Key performance indicators, or KPIs, have been a common term in the business world for so long that itâ€™s hard to call them â€œbuzzwordsâ€ anymore. The majority of successful businesses track at least one metric, and most leaders feel assured that they know their way around these simple tools.
However, without the right strategies in place when creating key performance indicators, you may be sending your business off course. The wrong KPIs can even drive your team toward the wrong behavior and goals.
Letâ€™s take a look at the basics of KPIs, as well as some of the most common things people get wrong about them.
What Are Key Performance Indicators?
Before we go any further, itâ€™s important to understand the concept of KPIs as a whole. Hereâ€™s a simple key performance indicators definition: KPIs are measurable values that track key business goals. Your company can use KPIs to see how close you are to achieving your objectives.
Choosing KPIs Because Theyâ€™re Easy to Track
Just because something can be measured doesnâ€™t mean it should be measured. Before you define a KPI for your company, itâ€™s important to make sure itâ€™s relevant to your business and your goals.
Donâ€™t labor under the assumption that more information is better than less. Too much data can overwhelm your strategy, reduce your performance, and even kill your business.
Collecting the Same Metrics as Other Businesses
Many businesses look around, consider what other companies are tracking, and start measuring the same things. This is especially true when certain KPIs gain ground in industry news or with certain leadership groups.
However, KPIs arenâ€™t one-size-fits-all strategies, and you must consider what works best for your company.
While others focus on their retention rate, for example, you might want to dig into your bounce rate. Ultimately, an effective website and better analytics to help you track your KPIs may be a better strategy than chasing other peopleâ€™s metrics.
Not Analyzing Your KPIs
If you arenâ€™t using your KPIs to offer insight into your goals, thereâ€™s no reason to waste time tracking them. When businesses donâ€™t take the time to have high-level staff analyze the data, itâ€™s hard to tell what those KPIs mean for your business.
Sticking With the Same KPIs Forever
After youâ€™ve invested time and effort in developing the perfect KPIs, itâ€™s tempting to go on tracking them forever. But you should continue making time, on an annual basis, to question their relevance to your strategy. As your business develops and grows, so should your metrics for tracking success.
Make the Most of Your KPIs
Ultimately, unless youâ€™ve aligned your key performance indicators with your overall business strategy, youâ€™ll waste time and effort while steering your company astray. KPIs are powerful tools in the right hands, so make sure youâ€™re giving them the consideration they deserve before tracking them blindly. With the right KPIs, youâ€™ll find it easier than ever to move the needle.
Want more of the business tips you need to inform your strategy? Check out our other posts for more insights!