The world of KPI measurement framework can make you feel like you are trying to navigate an unknown territory without a compass. KPIs help businesses chart the path to success. The kicker is that if you measure the wrong KPIs then it’s as if you were following a map for treasures that don’t exist.
What is the KPI Measurement Framework? Imagine it like a dashboard that is custom-built for your company. This dashboard isn’t limited to displaying data, such as how fast you are going (although speed can be an important KPI). It can tell almost everything, from your efficiency in using resources to the happiness of your customers.
Let’s start by putting the gears in motion and then move on to how this framework can be structured without slipping into the traps of overly complex jargon, or using redundant metaphors such as wheels and engine.
Step 1: Know Your destination
What are you trying to achieve with your business? While growth might seem like a simple answer, specifics are important. Growth can include increasing revenue, adding more customers, improving customer service, or expanding market share. It is much easier to achieve your goals if you tailor your KPIs around specific outcomes.
### Choose your metrics wisely in Step #2
All that glitters, is not gold. Not all data are useful. The common mistake is to track the wrong metrics. As an example, obsessing on page views while user engagement is a much more important metric. Prioritize metrics affecting your strategic goals.
### Step Three: Establish a Benchmark
It is impossible to measure improvement or regression without a baseline. The benchmarks are based on the historical data. It’s like knowing you need to run faster than yesterday if you want to win the race tomorrow in record time.
### Step four: Frequency matters
How often do you need to check these metrics? How often should you check these metrics? The business dynamics will determine how you proceed. A digital agency might track traffic and conversions daily, while a producer might look at production metrics on a weekly basis.
### Step Five: Tools of the Trade
No, you do not need to have a physical box of tools. The tools here refer to software or systems that you can use to track your KPIs. Google Analytics and other sophisticated analytics tools are available, as well as specialized supply management tools. Choosing the right tool will make all the difference in the world between having a treasure chest of information or a pile of useless numbers.
### Step Six – Data Interpretation
It’s not enough to have the numbers, you also need to know what they are saying. It is not uncommon for a spike in web traffic to be the result of a quick visit by curious netizens and not actual customers. Understanding how to interpret the data you receive in relation to your business and industry is essential.
### Finally: Action Based on Insights
Data is no different. KPIs have no value if they do not result in action. It may be necessary to revamp service protocols if the customer satisfaction rate is low. If the lead conversion isn’t what you want, perhaps it’s time for a rethink of your marketing strategy.
It’s important to remember that establishing your KPI-based measurement framework doesn’t happen in a single step. It should change as your business evolves and as new technology is introduced. It’s like tuning an instrument to the sweetest tune. Only in this instance, the melody is the harmonious array of data that propels you toward your goals.
The panacea for a business problem is often not to have more data. It’s to know which data to pay attention to. It may be overwhelming to begin with, but as you become more adept at this dance of numbers, you will not only read the map, but you will also draw it.