Whatever aspect of business they're related to, choosing the right key performance indicators (KPIs) is hugely important. An accurate gauge of a project's success and performance over time, KPIs allow a project manager to ascertain the progress of a given project in a quick, easy manner, and then relay that information to senior executives, clients and stakeholders.
While there are no specific KPIs that apply to every project, choosing the ones which relate to your business objectives is crucial. If the success of your previous projects has been tough to gauge, we'll explain the KPI setting process, provide tips on how to write KPIs, and offer advice on mapping metrics to accurately track the things that matter most over the course of your next project.
How to set KPIs
Choose KPIs that directly relate to your business goals
Ultimately, what is the goal of your project? If it's to improve your social media engagement, for instance, then you'd look at the number of users, the number of followers you gain each day, and the number of people who engage with your posts as that project's KPIs.
All of these metrics relate directly to the core business goal. In choosing your KPIs, ask yourself what are your company goals? And are there any major areas that you can improve through KPIs?
Opt for a few key metrics
When it comes to identifying and choosing KPIs for your business, less is more. Instead of choosing metric after metric, it's a far better idea to measure and report on just a few key metrics. Attempting to measure everything in a given project will result in too many trivial factors.
Every company, industry, and business model are different. While it's difficult to pinpoint an exact number for the amount of KPIs you should have, aim to identify between four and 10 KPIs.
Use both qualitative and quantitative KPIs
Most business and product-related KPIs will be quantitative, since such an approach provides businesses with hard statistics and facts. For qualitative KPIs, however, you'll be measuring metrics like how engaged employees are with certain goals, as well as their opinions on the project's progress and direction.
Using both types of measurement will provide you with a more well-rounded idea of how your project is moving.
Identify both lagging and leading performance indicators
Neither of these indicators are better than the other but comparing the two allows you to see how your project is doing. Lagging indicators measure the output of something that has already happened such as total sales last month, the number of new customers, or hours of professional services delivered. These metrics are good for measuring results since they focus only on output.
Leading indicators, however, measure inputs, progress, and your likelihood of achieving a goal in the future. They consist of metrics such as website traffic, conversion rates, sales opportunity age, and sales rep activity.
In the past, most organisations have focused on lagging indicators. One of the main reasons for this is that lagging indicators tend to be much easier to measure, since the events have already happened.
But this approach has its limitations. Leading indicators can help you alter your expectations of how a project will perform by showing whether or not you're on track to meeting your goals.
Identifying your leading indicators can have a powerful effect on your future performance, so it's important not to rely solely on your lagging indicators.
Look towards trends
Analysing customer and business trends is another powerful way to plan for the future. It allows you to stay ahead of the curve by looking at trends that are taking place or could take place in the future.
Along with identifying leading indicators, trend analysis can have a large impact on the success or failure of a project.
How to write KPIs
Step 1 - Define your key strategic objectives
Before you begin to write your KPIs, you'll need to decide which of your business' strategic objectives you want to focus on.
Step 2 - Define success
Once you've decided on your strategic objectives, you should think what the success of each objective looks like to you. Doing so makes deciding how you will measure the success of your objective a lot easier.
When defining the success of your KPI, you'll find there are multiple parts to the definition of your objective's success. So, it may be a good idea to look through a few KPI examples to help define your key business objectives.
While simply copying your KPIs straight from another list is a bad idea, you should use the example KPIs to see how you can measure your own success.
Step 3 - Decide on measurement
Now you'll have to decide how you'll measure success. If your objective is increasing contacts, and then turning these contacts into customers, then these numbers will have to be measured somehow.
There are all sorts of tools and software you can use to track and display your KPIs, which can provide a clear view of how successful they are over time.
Step 4 - Write your KPIs
Now it's time to start writing your KPIs. One way to evaluate the relevance of a performance indicator is to use the SMART criteria:
Like what you're reading? Sign up below to receive our best content each month...
And remember, you can always make these KPIs SMARTER through Evaluation and Re-evaluation. Both of these steps are very important, allowing you to continually assess your KPIs and their relevance to your business.
If you exceeded one of your KPIs, for instance, then you should weigh-up whether it was because the initial goal was too low or if it was because of another attributable factor instead.
Mapping your chosen metrics
Dashboard software is integral to measuring and mapping your metrics. By filtering out excessive information, such programmes ensure that only the most salient KPIs are visible to their intended audience.
They can also be used to connect multiple data sources and provide visibility to users who are presenting the information in a format that's timely, meaningful and actionable.
Dashboard software also lets users search for and update presented information, which saves times, streamlines workflows, and allows for the maintaining of accurate records – all of which have a positive outcome on key metrics.
Gazprom Energy is a leading supplier of energy for small businesses, offering competitive gas and electricity contracts that are simple to set up and manage. For more information, visit the homepage or call our team today on 0161 837 3395.
The views, opinions and positions expressed within this article are those of our third-party content providers alone and do not represent those of Gazprom Energy. The accuracy, completeness and validity of any statements made within this article are not guaranteed. Gazprom Energy accepts no liability for any errors, omissions or representations.
Why business leaders need emotional intelligence
Does my organisation need a business innovation strategy?
How businesses create resilience: systems, principles and benefits