Choosing the right KPIs (also known as Key Performance Indicators) when outlining your business intelligence strategy is essential. These indicators not only provide metrics about your business success but also provide the basis for effective data-driven decisions.
Furthermore, choosing the wrong KPIs wastes resources, particularly if teams chase vanity metrics. Examples of these are website views without meaningful conversions or social media impressions without interaction.
To establish meaningful KPIs, identified metrics should correlate with goals. Conveniently, business intelligence makes measuring performance through KPIs easy.
With this guide, BDI will take you through examples of KPIs for different industries, as well as how to establish KPIs for business benefits.
Table of Contents
Identify Core Business Goals and Associated Metrics
A benefit of using business intelligence for measuring KPIs is that it allows users to drill down into detailed metrics to quantify an organisation’s performance. Examples of these metrics include service call satisfaction, renewals, clicks, site traffic, and conversion rates.
When deciding on which metrics to use, first identify what stage of growth your organisation is currently in. Is the organisation a new start-up? These companies should focus on the metrics which validate their business models. On the other hand, an enterprise company should focus on metrics that reflect historic changes, such as customer lifetime value analysis.
Another approach would be to focus on the industry your organisation operates within. The quality of services rendered is a good metric for service companies, such as consultancies, to focus on. Alternatively, an organisation which develops products should focus their efforts on metrics related to product usage.
Reduce the KPIs to the Most Important Aspects
Creating KPIs which align with your business goals is a good starting point. However, these KPIs should be refined to reflect the most important aspects of your organisation.
It is more important to have fewer, more meaningful KPIs to learn from, as opposed to creating too many. In the case of the latter, your team may lose important information amongst the available data, and therefore not adequately interpret trends. You may also start to lose your audience alongside the focus of the common business user.
One way to mitigate against this and ensure your team is not overloaded in KPIs, is to choose seven to ten metrics that cover the most important elements of your organisation. From here, they can be reduced to your core business goals, allowing access to more specific metrics.
Assess Your Data
When creating your business intelligence KPI strategy, consider what data is available to your organisation. In particular, what data is available concerning the condensed KPIs from the previous stage in the planning process? Assess the sources for this data, and how complex the potential datamodel needs to be. Does your organisation have the tools and resources available to prepare and analyse this data?
This is a good assessment point for your organisation’s current decision-making process. For example, evaluate whether your organisation is currently using data in decision-making. If so, is the right data collected for your business needs?
Once again, reduce each proposed KPI to its core data components. Understand what metrics needs including and whether any information needs filtering out.
It is important to note that your data can come from multiple sources. For example, marketing or sales KPIs will typically involve information gathered by Google Analytics or CRM tools. In this instance, data will need to be aggregated for use. This is something that needs to be considered when creating data plans.
A BI tool with built-in data connectors can help inform this process by allowing you to prepare and join information both accurately and easily.
Represent KPIs in an Accurate and Effective Fashion
Once all of your KPIs are defined, and your business intelligence strategy is planned out, consider how you will represent your KPIs for your users to understand.
Furthermore, building an interactive BI dashboard allows users to explore their own questions and areas of interest. A good interactive dashboard should allow users to perform basic analytical tasks, such as filtering views, drilling down, and examining underlying data. All of this should be possible with limited technical training.
When your data visualisation strategy is in place, your organisation will be able to easily monitor KPIs and gain clear insight into your organisation’s performance.
Examples of KPIs
As previously mentioned, the metrics used within KPIs should correlate with your organisation’s goals. These goals should in turn be related to the industry your organisation operates within.
Examples of industries and their relevant metrics include:
In conclusion, the process of defining KPIs within your organisation is a crucial step towards business success. Interrogating the data available also helps to inform a positive business intelligence strategy, and to ensure vanity metrics do not become a distraction.
All KPIs should be business-goal-orientated and relate to the industry you operate within. Creating visual representations of these metrics can then inform team decisions and provide a clear overview of business operations.
How BDI can help
BDI offers a range of BI modules that can support KPI measurement. Our Business Systems Review service can identify areas of your business operations that require updating. The BDI team monitor any recommended solutions and adjust strategies where necessary for your organisation to reach its goals.
Our team of business experts would welcome the opportunity to consult your needs and find the best approach for your organization.
With this purpose in mind, we keep an open mind during the consultation process and consider each organisation’s individual needs. BDI also involves your key stakeholders in the process to ensure our solutions can meet all your organisation’s goals. Shortly after, our team will recommend the most appropriate software solution and provide support with implementation and training for end-users. We have a variety of software options and are confident we can find the right solutions for your data needs.
Let’s start your data journey today.