Imagine a world where everyone in your company or team has all the information needed to be successful. A world where everyone uses relevant KPIs to quantify and measure their team’s performance, so everyone knows exactly where their projects stand, and they can easily deliver progress reports based on goals.
How to make this happen? Which metrics matter most? And which tools should be utilized in the process?
Let’s start with the basics.
First of all, your team needs to identify the KPIs that are aligned to the company’s current strategic goals. Only then can the team start pulling in the relevant data, and crunching the numbers that matter most. Creating a data-driven environment starts with setting up the KPIs and a dashboard to access these.
The often repeated qualifications for the best metrics are, of course, “the three A’s”: good metrics are Actionable, they can easily be Audited, and they are Accessible.
In “Lean Analytics”, Alistair Croll and Ben Yoskovitz introduce a framework for deciding whether the metrics you’re tracking are good metrics or bad metrics. This distinction is crucial.
According to Croll and Yoskovitz, a good metric is:
- Understandable — A good KPI should, of course, be understood by everybody who has access to it.
- Comparative — KPIs should ideally be able to be compared over periods of time or against industry benchmarks.
- A ratio or a rate – Absolute KPIs can be useful, however, rates and ratios generally provide a bigger context.
- Behavior-changing — Can someone in the team take action based on how the KPI changes? If not, then this metric may simply be noise or a vanity metric.
KPIs can also be qualified using the IPA Rule. This rule stands for Important (Is this KPI important? Does it matter?), Potential improvement (Does this KPI have potential for improvement?), and Authority (Do you have authority or means to improve this KPI?).
Several dashboard tools can be of assistance in communicating the KPIs and making the data accessible to everyone in the team. I highly recommend Geckoboard, which makes it easy to create beautiful metrics dashboards with just a few clicks, and has pre-built integrations with software tools like Google Analytics, MailChimp, Salesforce and Zendesk to save time. Other nice, similar options are DearLucy and Leftronic.
Effective dashboards are powerful. They are, essentially, tools that make statements as to what a company or a team considers to be valuable.
One of the most interesting things utilizing a dashboard software makes possible, is to simply track leads and conversions. And in order to track these, the team only needs to agree on which specific actions define each stage of the customer journey, and then build these into the dashboard and the reporting system.
The Net Promoter Score (NPS) — that is, the percentage of people who would recommend your company’s products or services — seems to me like one of the most relevant metrics.
Measuring the NPS is not the only relevant metric of success, however, nor should it be.
Relevant KPIs should be set for each stage of the customer journey. It is important to focus on a single overall macro KPI, but also to monitor the whole customer lifecycle.
Dave McClure, for example, suggests the following macro metrics according to different phases of the customer journey:
- Acquistion metrics –- How do the customers find you?
- Activation metrics –- Do the customers have a great first experience?
- Retention metrics –- Do the customers come back?
- Revenue metrics –- Does your company make profit?
- Referral metrics –- Do the customers tell others about you?
What I think is best about KPIs and metrics is that the overall process of sourcing and communicating data can spark intense discussions that at times can strike right at the core of the business and its purpose.
Dashboards and metrics may not be something that everyone is passionate about. But collecting and reporting data can have a huge impact on accelerating the company’s and the team’s performance.
Visit the Geckoboard website and get your free trial of Geckoboard now:
Check out Meltwater’s Growth Hacker Brendon Ritz’s brief guide on analytics and data: