Did you know that about 64% of features developed are rarely used? A major cause comes from a lack of guiding force to decide which features to develop. If you don’t know what direction you are headed, any path will take you there. That lack of direction is what leads to less than useful features being developed.
The issue stems from digital teams have a lack of clear digital strategy, KPIs and metrics. Many product teams are not sure how to measure success or are unclear on the direction headed.
We will show you, step by step, how to solve this problem. The output of the process will be strong KPIs and associated metrics tied to your digital and company goals. As Avinash nicely puts it “KPIs are measures that help you understand how you are doing against your objectives”
You can’t afford to continue or start your digital program unless you’ve established your digital objectives, and KPIs.
As analytics guru Avinash Kaushik has said “You are what you measure, so choose your KPIs (incentives) wisely!” We think that you should treat your KPIs as your GPS. Either you are speeding towards your goal, need to speed up more, or are not on the map at all.
The benefit is clear, laser-like focus for your entire digital team to achieve the following:
- Clear strategy for each of your digital products, built on the objectives and KPIs of your overall digital program
- An optimized roadmap with those features with the most positive impact your KPIs first. Your backlog will be organized to deliver high value features fast.
- Accountability for digital program and digital products KPIs. Product owners will strive to exceed targets. They will know how they are measured.
- Alignment with stakeholders, senior management, and the rest of the organization on what’s important for the digital team. This reduces conflict, and unnecessary confusion.
Convinced? We thought so! Let us guide you through the steps to put KPIs and Metrics in place at your organization.
Understand your company’s overall strategy
Rally the troops
You will want to round up all the right people to be involved in the process. This will include product managers, product advisors, stakeholders, sponsors, and agile team members.
Enterprise strategy, goals, and KPIs
Hopefully your company has a clear strategy, goals, and associated KPIs. However, we’ve found that this may not always be the case. In the case you do, great! Write it down and move on to step 3.
In the case you don’t, don’t fret, we’ll show you how to do it.
You will need to ask questions such as:
- What are your senior leaders top goals? What are they measuring? How do they define success?
- What are our division’s goals and objectives?
- What are the company-wide goals you are measured against that define success?
With the answers to these in hand, you should compile what you believe the company’s strategy, goals, and KPIs are. We suggest putting this information in a spreadsheet application, where you tie each KPI to the company goals. Then, get input from all of the people involved in this exercise.
If possible, you should get buy-in from your company’s leadership. However, we know this is easier said than done!
Define your Digital Strategy, Goals, and KPIs / Metrics
If your digital group has been around for a while, you may have digital strategy, goals, and KPIs defined. Maybe it is time for tweaking? Been awhile since you have looked at this?
Align with your company strategy
Your digital teams strategy, goals, and KPIs need to be closely aligned with the company’s. With your companies as the starting point, start to think about how digital enhances your company’s objectives.
For example, let’s say that you are a B2B manufacturer. Your company’s objectives are to retain current customers, while gaining new customers. That’ll work.
Your digital objectives might be to service your current customers through a customer self-service portal, and to gain new customers through your public facing site. For retaining current customers, your KPIs might be Net Promoter Score and Retention rate. For new customers, your KPI could be lead generation or eCommerce sales.
Choose 3 KPIs
As mentioned on kissmetrics, “The data you collect may be helpful at some point; but if you can’t cut out the noise, you’ll get buried.” Thus, we recommend choosing 3 KPIs for your digital program. This allows you to choose enough KPIs to counter each other, in the case where one rising to infinity could actually have negative benefits. 3 is very manageable for the team to be able to rattle off and understand. More than 3, and they likely won’t resonate with your team.
You might be thinking, well I have these other 10 things I want to track! Don’t worry, you can include the relevant ones as metrics underneath your top KPIs.
Continuing our example above, for the eCommerce sales KPI there could be a variety of metrics supporting it: top of funnel conversion, bottom of funnel conversion, etc.
Set targets for your KPIs
The team now knows the direction you are looking to take digital. Great start! However, how fast are they expected to transform your digital program? And, to what level?
Time to set some targets!
But, how do we set realistic targets that we can meet or exceed? Start with the macro factors, zeroing in on the micro factors.
- How is your industry changing? How do macro factors impact your team’s ability to hit your KPIs
- How much investment do you have in digital?
- What are the expected impacts on your KPIs from the investment?
- What is the baseline for your KPIs? What were they last year? What are they today?
It is critical to take a hard look at expected investment in digital, before defining your KPIs. Research shows that high performing companies invest substantially to hit their KPIs and set realistic targets.
Are you setup to properly measure each of these KPIs?
You will want to walk through each KPI and consider whether or not your analytics infrastructure currently supports measuring each KPI. If it does, wahoo, move on to the next step.
If not, it is time to build out those KPIs in your analytics tool. This process greatly depends on your particular platform, so we will cover this in more detail in a future post.
You have your KPIs identified, and measurable. Now what?
Now you need to be sure everyone far and wide knows your KPIs and targets. Think e-mails, quarterly reviews, corporate homepages, showcases, etc.
Your goal should to be sure that everyone in your digital program knows your KPIs and targets. Better yet, those areas that work directly with your team should also be able to recite, and understand their role in hitting the KPI targets.
Continue to evaluate performance against these KPIs and adjust targets when required. Could be required when investments change, large macro shifts in the market, not able to do a certain feature, etc.
Now that you have setup your digital KPIs, it’s time to sit back and relax… Ok, just kidding.
In order to get your KPIs in place, you may have taken a MVP (minimum viable product approach), which is great! To Warren Buffetts point “It is better to be approximately right than to be be precisely wrong”, its better to get some analytics in place instead of waiting for perfection.
Anytime a significant investment, change to roadmap, additional agile teams, etc you should consider revising your digital KPIs. In addition, any significant feature is being developed you will want to understand its impact on your KPIs.
However, if those things don’t occur within 6 months to a year, you should consider revising anyway.
Does your team have multiple product groups? If so, stay tuned, we will be posting soon on that topic.