KPIs, or key performance indicators, can help you understand if your company is on the right track for success and if it’s not, where to focus your attention.
No matter what it measures, the aim of any KPI is to bring about improvement and insight.
Making of KPIs
The first step is to determine which indicators are essential to the business reaching its goals and that drive results you aim for. This may be total orders, customer engagement, app installs, site traffic, etc.
A measurement can be a number of customers, a number of sales, or total revenue. But until you start making comparisons, they are simply numbers. A metric is typically a combination of two or more measures, such as the number of customers over time or the total revenue over time. A metric becomes a KPI when it is put in the context of a particular organization or industry. A KPI adds meat to the detail, so ratios and percentages often make better KPIs than just the number of things in a group. With the amount of data that today’s businesses and organizations generate, it is important to choose the right metrics and indicators. At the same time, KPIs must be aligned with your company’s overall strategy and objectives
The second step would be to determine how quickly you can assemble the data for review. The quicker the data can be gathered and reviewed the sooner problems can be identified and corrective action is taken before there is a large impact on the lagging indicators
Why Use KPI’s?
There are five solid reasons to use KPI’s to measure the performance or progress of your business:
- To reduce the number of decisions that are based solely on instinct or gut feel and make decisions based on objectivity and facts
- Quantify the achievement of goals by setting, monitoring and measuring against a standard or target.
- As your business grows it becomes more difficult to remain as close to the operational details as you once were.
- Allows you to focus on facts when chaos ensues.
- KPI’s help to cut down the lead time on discovering problems or opportunities by looking at indicators
What makes a good KPI
KPIs give executives the chance to communicate the mission and focus of the organization to investors, team members, and other stakeholders. As KPIs filter through the organization, they must grab employees’ attention to make sure that everyone is moving together in the right direction and delivering value to the business.
The KPIs that a company or organization measures will vary depending on the type of business and industry, its customers, and its staff.
However, they are likely to include some of the following:
- Net profit
- Customer engagement
- Customer complaints
- Market share
- Supply chain miles
- Waste recycling rate
- Staff churn
- Return on investment (ROI)
Once you have defined your business’ goals and strategy, identifying and aligning the KPIs for your business will be much simpler.
KPIs are only as valuable as you make them. Sharing your key metrics with other people in your organization is a key stage in the journey towards becoming data-driven. A highly effective way to achieve this is to use TV dashboard software like ours to display a selection of key data on a TV screen or monitor in a prominent area in their workplace.
The benefits these companies see from using TV dashboards are profound. Aside from being able to monitor abnormal events and trends, a simple dashboard with some carefully selected metrics can impact an organization’s culture, inspiring data-centric conversations (and more importantly, action) like nothing else.
We at Archisys believe that data-driven companies are the next step in evolution. We help you find KPIs, code them and help you get them real-time on a screen in front of you. And it’s so easy we can be set up and be running live in no more than a couple of days.
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