KPIs should work together to produce action.
Lose track of some and you’ll make the wrong decisions.
KPIs are great for driving a company forward. But they’re also a trap, especially when you miss the bigger picture. Let’s take “Joe” as an example. Joe is the digital marketing connoisseur of the company, keeping track of the KPIs he finds relevant. Joe notices a drop in revenue over the past few months. He attributes this to a lower-than-usual conversion rate.
There’s an obvious problem in the story of Joe. First, let me remind you that KPI stands for Key Performance Indicator. It’s one performance measurement out of the many you should be tracking.
The issue isn't that Joe used KPIs to justify decisions (they should be involved in your decision making, because ideal KPIs are practical and actionable). The problem is that Joe suffers from what I call tunnel vision. Joe overlooked key factors such as the churn rate of his company’s product. Joe typically prioritizes only one or a few KPIs that he finds relevant. And that’s playing a dangerous game.
Avoiding tunnel vision
Joe’s tell-tale story is common in many teams I've worked with. All too often, a teammate mentions just one performance measurement. One. They don’t realize that understanding multiple KPIs at once provides necessary context for your decision making. And this yields better results in the long run. So, it’s imperative that:
- All your KPIs are in one place
- Your KPIs are accessible to everyone involved
- Relevant KPIs are identified and integrated
KPIs need to be in one place. Your team is far less likely to tunnel if key performance data are in one place and readily available.
Performance data has to be accessible to team members. Decisions based on data are more successful if employees better understand relevant KPIs and their relationships. Teammates make better contributions with more knowledge at their disposal.
Dashboards such as the one’s I've mentioned allow you to create multiple users, letting them access real-time key performance data in one place (you can even use the TV-Mode to rotate between dashboards on your office’s big screen).
Lastly, you’ll want to make sure you identify the right KPIs. You don’t want to spend months looking at arbitrary sets of data. Revolve them around the short and long term goals of your team.
If you already know which KPIs to track, great. Make sure you keep tracking your key performance data and integrate these into your active decision making. This also means integrating KPIs based on the online services you use, whether it be Salesforce, Shopify, Mailchimp…you name it.
I cannot stress this enough: integrating the online services you use is one of the best ways to keep track of your performance in real-time.
A little exercise for you…
Since you've read this far, remember our tunnel-vision colleague, Joe? Don’t be that person. In 60 seconds: consider all the key performance data readily available to you. Identify critical relationships between certain KPIs. Who knows, you may learn something new.
Which KPI relationships are crucial to understanding your business, and why? Let me know below!