When it comes to assessing your success in achieving business goals, few tools are as helpful as a KPI (key performance indicator). A KPI that is directly tied to your goals can act as a straightforward, easy-to-understand measure that helps you find out if your efforts are effective. However, many companies make the error of selecting a KPI that isn’t relevant to their objectives.
After all, focusing your efforts on cost reduction will hardly help you achieve a more intimate relationship with your customers. Yet far too many companies do this exact thing by using the wrong KPIs to measure performance. When this occurs, the KPI becomes worse than useless—it can seriously cripple a brand’s ability to reach its goals. So how do you avoid this problem and choose relevant KPIs that will help you achieve your goals? Here are five tips to help you choose the right KPIs for your brand:
1. Set Clear Goals
Just like any other process in the world of business and marketing, the first step to choosing effective KPIs is to set clear, measurable goals for your company. It doesn’t matter whether your goal is to increase sales by 10 percent in the next quarter or to increase customer satisfaction ratings by 20 percent over the course of the next year; these objectives must be clearly defined in order to set useful KPIs.
Different KPIs provide insight for different areas—if you’re trying to improve relationships with your customers, evaluating your retention rate will do much more for your business than measuring search engine rankings. Make sure that your selected KPIs offer direct insights into your business objectives.
2. Know Your Industry
KPIs can vary dramatically by industry. After all, the nature of a wedding catering company is quite different than that of an online publication—and as such, their KPIs are likely to be quite different as well. While the catering company could glean valuable insights from the number of bookings made in a single month, the same metric would be of no value to the online publisher.
Not sure how to find KPIs that are best suited to your industry? There are several online libraries that provide an extensive listing of KPIs for a wide range of businesses. KPI Library, KPI Mega Library, and others serve as great databases of industry-specific KPIs.
3. Remain Focused
It can be tempting to try to use a large number of KPIs to generate a wide swath of data. After all, the digital age has made it possible to do just that—measuring everything from the number of people who open an email to the number of shares on a Facebook post.
But this method can prove overwhelming and ineffective, ultimately distracting your focus from the most important metrics that will help you reach your goals. Just because you can measure something, doesn’t mean you should. As Hubspot notes, “If you try and track too many KPIs, you might as well just not track anything at all.” Hubspot recommends focusing on four to ten KPIs to avoid becoming inundated with too many data points.
4. Quantity and Quality
Another common pitfall when selecting KPIs is to only focus on quantitative indicators—the raw numbers of sales or conversions. But by only selecting quantitative data, your company could very easily fail to understand the reason your numbers are the way they are. Because of this, it is wise to also select some qualitative indicators to help you have a clearer picture as to why a particular result has taken place, allowing you to more efficiently identify the reasons behind failures and successes and make the necessary changes to your processes.
As Roman Pichler explains, “Combining [quantitative and qualitative indicators] gives you a balanced outlook on how your product is doing. It reduces the risk of losing sight of the most important success factor: The people behind the numbers, the individuals who buy and use the product.”
5. Prepare to Adapt
Just like any other marketing or business effort, a KPI is not something you can simply set and forget. Your business goals will no doubt change over time as your company continues to grow and adapt to an ever-changing marketplace.
As effective as your current set of KPIs may be in helping you evaluate your ability to achieve your goals, they could very likely become irrelevant a few years (or even a few months) down the line. Any time your company or department changes its objectives, it would be wise to evaluate whether your KPIs are still relevant and make changes when necessary.
Conclusion
When proper KPIs have been selected, aligning your company’s goals and measuring the success of your efforts becomes easier than ever. As you set clear goals and use knowledge of your industry to select a specialized, focused set of KPIs, you’ll be able to effectively assess your company’s ability to achieve its objectives and implement the right strategies for success.