Why Is Tracking Business Metrics Important to a Company’s Success?
“Data —a lot is never enough, but a little is too much.”
Did that sound strange? Probably. But it’s really a truth in today’s business world. See… data comprehension is key. Without understanding your data and what it means, a little is too much. On the other hand, when you do understand the data and it’s value… well, there can never be too much.
Extracting meaningful insights from business data is one of the competitive strategies being used by businesses vying for valuable customers in today’s marketplace. Yet, since information is often found stretched across cyberspace, over and from a myriad of applications each performing a different business role, this can make such a task daunting for those in the small to mid-size space.
Therefore, it’s critical before you start collecting data that you know why you want it and what you’re going to do with it—what you want it to show or tell you.
Defining the metrics that matter most in your industry is the first hurdle encountered when establishing key performance indicators, or KPIs. Key Performance indicators must be agreed upon by management and communicated to all employees.
Now that the end-game has been defined, a plan is devised to reach the goals set.
Here are some tried-and-true suggestions for establishing your business KPIs:
- Link KPIs to strategic goals and get support from all parties involved (management, departments, employees, etc)
- Establish an owner (or group of owners) for each KPI. This person(s) has to have the ability to take corrective action when necessary. (In a sole proprietorship or SMB, sometimes YOU might be the only owner for KPI’s but you still need to track them!)
- Measure frequently – while some metics may only be measurable annually, quarterly or by month, identity KPIs that can be monitored as frequently as possible.
- Keep it simple…. Key information needs to be self evident and visible at all times so that exceptions can be easily identified and acted upon.
- The person or people who is responsible for the area covered by specific data must have direct access to their KPI metrics so they can make informed decisions and take focused action.
- Context is key. Track actual performance against goals or past averages. This can inform the user — at a glance — if adjustments are required
- Ensure users understand what each KPI measures and the KPI’s relationships to the goals.
- Don’t be tempted to fall into the, “…if it CAN be measured, DO measure it,” camp. Be sure each performance indicator you’re tracking is essential and relevant to meeting strategic goals.
- Watch ROI. Ensure the measurement of a metic is not a time consuming, manual process and that the information is trusted and readily available.
- Creating user-centric KPIs that are simple to monitor, maintain, and analyze ensures future participation during the construction and implementation of larger, more complex KPIs
KPIs are a necessary component of the blueprint for success in today’s competitive environment. Hopefully this article can help you establish metrics that will push your business to the next level!