Business KPI Tracking Tips for 2020
Key performance indicators (KPIs) are firm business staples and with good reason. Unlike generic target setting, KPI performance metrics centre around specific goals to help with everything from business processes to customer satisfaction and beyond. But, as with the implementation of any business goals, KPIs are only useful if you take the time to track them.
Indicators in themselves might help focus efforts, but KPI tracking leads to results that you can use. Only then will you be able to improve business processes and adjust indicators accordingly. Sadly, many companies fall foul here due to the complex data inherent in this process. In reality, though, tracking KPIs is surprisingly simple when approached in the right ways, and we’re going to prove it by looking at some techniques that will help you stay on top for 2020 and onwards.
Understand and set your goals from the get-go
Setting unclear indicators without business goals in mind makes for a muddy data landscape with uncertain results. Results which, by the way, you’ll never be able to put to any real use. First, you must understand your overall strategic goals and the ways to achieve them. Remember that key performance indicators are defined as quantifiable measurements or data points, so take this time to make sure you can quantify them by considering ultimate end-points. While key goal focus areas are always going to vary, some prime areas for priority include:
- Sales Revenue
- Contract renewals
- Customer satisfaction
Each of these relates explicitly to core business priorities, and are easily trackable as a result. Only with these in mind can you start thinking more specifically about successful KPI implementation on the whole.
Choose the right KPIs for your business
Once you have goals in mind, it’s time to bring them to life. This is where KPI implementation comes into its own. After all, key indicators and your ability to track them are how goals become results. Still, any KPI isn’t going to serve. Instead, you need to focus on the right indicator implementations at all times.
Your business goals themselves will help here, but you’ll also want to narrow things down by considering unique priorities and even the needs of specific departments within the business. You may also find it helpful to begin with goals and work backwards to identify key performance points. For instance, sales teams looking to increase revenue may see the best trackable results by monitoring sales volumes, while a customer service department looking to save money might want to focus on return amounts or similar.
While the right KPIs for your cause will vary, one key thing remains the same across the board, and that’s the need to remember that:
Less is more
You’ll never be able to track a slew of poorly implemented key performance indicators from a range of data sources that don’t serve your purposes. That would simply distract from business targets, and possibly damage your efforts. Instead, you’re certain to benefit from implementing a few, but focused, indicators that you can follow without worry for each goal. Exact amounts are always going to vary depending on business size and scope, but try not to pick too many so that results here are as reliable and focused as you need them to be.
Think about lagging and leading performance indicators
The terms ‘lagging’ and ‘leading’ are synonymous with KPIs, and they should also feature heavily in implementation and tracking. But what exactly do these terms mean, and what difference do they make to your KPIs?
- Lagging — Lagging indicators are actions regarding things that have happened, such as sales in the last six months, or customer acquisition across the previous quarter. These data sources focus solely on output and can be useful for measuring success.
- Leading — Leading indicators are metrics concerning things that have yet to happen, such as future sales predictions, upcoming conversion rates, etc. Leading indicators focus more on input, and can be harder but more useful to track.
It isn’t unusual for businesses to focus purely on lagging, as these allow for easy data access with verifiable results, but focusing on what’s happened isn’t always enough for KPI tracking. In reality, success here comes down to your ability to consider both leading and lagging results. Yes, you need to know what’s happened to determine KPI success and necessary changes, but leading indicators are also invaluable for driving efforts and helping you to settle on/measure strategic action. Be sure, then, that you’re making space for both when setting indicators and tracking processes.
Measure weekly or monthly
The frequency with which you’ll need to measure KPIs inevitably varies depending on the time necessary to see results, but make sure to measure indicators and their results at least weekly or monthly. With a few exceptions, the more often you track KPI implementations, the better chance you have of adjusting and progressing as necessary. You certainly need to have regular processes in place here to guarantee that your efforts don’t go to waste.
Many business owners neglect regular measurements like these because they fear that the time inherent in the process will draw them away, rather than towards, their goals. In reality, though, using the right tools for KPI measurements means real-time reporting that you never need to worry about. And, that leads us nicely onto our next and final tip.
Use the right tools to track your KPIs
Your ability to track KPIs in 2020 ultimately comes down to the tools you use. While each tip mentioned can help towards this goal, they fast become useless if you fail to take care of this crucial aspect.
The solution? Understanding the tools available and how each can support your efforts. Again, there’s no ‘‘right’ solution here, so think about your unique business indicators when considering the two primary tools at your disposal, which are:
Relying mainly on Excel spreadsheets and similar, manual KPI tracking can work well for small businesses with a tiny subsect of KPIs and goals behind them. This can be a cost-effective way to guarantee results and profits on the back of indicators, without facing the upfront cost of software packages.
By comparison, medium to large businesses looking for KPI tracking could benefit from turning to analytics tools. With the help of business intelligence software, such individuals can enjoy data centralisation capabilities that automate tracking processes and centralise information on one easy-to-access KPI dashboard.
This makes business-wide KPI tracking easier than ever and allows for regular measurements that never lead to lost productivity. This technique also makes it possible to compare and contrast results across the board for intelligent and informed KPI templates moving forward.
Ultimately, the right solution depends on everything from company size, to budget, and even the amounts of data you collect. Use this information to settle on the right tools, and you’ll supercharge your KPI efforts in no time.
KPI tracking: It’s all about finding what’s right for you
When you consider every tip discussed, one thing becomes clear: successful KPI tracking in 2020 will primarily come down to understanding your business needs. Given that performance indicators are always going to be unique to you, this shouldn’t come as a surprise, but it’s a point worth reiterating. Only by understanding your business and its needs can you set effective KPIs that provide useful insights.
Of course, with such large amounts of data now widely available, implementing the right technology is also crucial for getting to the bottom of KPIs once and for all. By simplifying your tracking processes and reducing your outlay, perfecting this alone makes sure that you’re always doing right by your business, no matter what.