How to tell which actions actually moved the KPI needle
Would you run a marathon without doing any formal training? Of course not. You understand that in order to meet your goals, there has to be a series of steps in place to get you where you want to go.
This is precisely what having clear KPIs does for your franchise network. They help you to know if your business is heading in the right direction — and if not, where it may need some extra attention.
Basically, KPIs give us a high-level view of our organisational health and overall progress. However, to be successful in setting, interpreting, and analysing your KPIs, you need to understand them inside and out. And maybe most importantly, you need to have easy access to them.
Instituting KPI best practices first requires clear visibility over all data within your organisation. And in order to have an effective strategy, you also need to:
- Identify critical business objectives
- Align KPIs with those business goals
- Communicate actions to relevant individuals
- Track KPI progress and cross-reference with wider business-data
- Create a holistic understanding of your operation
Only within this broader context can KPIs transition from a box-ticking exercise to a strategic advantage able to deliver real outcomes to the bottom line. Realistically, this is more important now than ever before. 2020 was a dramatic upheaval for many organisations, and the focus in 2021 needs to be about creating sustainable foundations for a better future.
Effective use of KPI management can help you improve your business — but only if done right.
So, in this blog, we’ll discuss the four most important components to crafting a KPI reporting and analysis structure that works for your franchise network.
Let’s get started.
KPI reports vs KPI dashboards
When it comes to KPI reporting, there is an inarguable need for agility, strategic thinking, and analysis. A growing business moves quickly, and it’s critical to build a real-time system that delivers and communicates clear results to take actions that have important outcomes.
Long-term KPI analysis and real-time KPI tracking sit at the heart of your KPI strategy, and each is delivered by a unique set of tools.
- KPI Dashboards: KPI dashboards are, first and foremost, a data visualisation tool. Generally, they include a series of specific graphs and charts which update in real-time to show the performance of KPIs and Metrics. Dashboards usually include all information on one page so that can be viewed at-a-glance.
- KPI Reports: A KPI report will collect the data during a predefined period and help you track and analyse what’s happening in your business. Reports are static, and focus on the interpretation of your data, often using graphs or charts that support a specific decision for your organisation.
An effective KPI strategy relies on both KPI dashboards and reports to pull on the right information at the right time. An ideal solution would be able to capture both the analytic power of reporting and the on-demand nature of dashboards to maintain tight control over performance. What you want is the ability to focus on actionable insights that can drive outcomes. This multi-pronged approach is important to deliver strategic reporting to track and communicate the results necessary for strategic execution.
Aligning KPIs with Business Goals
Of course, your reporting doesn’t matter if you haven’t set the right KPIs and aligned them tightly with your business goals. It’s important to do in-depth research on your business and think strategically about what you want to achieve. From there, it’s about considering the cause-and-effect relationship that different variables (KPIs) have on achieving that outcome.
Step 1: Set measurable business goals
Are you trying to grow revenue across your entire organisation? Are you looking to open more locations? Are you interested in gauging brand reputation in a certain region? You need to set strategic goals for your business. But they also need to be measurable to be valuable.
Measurable goals don’t include words like “more efficient” or “more effective”. They focus on quantifiable results. For example, your sales team has a goal of increasing revenue by 5% next quarter.
Pro tip: Always set S.M.A.R.T goals in order to ensure your ability to take effective actions based on planning.
Step 2: Understand cause and effect
It’s important to know the relationship between KPIs and how each impacts the other. For example, to reach that 5% revenue lift, you may have to do several things well: increase leads in the sales pipeline, improve the quality of the leads, or improve your closing rates. Each has an impact on the overall goal and should be measured.
Realistically, the cause and effect stage is the alignment of core KPIs to your strategic and measurable goals. For example, if you want to measure revenue growth as it relates to your goal, some important KPIs to measure would be:
- Are all of your locations meeting sales targets?
- What are your sales per region?
- What are the revenue forecasts for each location?
- What’s the average purchase value at each location?
- What’s the average profit margin at each location?
- What is our average customer lifetime value (CLV)?
Once you have all of the data points for the KPIs above, you can use it to make strategic decisions about how to achieve your goals.
Step 3: Alignment across your organisation
Whatever your goals are, make sure they are clearly laid out and agreed upon by any key members of your leadership or management. Your goals should be focused on how you move the needle forward in the growth, health, and/or sustainability of your organisation. Everyone must understand how their performance adds value to the organisation and how meeting their goals helps achieve company goals. For example, website managers need to understand their role in generating the leads necessary to meet the revenue goals.
KPIs also need to take into account all of the stakeholders necessary for success. It’s not just your internal customers you have to measure, it’s your performance with customers. You can hit every internal KPI, but if you’re failing to satisfy your customers after the sale, it’s going to be difficult to build a sustainable business. Meeting this increased revenue goal should include upsells and cross-sells — which only occur if customers are happy.
Pro tip: Brainstorm all stakeholders in your strategic pipeline before building your KPIs. Create dashboards and data visualisations based on roles and goals for work units. This will help simplify communication and improve planning.
Step 4: Keeping data digital and up to date
It’s impossible to accurately analyse data that is scattered among several different platforms, silos, or formats. Even within smaller organisations, data must be centrally accessible in order to ensure that strategic analysis is possible (and effective). This means fully digitising your records and migrating your data to a centralised data management system in order to ensure that all decisions are made from a holistic view of your organisation. It also means keeping your data up to date and automating the input of new data into your system.
Pro tip: The right business intelligence tool will help you access, review and update your core business data and KPI management in real-time.
Making communication easy
Knowing your KPIs and where they stand isn’t good enough to drive change in an organisation. Once you know how to meet your goals, it’s important to direct the correct individuals to take action— and make taking those actions easy.
Individuals within your organisation need a simple way to visualise how what they are doing is impacting KPIs in real-time. KPI dashboards make it easier to track your key performance against your strategy to see where it’s working and where it’s falling short. They provide the information you need to direct team members to act. They also provide an easy way for team members to measure their own progress and see how their actions impact KPIs in real-time. However, the right tools go even further to simplify and improve this process.
Using the right business intelligence tools
Business intelligence trends have seen an increased focus by BI tools on KPI reporting. This is a development that is close to our heart, having built our own BI software (Loop) specifically to improve communication and KPI analysis within strategic planning. Our focus has always been on providing actionable insights that simplify the process of identifying the most effective actions, and then putting them into effect.
Loop is not the only tool able to improve KPI analysis outcomes. However, there are key features built into our system that should be considered essential to any software investment intended to improve a KPI strategy. These include:
- Dashboards: You need customisable dashboards that enable individuals to see the information that is relevant to them. This is key for communication, understanding KPIs, and strategic planning.
- Balanced scorecards: Balanced scorecards help align data with strategic planning, and are critical to selecting the right KPIs to track. In Loop, users can build and surface balanced scorecards across multiple levels of your business hierarchy (including a franchise network), scoring and ranking elements of your operation on a KPI level and on overall performance.
- Action planning: Within Loop, you can set actions for specific users that are matched against KPIs. This is a unique feature that is specifically designed to simplify communication and keep individuals focused on strategic actions. It also becomes a central repository of actions, allowing managers to have full visibility and drive accountability and actions using KPIs.
- Surveys: Communication and data gathering isn’t just about KPIs, it’s also about getting input from people. We included a survey feature within Loop that enables you to collect feedback at all stages of planning in order to better align actions with strategic outcomes, and assess progress.
The intense focus on actions within Loop can drive more rapid improvement of your KPIs. Different from traditional business intelligence tools, it helps break down silos, focus on strategic alignment, share best practices, and drive business performance.
Use tools that take the legwork out of the equation
Of course, everything we’ve discussed here — setting business goals and matching them with KPIs, continually collecting data, analysing it and assigning action — can be done manually. However, that is an inefficient way of going about it.
Realistically, if you want the time needed to focus on actually identifying actions that need to take place (and accomplishing those actions), you need tools that can help you simplify this complex process.
Preferably, one tool that can help with:
- Planning and business strategy
- KPI management
- Communication
This is exactly what we built Loop to deliver. Loop goes beyond the simple collection of data to focus users on effective actions that impact the bottom line. Closing this gap between analysis, action and outcomes is central to our ethos, and by looking at how Loop helps users think strategically and create meaningful results, we can explain how to better approach KPIs in general.
When it comes to KPI reporting and analysis, it’s all about surfacing key business metrics that are aligned to business goals and monitoring and driving performance of them across a hierarchy. Business intelligence tools are critical to understanding your strategic objectives and communicating efficiently and effectively — and Loop can help.
