A well-defined KPI report should be visually attractive, informative, and actionable. How to create one? Start by answering the five questions presented in this article.
KPIs are measurable metrics that translate complex measures into simple indicators of business performance. A well-framed KPI helps managers navigate essential business processes and shows whether an organization is achieving its key objectives.
When defining your company’s KPIs, there is no golden rule which KPIs businesses need to monitor. It depends on many factors, including the industry, company’s structure, nature of projects, the size of the budget, and people who use these metrics for making decisions.
Regardless of the KPIs you choose, if you don’t have a good overview and quick access to them, you will still not reach the full benefits. As such, to get a brief overview of your business performance, it’s best to create present all crucial metrics on one dashboard and create a KPI report.
What is a KPI report?
A KPI report is a visual dashboard with KPIs & metrics that reflect on the performance of an organization. Well-defined KPI reports give business leaders insight into their company’s performance and help make informed decisions.
Read on: KPIs That Drive Smarter Business Decisions
The benefits of KPI reports
There are many benefits of setting up and using KPI reports. And although the list is much longer, the main benefits include:
- Important data accessible in a few clicks
- Automated real-time updates, the latest information
- Quick overview of the company’s budget
- Tracking project & sales performance
- Beautifully visualized data is easily understood
- Actionable metrics help to make the right decisions
Setting up your first KPI report
Let’s move on and see how business executives choose the right metrics for their KPI reports. To determine the metrics that benefit your company, answer the following questions.
1. What is your desired business result?
Think about your company’s long-term goals and write them on a piece of paper. Now, consider the steps you need to take to achieve your objectives. It is vital to have a clear vision of how you will change the current situation.
For example, if you’re looking to increase profit, are you going to do it by increasing your customer base by 50%, selling 10% more products each month, or cutting the production costs by 25%?
Next, to evaluate whether you’re getting closer to your goals, you need to set feasible objectives and complement them with measurable and actionable KPIs.
After you’ve written down all your goals and decided upon the metrics you would like to track, move on to the next step.
2. Do you have access to the relevant data?
No matter how actionable metrics you come up with, they can’t be compiled into a KPI report unless the program you’re using has access to the relevant data.
If you’re not yet collecting the required data, find an appropriate tool that enables you to do so. If possible, choose a tool that gives you access to real-time data.
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3. Are the KPIs you’ve chosen actionable?
Suppose you created a metric to show how many new customers you acquire month-to-month. Now, the KPI on your dashboard shows that instead of increasing the client base, the number has dropped. What’s your next step to improve the situation? Do you have a clear action plan? Is this a number you can impact?
Always create actionable KPIs that you can influence through your own actions.
For example, if your goal is to increase the profit by selling 10% more products each month, you could measure:
- Average shopper value (you should try to reach buyers that make bigger orders);
- Average size of an order (by offering discount you can increase sales);
- Average profit earned from each sale (maybe you need to raise the prices).
As you can see, all these KPI metrics are measurable and actionable. Meaning, it’s in your power to change the results and improve the sales performance.
4. How do you want to visualize the KPIs?
Think about each KPI individually and consider multiple ways of presenting them. Are you going to use pie charts, tables, bar charts, line charts, or number metrics to visualize a metric?
When creating a KPI dashboard, place similar metrics close to each other, creating a natural flow of information. This way, you’ll find all relevant data quickly.
5. Who is going to have access to the KPI report?
When creating a KPI tracking report, it is crucial to consider who will see and use the data. Think about who will benefit from the information and who’s responsible for the outcome. In addition, who has permission to see all the data reflected by the KPIs?
Maybe you came up with an interesting KPI, but there’s nobody to monitor it. In this case, there’s no use in adding it to your dashboard. Always ensure that every KPI metric has someone responsible for the results.
Conclusion
As you can see, there are a couple of questions you need to answer when first starting out defining your KPIs and setting up KPI reports. After this, you need to decide how many reports you need. Keep in mind that the reports are there to help you make informed decisions and reach your business goals more efficiently.
As such, don’t limit yourself to only one KPI report. Instead, create multiple real-time dashboards to evaluate the performance of various business processes. Start with the executive dashboard and move on to create dashboards for monitoring financial and sales performance and internal processes.
Take a look at our KPI Ultimate Guide.