commonly, this involves grouping related KPIs together to make the manual process simpler. For example, online retailers could focus on frameworks involving positive reviews and online shares in relation to increased sales, and the impact of customer service efforts on the number of visitors. This way, relevant teams will be able to collaborate to develop a comprehensive idea despite a lack of software.
4. Develop a framework from tracking results
While we’re on the subject of frameworks, you need to be tracking results to make such correlations possible. An analytics tool pulling data from a centralised database is by far the most effective way to track granular progress. However, similar outcomes can be achieved with diligence and spreadsheet analysis.
Regardless of how you get the results, you need to set up a system internally to review and make decisions based on the data. If you don’t have the right business process, the most advanced BI software will fall flat. What that means, on the most basic level, is continually revisiting your KPIs, preferably with once-a-month meetings.
During these sessions, you can collaborate to understand both where KPIs are working, and where you need to double your efforts. This continual tracking is vital for receiving the best results upfront and adjusting your KPIs according to an ever-changing business climate. As a team, you’ll be able to discuss successes and failures, as well as considering potentially missed goals and what went wrong.
Tracking efforts together can help you to develop the all-important frameworks mentioned above by revealing correlations and trends that you might not notice otherwise. These reviews also provide you with a chance to hold people to account, ensuring that they’re both hitting targets and developing a better understanding of your communication around KPIs.
5. Iterate to make sure you’re doing the right thing
Iteration, or repeated rounds of analysis within similar performance fields, is the last step in making sure that you’re doing the right thing by your indicators. Iteration strategies can help to strengthen priorities and delve deeper into issues that you might otherwise only consider on the surface. This is key to those frameworks we’ve already mentioned, and it can help you really zoom in on your business focus.
The most successful KPI strategy will typically have a six-step iteration process, which will include stages such as:
- Closing a performance gap
- Building on that learning to scope options for change
- Choosing one cause to fix
- Designing how you’ll fix it
- Carrying out that action
- Retracking original performance gap
Again, this type of cyclical review is something that the right BI software can help you achieve with simplicity. Regardless, a continual ‘test and check’ attitude, and attention to detail are the two key attributes that will let you ensure that your KPI plan is on track.
Ultimately, a KPI strategy is about improving your business. By making the right investments, planning, testing and holding teams to account, you will be able to grow in the right direction. In all reality, setting KPIs and tracking actions is not all too different from the fundamentals of a good business strategy. You need the right tools and right attitude — that’s the comprehensive approach that will guarantee improvements without fail. That’s what we call successful implementation.
