How to choose your Key performance indicators?

Key performance indicators are the stars of dashboards and excellent tools for steering an activity or an action plan and ensuring that teams are making their efforts in the same direction.

What is a performance indicator?

These indicators deliver relevant quantified information for decision-makers to measure and evaluate the results of one or more actions. They also make it possible to follow the evolution of performance and analyze a present situation.

They are used at different levels of business.

Usefulness and application

Here are some functions of performance indicators:

• They allow the alignment between the strategy and the operational to ensure that the axes decided by the management committee are declined at the level of all the services closest to the field.
• From an organizational point of view, they are used to measure the performance of processes and the progress made. These are decision support tools.
• For all operational areas, they are useful for assessing the achievement of objectives, steering the implementation of action plans, analyzing the effectiveness of a decision, of corrective action.
• Set at the individual level and in direct connection with the objectives, they are the basis for the involvement of employees in their missions. Whether to calculate a performance bonus or to promote career advancement. They also provide a clear guideline and inform everyone about their positioning in relation to their results.

What is a KPI?

With the advent of business intelligence (BI), this term is increasingly used.

The purpose of Key Performance Indicators is to measure the performance of a company, a business unit, a service, a project in the light of the objectives set. These are, therefore, performance indicators, as defined above.

Expression of measures

A key indicator is expressed in various ways. It can thus take the form of:

• A number: the simplest. It can be a volume, a duration, an average delay, an amount, a cost, a profit … For a website, it can be the number of unique visitors, clicks on a particular page, abandonments of the basket, or the amount of an average basket … These are generally monitoring indicators.
• A ratio: the most common to express performance. Examples: an availability rate, a customer satisfaction rate, a loyalty rate, a percentage of market share, an absenteeism rate … For a website: a bounce rate, a conversion rate.

A ratio can translate:

• Efficiency: result obtained / objective;
• Efficiency: results/resources committed;
• Profitability: profit/investment;
• A level of quality: number of faults / total number;
• …

Establish key performance indicators

Some additional advice:

• Retain a limited number of indicators — to avoid flooding decision-makers with a flood of data.
• Define them with the teams — an “imposed” indicator is less likely to work.

They must be :

• Easy to understand and engaging — motivate teams to act;
• Relevant (if not what interest?).

Result indicator Vs monitoring indicator

How to differentiate these two types of indicators?

• A result indicator expresses success. It is linked to a goal and allows you to assess whether the objective has been reached or not. It is an observation once the action is finished.
• A monitoring indicator is used to steer the action: put more resources if necessary, adjust the content of the action, eg. It allows you to anticipate and make decisions before seeing the results. It is a lever for action in the service of achieving the objective.

Example: for an emailing campaign (1 shipment every week over three months).

The objective of this action is to sell subscriptions, for example, 1000 subscriptions over three months. The result indicator is the number of new subscriptions sold.

Steering indicators can be:

• the number of opened emails: if this number is insufficient, review the wording of the email title
• the conversion rate: if too low, rework the call to action

These last indicators make it possible to follow the actions on specific points to readjust the action if necessary.

Please note:

1. Result indicators can be used for monitoring. In the example proposed above, the number of subscriptions acquired during each mailing can help to readjust the following: mailing on a broader basis, performance improvement (opening rate, conversion rate …). This is possible when intermediate results are available before the final result.
2. The indicators for each action can become indicators for monitoring the overall objective of the plan.

Let’s go back to our example.

Emailing campaigns are part of a global plan to improve online sales. The objective of the plan is to increase online sales by 30% over one year, the result indicator being the differential in sales n / sales n-1 in%. It includes the following actions:

• affiliate campaign
• display campaign (banner on other sites)
• emailing campaign (previous example)

In this case, the (result) indicator of the number of subscriptions acquired by the emailing campaign becomes an indicator for managing the plan. In other words, if the number of subscriptions is below what is expected after the campaign is over, it may be decided, for example, to extend it. The campaign is spanning three months, the plan over one year.