Executives and business leaders are always trying to get more out of their data to make meaningful and accurate decisions about the business, how it’s performing and its future direction.
NB: This is an excerpt from our latest eBook: 'KPIs and Metrics - The key metrics you need to measure to ensure your business stays on track'. To download the eBook, click here.
But to make smart business decisions, you need timely access to the right data, presented in meaningful and easy-to-understand formats. Many organizations struggle to gain that kind of access. Let’s explore the key tools and areas you need to focus on to ensure your business is doing its best.
KPIs and metrics
Metrics drive improvements and help businesses focus their people and resources on what counts.
Metrics can be used to address specific audiences such as customers, shareholders, staff members and business owners. A metric on its own is not that useful. It needs a context.
Let’s look at the metric of customer service response times. Service response times can be the difference between loyal and happy customers and disgruntled ones who’ll switch to your competitor after the smallest inconvenience.
You can create a metric to measure how long it typically takes to reply to a customer enquiry, whether that’s by phone, email or social media. The metric may highlight that lengthy response times have an increasingly negative impact on customer retention.
A corresponding KPI could be that 95% of customer enquiries are to be responded to within 24 hours.
Of course, a 95% response rate isn’t a realistic target for everyone.
Behind effective metrics are business goals that are SMART (specific, measurable, attainable, relevant and time-bound), says organization development expert William J Rothwell.
They should also be based on established benchmarks and business objectives.
In this example, customer satisfaction becomes a metric that is monitored.
Line managers are responsible for making sure service levels are met and individual KPIs supporting this goal are assigned to their team.
You might overlay another metric to understand and assess the impact
customer satisfaction has on increasing revenue from up-sell and cross-sell opportunities.
These KPIs help measure your progress against each element of your strategy. Your KPIs may evolve over time as strategies change or more information becomes available.
When changes are made to the KPIs being monitored, either in terms of the KPIs used or how they are calculated, those changes must be communicated to managers, leaders and staff so they can realign their goals.