In our last article, we talked about basics of KPI, what are they, and why do you need them.
Now, we are going to go through defining the KPIs in the right way, how to track and analyse them.
Good start with defining the KPIs for your company is being aware of most common mistakes, and avoiding them.
So, one of the most common mistake in defining KPIs is defining too many KPIs.
Another, really common one, is going too much into details with KPI reports. Sometimes is good to go into details, but not always. When you have this in mind, we can go further.
Defining the KPIs process should consists of several steps. Of course, there are many different approaches on how to defined the KPIs. You can even create and use your own.
For example, here is an example of a good approach:
First step should be defining your company goals. You should define short term goals, as well as long term goals.
Next logical step should be to find and decide wich measures are the best in order to determine if you have met your goals.
After this you shoud think and list all the activities you should undertake in order to reach your goals.
When you do this, then you should select the top 20% of activities for which you believe they will have the highest positive impact on your goals. You should do this for both short term and long term activities.
You should also pay attention that having a quantitative and qualitative measurement of the results is necessary.
So when you pass through all these steps, you will be ready for smart defining your KPIs.
Simply, just think of really relevant KPIs and provide a measure by which you can have clear picture of the performance of your company, in the context of the success or failure to meet your defined goals. So as long as the KPIs help your company to determine success in progress to your goals, it is relevant.
Few examples of good KPIs in marketing:
- New customers acquired
- Cost of marketingt per new customer
- Number of new customers by demographic segments
- Customer attrition (loss of clients)
Or, when it's about manufacturing, good KPI can be:
- Cycle Time
- Number of manufactured products
- Number of product defects detected
- Number of returned products
Defining good KPIs for your company is not something really hard to do. It's mostly about realizing what information will help you, and won't help you, in order to determine how your company makes progress to your goals.
Once you know the base characteristics of good-quality KPIs, the decisions you will make based on them are much more likely to be a good decisions.