How Intelligent are your KPIs?

Make KPIs and business metrics more effective by mapping them to Goals. There is, or at least should be, a logical thought process for how KPIs are conceived that creates a hierarchical structure. By showing that logical structure, team members understand how they are determined, what activities people are working on to achieve them, and how their work affects business performance measurement and the overall goals for the company. It’s valuable to see how work aligns with corporate goals and how work assignments make a difference.

KPIs need to be directly associated with actionable activities. You should be able to look at the KPI value and understand what needs to be done. KPI examples are:

  • campaign conversion rate
  • cost per conversion
  • defective parts per day
  • ratio of lead sources
  • percentage decrease in customer complaints

Example

Simply saying that blogging more will increase revenue is a flawed approach and not well thought-out. That’s just guess work and people don’t buy into targets if they are not supported by logic.

Instead, figure it out systematically and always begin by considering your goal of increasing revenue.

  1. You might say that one critical item you can do to increase revenue might be to improve your overall presence in a certain market;
  2. to do that, you need to market to a new audience who is unfamiliar to you;
  3. and the area of focus will be engineers in North America;
  4. for that you may decide it’s a good idea to show thought leadership; and
  5. one way to accomplish that may be to blog regularly;
  6. you establish a KPI to monitor Percentage increases in blog interactivity; and
  7. you set a target of 5 interactions per month and a 20% increase in blog interactions for each quarter. Or you might add a KPI to monitor how engaged your blog posts are by tracking comments people leave and how that improves over time.

There are many corporate activities that can help increase revenue and they should all be mapped. The example we used is shown in blue.

As the example illustrates, there is a logical flow to decision making. It shows an increasingly detailed dissection of the work or processes needed to accomplish the stated goal. What we have done is to make increasingly more refined decisions to arrive at effective KPIs and the targets we will assign to them.

You can use Word, Excel, Visio, or KPI Karta to map out and monitor your KPI targets against actuals.

This provides an organized flow of how the decision of increasing blog interactions was determined. By using this approach, you can determine what the actions are to accomplish that result and which KPIs you should monitor. Everyone in the organization can see what needs to be done and why, thus building a stronger commitment to the cause.

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