If you have read our previous Blog on Setting a Data-Driven Business Plan: A Blueprint for Small Businesses, you will have seen how data is key to developing a strong business plan, measuring performance against it, and making ongoing business decisions and improvements.
Key Performance Indicators (KPIs) are at the heart of measuring progress and success.
Here are 10 ways they can be used effectively:
Goal Setting: Establish clear business objectives and align KPIs with these goals. For instance, if aiming for increased sales, track KPIs like revenue growth or conversion rates.
Performance Measurement: Use KPIs to monitor and assess various aspects of the business, such as sales, marketing effectiveness, operational efficiency, or customer satisfaction.
Identifying Strengths and Weaknesses: Analyse KPIs to identify areas of strength and weakness within the business. This helps in focusing efforts on areas that need improvement.
Decision Making: Base decisions on data-backed insights from KPIs. For instance, if a particular product line isn't performing well (low sales or high return rates), consider reevaluation or marketing adjustments.
Employee Performance: Utilise KPIs to evaluate and manage employee performance. Whether it's sales targets, customer service metrics, or project completion rates, KPIs aid in performance assessment.
Resource Allocation: Optimise resource allocation by using KPIs to identify where resources are most needed or where they generate the highest returns.
Monitoring Trends: Track KPIs over time to identify trends or patterns. For instance, spotting seasonal fluctuations in sales or identifying shifts in customer preferences.
Benchmarking: Compare KPIs against industry standards or competitors. This provides context and helps in setting realistic goals and performance expectations.
Customer Insights: Use KPIs related to customer satisfaction, retention rates, or acquisition costs to gain insights into customer behaviour and preferences.
Continuous Improvement: Continuously review and refine KPIs. As the business evolves, ensure that the KPIs remain relevant and aligned with current objectives.
Create a Dashboard for KPI tracking
By creating a Key Performance Indicator (KPI) dashboard will provide a structured approach for your business to track progress, make informed decisions, and drive improvements across various facets of your operations.
Imagine your Key Performance Indicator (KPI) dashboard like a GPS navigator putting all the important information in one place, like a snapshot of how things are going. This dashboard helps everyone see the big picture, spot trends, and figure out what steps to take next.
The choice of key performance indicators (KPIs) for a small business can vary depending on the industry, business model, and specific goals. However, some common KPIs that many small businesses find useful include:
KPI dashboards provide metrics for consistent tracking; quick decision-making on the health of a KPI; and the ability to spot patterns that may require further investigation.
The reports may enable the reader to identify shifts in performance against KPIs and make key business decisions in response to the metrics.
Be mindful of how many KPI’s you choose to monitor and also spend time developing some smart charts to make it easy to read and use.
Below are 3 powerful charts designed for a business to look at their primary KPI’s Sales Revenue against secondary Gross Margin, Quote Volume, Sales Volume and ATV. By comparing each metric performance against targets provides a clear picture of what is happening in the business.
Email Hello@wearemojo.co.uk if you would like a template for the above charts
KPI reporting doesn’t automatically translate to insight.
Developing a dashboard with all these KPI’s will enable you to have a starting place to track what is happening in the business. But they won't automatically provide the insight you may be looking for.
However, deeper analysis is often required to look for correlations between events and metrics; looking for answers to hypotheses: uncovering opportunities and risks that are hidden in top-line metrics.
Analysis and the translation of the analysis are where the insights can be surfaced. It can be an iterative process when undertaking an analysis project, discussing the findings and surfacing new lines of exploration.
Interpreting KPI reports, to tell a story of the reasons behind the data and mine the reports for insights is a skill set worth investing in. This can be different from the technical person who has built the dashboard.
So when looking at your business's data insight and reporting, consider how skilled your team is in being able to use them.
We Are MoJo works with many businesses to design pragmatic, usable reporting and insight strategies to aid a businesses growth. Get in touch with us today to discuss how we can help you.