Identifying the right KPIs to follow up the health of your business is more an art than a science.
We are trying to find the KEY performance indicators, not a bunch of data collected in a huge Excel document.
This is what we do at Hoshinplan.com to make sure that we are tracking the right data.
1. Easy
Is the data behind this KPI easy to collect and straight-forward to understand?
Sometimes the ideal KPI is extremely difficult to capture. Or collecting it makes it so hard that maybe we can’t have it with the right frequency.
Most of the times, a good-enough but easy-to-capture KPI is a lot better than another one that might take us weeks to start tracking.
The same principle applies when it comes to understanding the KPI: change the KPI if you feel that lots of discussions arise when you try to interpret what has happened based on it.
2. Actionable
If this KPI turns red, is there something I can act upon right away?
What could be more frustrating than seeing a KPI tumbling down and not being able to act? When setting your dashboard, make sure that your KPIs are actionable and that if something goes wrong, you can set a plan to change the trend.
3. Forecast
Does the KPI give time to act prior to disaster?
There is actually something even more frustrating than having non-actionable KPIs: having KPIs that tell us the truth so late that there is little we can do to change.
Make sure that you have all kinds of KPIs when you define your dashboard:
- Control KPIs: These ones will just show you critical aspects of your business that do not require specific attention, unless they drop below a certain limit.
- Process KPIs: These figures should guarantee that, if there is a good performance, we will probably reach our goals. A good and very easy example comes from sales: given a historical conversion rate, how many visits/calls is our sales force doing might be a good process KPI that shows in advance if we will reach the sales goals or not.
- Result KPIs: These KPIs should show you your final goals clearly. To make sure that even in the long run you are following up on them properly, our suggestion would be to imagine curves of your ideal accomplishment, and track (weekly, monthly) if the company is performing accordingly or not.
So that’s it, hope it has been useful.
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