In recent years, the advent of social media has upended our business processes, along with our digital ecosystems. Now that algorithms are calling the shots, it’s getting harder and harder to gauge the impact of the actions we’re taking in the digital realm. That’s why we need to adopt a set of best practices—and that’s where key performance indicators (KPIs) come in. If you want amazing results, you need to clearly define what you want!
First of all, what is a KPI? This acronym stands for “key performance indicator”—basically a tool designed to give you understanding and help you make the right decisions for your company or organization. KPIs are very useful if you’re hoping to track and measure progress towards a strategic goal.
Daily, weekly or monthly measurements of operational efficiency can help you monitor the overall impact of your actions. The right KPIs, whether strategic or operational, should bring value added to your company. They should also be shared, relevant, usable and well defined. Indeed, if they aren’t clearly defined, they can end up being counterproductive.
But before any KPIs are defined, your company or organization should map out a few clear goals. What do you hope to achieve? Boost community involvement? Raise your profile or visibility? Improve customer service? Take a step back to determine the right approach, which should tie in with your overall marketing strategy. Once your goals have been determined, you can move on to potential KPIs.
It’s normal to feel a little overwhelmed when deciding which KPIs should be used. After all, there’s no shortage of information out there for measuring company performance, so how are you supposed to figure out the right type(s) of data to use? The indicators you consider should be aligned with your type of company, vision and operating sector. Here are a few useful criteria to keep in mind: KPIs should always be straightforward, realistic and easy to understand. They should also be precisely quantifiable so the people involved can take concrete steps. Last but not least, they should be controllable (e.g. exchange rates should not be used as KPIs because there is no way to control them).
Start out by selecting three priority objectives from among your stated business goals; then choose up to three KPIs for each objective. Sometimes, one KPI can be used to measure progress in one area. KPIs are a good way to reach your objectives and to devote the required amount of time to each one. Meanwhile, to ensure that KPIs remain relevant, they should focus on important factors. If you think you need five indicators for a single objective, it is very likely you need a clearer definition.
It’s nice to know how many visits and page views your website gets, along with your keyword ranking on Google. But the idea is to go above and beyond these types of basic data.
KPIs may be quantitative, e.g. they can be used to assess the immediate effects and impacts of social network activities and people’s online behaviour. They can also be qualitative, e.g. they can be used to evaluate consumers’ perceptions, opinions and preferences—even their emotions. KPIs should be numerically calculated before you spring into action; that way, you can evaluate the impact and determine your return on investment. KPIs might be aligned with overall performance, e.g. the absentee rate for employees or company name recognition. They might also be aligned with specific goals or with monitoring various processes. In short, KPIs can tell you whether your quality or efficiency targets are being reached.
In the realm of e-commerce, for example, high-performance KPIs can be used to monitor the value segmentation of an average “shopping basket”, the number of no-result internal searches or pre-purchase visits or the loyalty of new or recurring clients.
KPIs are also widely used in digital marketing to analyze traffic patterns or to assess the performance of sponsored link campaigns. Depending on the results, recommendations and optimization solutions might be proposed: how to improve a “landing page” or a product datasheet, for instance. In the end, there are many different ways to improve your conversion rate!
What do we mean when we say a given KPI is irrelevant? An irrelevant KPI typically involves a “known quantity” and thus offers little in the way of value added. In other words, there is nothing can be gained from an irrelevant KPI. For example, if you decided to calculate your employees’ average age but did not link this indicator to a specific goal, the information would be useless and would simply confirm whatever the average age is.
A KPI is also irrelevant if it is contested and not unanimously accepted. For example, you could set a consistency KPI with the goal of handling 50 files every month. But if this is not accepted by some stakeholders, either because the office is short-staffed or because the files are particularly troublesome, the KPI will be irrelevant. In short, the effectiveness of a given KPI should not be up for debate.
Selecting the right KPIs is intended to improve your company’s profitability and productivity. If KPIs are precise and clear, your employees will feel engaged and will have a better idea of what is expected of them. Any resulting decisions will be fact-based because potential problems (as well as opportunities) can be detected swiftly. Companies can also rev up their decision-making process while reducing the risk of making the wrong choices. Analyzing KPIs can shed light on areas that are going well, as well as on things that are not working out.
Once you have determined your KPIs, you can group them together within a single platform, which can be referred to if you need a quick summary of how various initiatives are working out; this summary can also be updated in real time. Putting these recommendations into practice should help you take your company’s success to the next level!