Although analytics and reporting may sound the same, they aren’t. Dive into the difference between the two to learn which one you need.
Reporting | Sep 24
Stefana Zaric on August 6, 2021 (last modified on August 5, 2021) • 15 minute read
Two people with the same goal may have two very different strategies that they’ll use to reach that goal.
Say they want to sell something on Instagram. Person A may choose to go slow and build a community first – share free, valuable content until they gain the trust of their followers, and then try to sell. Person B may opt for Instagram ads and invest money in reaching the right people who may need their product.
They both may have success, but they’ll measure it through different metrics. The first person may monitor their engagement rate, while the other will probably track the number of inquiries they get.
In business, you’ll also have different ways to achieve your goal. When you create a strategy, you’ll also need to choose specific KPIs to measure, so you can evaluate your performance and see what you’re doing well and what can be improved.
But how do you make sure they’re the right ones? KPI development may sometimes be a challenge, but identifying those that truly reflect your strategic priorities can play a critical role in your overall business success.
That’s why we’ve asked 40+ experts how to create KPIs that are aligned with what you’re trying to achieve, so let’s dive in.
Tracking and evaluating your performance is crucial if you want to reach your goals. Without measuring your progress properly, you don’t know if you’re on the right track or if there’s something in your strategy you should improve.
When developed correctly, KPIs help you not only have insight into exact numbers but also truly understand how your business is performing and how healthy it is. This knowledge affects all your further business decisions.
KPIs also provide you with an opportunity to learn, while boosting your team morale when you get satisfactory results. Also, since KPIs are assignable to teams and individuals, they encourage accountability, an important quality every company should nurture in their employees.
One question that many businesses have a hard time answering is this – how many KPIs are enough?
It’s easy to get carried away and define numerous KPIs, but in reality, tracking every single business metric is impossible, and unnecessary. Identifying the main business KPIs brings much better results and helps you focus on what really matters.
We asked experts how many KPIs they regularly monitor. Most of the participants have been in business for a long time – almost 40% of them founded their companies over five years ago, while around 15% of respondents were new to the business.
Most of our respondents said their company scorecard had less than 10 KPIs – for almost half of the experts who participated in the survey, that’s the right amount of KPIs one should monitor. On the other hand, a bit over 39% of participants track between 10 and 20 KPIs, while only 10.9% of people believe that tracking up to 30 KPIs works well for their companies.
Your most effective KPIs will be those that are directly related to your strategic objectives, according to David Nilsson of ConvertedClick.
“Don’t make the mistake of trying to track every process. Not all processes have a strategic impact and measuring too many KPIs will create unnecessary work with little value.” says Nilsson and gives an example: “If your strategic objective is to increase sales, you might want to track the number of qualified leads in your sales funnel.”
Daivat Dholakia of Force by Mojio agrees that less is more when it comes to KPIs that reflect your business priorities. “If you can designate one KPI as “less important” than another, you shouldn’t be tracking it at all. Stay focused rather than spreading out your resources to track metrics that won’t ultimately matter.”
So, now you know you should limit the number of KPIs you’re going to track. But how do you create them? Let’s dig deeper into the most effective strategies according to professionals.
Want to learn the secret to developing KPIs that will be aligned with your strategy and keep you on track while you’re progressing towards your goals? These expert tips will help do just that.
Sure, it may seem obvious that the first step will be to define your strategy and priorities, but that may turn out to be ineffective if you don’t do it right.
Edward Mellett of Wikijob says that “your strategy serves as a springboard for developing relevant KPIs, but only if it’s clear! All too frequently, businesses produce a 30-to 40-page strategy document that no one reads or comprehends. Making a simple one-page approach is a wonderful method to get around this. This will assist you in clearly defining your goals and determining what you need to do to accomplish them.”
For successful identifying of your strategic priorities, Peter Thaleikis of Bring Your Own Ideas Ltd. suggests the following: “The first step is to identify your strategic priorities. This can be done by reviewing the company’s mission statement, vision statement, and values. The next step is to determine how you will measure success in achieving these priorities.”
Once you know what your priorities are, you can move on to determining how you’re going to measure your progress towards them.
Janice Wald of Mostly Blogging shares her secret for developing KPIs. “We start backward”, says Wald.
“It’s an effective strategy. Determine where you want to be – that’s how you come up with your Key Performance Indicators. Once you determine your goals, determine how to get there. This plan keeps you on track to meet your goals. Make sure your KPIs are measurable so you can evaluate the data.”
Mostly Blogging isn’t the only business that traces their steps back until they find what KPIs will bring them closer to the outcome they want to see. Dean Scaduto of Kitchen Infinity agrees that “many times the most important KPIs come from taking a step back. Think about the outcomes you are looking for and then take a step back and look at the behaviors that lead up to those outcomes. Tracking those behaviors add up to accomplishing strategic initiatives.”
The best outcomes happen when your teams join their forces. Marketing and sales teams often have to work together to come up with the best strategy and ensure great results.
Ashley Melkonian of Bayway Volvo knows that and suggests having your “marketing, sales, and the leadership team sit down together and talk about what the company goals are.” Melkonian says that they need to “decide together what the company’s most important goals and KPIs are, and what the best actions are to take to meet them. Getting these different perspectives is a great way to evaluate and align the overall company goals so everyone is focused on the same, most important things.”
If you’re developing KPIs for a client, looking at the performance from the funnel perspective may be the way to go, explains Sasha Matviienko of Growth360. In every part of the funnel, you can identify KPIs that tell you how successful you are at approaching your goals.
You may ask yourself:
With this information, you can provide a full-picture report for your client, says Matviienko.
Editor’s note: If you want a simple way to monitor your marketing and sales activity all in one place, here’s a solution. This Marketing + Sales Funnel Dashboard template from HubSpot will help you identify both bottlenecks and dropoffs in your funnel, track your customer’s journey from discovery to purchase, and more.
“We follow a good rule of thumb to create strategic KPIs for our company in a way that each KPI reflects only 1 of our strategic goals.” says David Kack of Powerful Generators. “For example, if we are working on multiple revenue goals, we break those into separate KPIs so that they each get their own measurement and analysis.”
This way, Kack and his team get more accurate and straightforward results. “Similarly, when we’re setting a goal for reducing time to market from both development and procurement, we make sure that the KPI reflects a reduction in time-to-market overall and not just from one area.”
Rasmus Christensen of Refyne believes that some companies don’t realize how essential it is to understand how the customer journey in their case works. “The easiest way of approaching this is defining some macro and some minor KPIs. Macro KPIs are often the easiest for a company to define. It’s usually transactions, revenue, leads or newsletter signups. Depending on what your business offers their customers.”
While macro KPIs are typically simple to develop, micro KPIs may be more demanding. “Defining some micro KPIs can be tough, as this can be content consumption, visits on a store page, sign-ups to a members club. Some can be easy to define, some can be tough,” says Christensen and add that it’s important to consult all relevant stakeholders when you start defining your KPIs.
“Because success criteria for a customer service department, might not be the same for the marketing team, however, each team plays a critical role in achieving success on the macro KPIs defined.
I also believe it’s essential to not have too many KPIs for the company as a whole. It’s OK to have individual department-related KPIs, but having too many KPIs can result in departments running in different directions and therefore lack results in the end.”
Your employees’ insight may be more valuable than you think when it comes to developing KPIs.
Courtney Zaharia of Online Optimism underlines the importance of having clear business goals, and adds: “By gathering employee feedback, supervisors can be sure that they are setting KPIs that help both the company and the individual. Without this feedback, you may find that your overall company goals don’t match with personal goals, or vice versa, making it difficult to find KPIs that support both.”
KPIs are not set in stone. Your goals and strategies may change over time, so it’s necessary to revisit your KPIs from time to time and make sure they’re still relevant for your progress.
Charlotte Spence of Mattress Nerd confirms that “developing KPIs is a process that never stops”. Spence explains that “KPIs you created 6 months or even 6 years ago may not and often should no longer be relevant to your evolving business processes. Along with finding the right KPIs today, you’ll want to review your KPIs 2-3 times a year to ensure that the data you’re collecting is still the most relevant to help guide your business decisions. If the KPIs are not helping, they’re just extra noise – toss them and determine some new ones that will be more useful.”
Have you heard of SMART goals? This abbreviation refers to goals that are specific, measurable, achievable, realistic and time-bound. This technique also helps when developing KPIs for your business.
FirstSiteGuide’s Artem Minaev recommends using this system. “The system will help you determine your objectives from which to draw your KPI. From there, you need to create a SMART goal and get specific about the threshold for success or failure with your KPIs. If one KPI for your business is increasing sales calls, determine how many you’d like to see within the next 3, 6, 9 months, and so on. If your KPIs are on point but your business isn’t performing as expected, you need to reassess and choose KPIs more relevant to your objectives”, explains Minaev.
Sandeepan Jindal of BidFortune has a similar approach – for this company, it’s critical to define the KPIs as clearly as possible and make them easy to understand for everyone involved.
“We look at creating KPIs that:
Elliott Brown of OnPay Payroll + HR highlights the importance of having short-term KPIs that contribute to your high-level KPIs.
“While KPIs should always include the ultimate goal of a business unit (like revenue, customer count, and ROI), you can also create KPIs that emphasize shorter-term strategic priorities. For example, a marketing team that’s trying to broaden its funnel might view traffic, the number of leads, or conversion rate as a KPI. Similarly, an HR team that’s trying to build culture might set a KPI around something like attendance of voluntary team get-togethers.” explains Brown and adds:
“The approach is to identify a KPI that shows clear progress toward your goal — even though the topline numbers haven’t changed yet.”
Gerrit Buss of FourManagement GmbH recommends making a distinction many brands fail to acknowledge when developing their KPIs.
“A key to success is the distinction between key, business, and process performance indicators (KPIs, BPIs and PPIs). KPIs are key indicators for overarching goals. BPIs break down KPIs on the stakeholders. PPIs measure process performance that is necessary to support overlaying BPIs,” explains Buss.
“When developing the KPIs, it is necessary to focus on the corporate goals that are required to achieve the overarching strategic goal(s).” These KPIs are more likely to be accepted by every decision-maker in a company if they’re involved in the process of developing the KPIs, adds Buss. “The total number of KPIs can be reduced to a minimum – it can be achieved if the focus is only on the KPIs that are relevant for achieving the strategy.”
Identifying relevant stakeholders and their goals can really be critical for developing KPIs that truly reflect your strategic goals, confirms William Taylor of VelvetJobs.
“My recommendation is to identify your stakeholders, understand their goals and objectives as far as your company is concerned, and then create KPIs pegged on each priority stakeholder’s goals and desired outcomes from your company.” says Taylor. “KPIs pegged on value creation for stakeholders, i.e. meeting their needs, help the company chart business paths that are in sync with stakeholder expectations and this helps drive business success and longevity.”
Ravi Parikh RoverPass reminds us that good performance only has value if you can understand why it’s happened.
“Coming up with good KPIs is all about assigning responsibility. For example, being able to say that your website sales doubled in a quarter has no impact if you can’t trace it to the web optimization strategy responsible and recognize the people involved. KPIs also need to clearly align with team goals. If your sales team has different goals than those that your company is setting as a whole, it is past time to regroup and change your approach,” explains Parikh.
Editor’s note: Need a straightforward way to track your most important sales KPIs? Download this HubSpot Sales Activity Dashboard template where you can monitor every stage of your funnel, track your sales reps’ email productivity, learn how many meetings your sales team had with prospects in a specific time period, and more.
Paige Arnof-Fenn of Mavens & Moguls believes you need to take your audience into account when developing KPIs.
“The best KPIs tie to your strategy and measure how well you are addressing your customer’s needs. Conduct market research to determine their top priorities they will pay to solve so it is backed by data.”
Developing KPIs may sound like a challenging task, but it doesn’t have to be.
Best practices involve setting your goals first, because once you know what you want to achieve, it’s easier to determine what you need to measure to evaluate your progress. Don’t fall into the trap of creating too many KPIs because not all of them will be relevant, and tracking them all may be too time-consuming, without providing any vital results.
Your KPIs depend on many factors, some of the most relevant being your goals, customers’ needs, and your strategic priorities. When you figure out what your top priorities are, follow the tips we’ve covered in this article and you’ll make sure your KPIs really reflect the aspects of your business you consider the most important.
Reporting | Sep 24
Reporting | Sep 23