KPI reporting is potentially the most important aspect of tracking whether your goals succeed or fail.
There’s a famous quote, attributed to Peter Drucker, that says, “What gets measured, gets managed.”
Anyone with a keen eye for granular details has heard this saying. In business, especially fast-moving startups, the only way to really tell what’s happening is to track key performance indicators (KPIs). Unfortunately, there are a couple of problems, both with Drucker’s quote and with typical KPI management.
- Problem one: Simply measuring or tracking doesn’t mean you’ll manage it
- Problem two: Some KPIs are more important than others (tracking the wrong metrics means mismanagement of resources)
Success in KPI reporting isn’t simply figuring out which key items to track. You have to properly manage these success-drivers, too. But there’s a space in between. How you track, review and tweak your chosen metrics is as important as what you track. And it’s here, in the void between Drucker’s “measuring” and “managing” this resource aims to assist you.
Bottomline: Get the reporting right and you’ll then be ready to manage and improve the numbers that matter most.
First, Use the Correct Tools
Most metrics have multiple ways to see the data. Some are more “raw” than others. Like opening up a filing cabinet and counting W2s, to see how many new hires you made in the past 30 days. Tools allow for easy viewing of one (or more) of your KPIs. For example, Gusto is powerful for tracking key payroll data and headcount numbers for startups to use in their financial model.
Why Tools are Important
Tools are important to reduce the burden of viewing key metrics, in the first place. If headcount is a pertinent metric for you, it’s easy to login to a software and take a look at recent hires. It’s not so easy to have to talk with your team and wait for the hiring data to hit your desk.
Key takeaway: The faster/easier it is for you and your team to see the data, the more you’ll actually look at it. Regularly checking in to see progress equals better management of your KPIs.
3 Tips for Finding the Right Tools
- Intuitive interface: What you measure must be easily accessed and understood. Choose the software that is easy to use.
- Multiple features: Tools that only track one thing, or don’t have much else to offer, aren’t the best option.
- Integrations: One tool won’t cover every KPI you track, but you want your SaaS tools to work together via integrations. Putting multiple tools together is called creating a “tech stack.”
Second, Get a Solid Dashboard
A dashboard further reduces the barrier to entry for KPI tracking. Instead of having to log into multiple tools, you’d have most metrics updated and on display in one place. Once a month, or week or even daily, key staff view if they’re on track. From there, you and your team make adjustments and decisions to improve performance.
Depending on how paired down the KPI list is, it’s possible a single dashboarding tool may cover everything. That said, it’s likely you’ll either:
- Have a dashboard for as many KPIs as possible and individually track the rest
- Or use a couple of dashboards, one for financials and another for non-financial metrics
Key takeaway: Easier access to tracked data increases the likelihood of using the metrics that help move the needle in your business.
3 Items to Look for in a Dashboard
- Near “real-time” data: The most important aspect is to see updated data, when you need it. A cloud-based, well-integrated dashboard means regularly gathering each metric.
- Top-notch security: One hack with one aspect of your business would be a nightmare. And if everything you track is hacked (by your dashboard tool being compromised) it’s your worst nightmare.
- Great service: Things are going to break. Integrations will be laggly or not pull the new data at all. Getting things set up takes time, too. Know that a qualified representative is going to help with your dashboard choice.
Third, Set Your Markers
Again, this article isn’t to help you choose the right KPIs. An endless list of jargon and terms exist, specifically for startups. However, after you choose what to track, it’s time to decide what a good number/result is for each metric. Setting your “markers” is another step in the conduit toward proper KPI management.
The metrics tracked should be closely related to your overall business objectives. Here’s an example to illustrate:
Company growth objective: 10% growth per quarter for next year
Potential metrics necessary:
- Number of incoming leads
- Close won/lost rate
- Number of sales reps (to handle an increased burden)
- Forecast (reflecting the 10% objective)
There are more possibilities here (inventory, Cost of goods sold, service reps to handle the increased service burden, and so on). This is choosing the right metrics and now this example company is ready to put a number to each metric.
Continuing the example:
- A 10% increase in leads (Currently 25 sales-qualified leads per month, increase to 30)
- Current close won/lost rate is 20% and must maintain to reach growth target (based on an increased number of leads)
- One additional sales rep needs to be brought on immediately and another within 6 months
- At 10% increase in revenue, our forecasted revenue and gross profit should hit [insert Q1, Q2,Q3, and Q4 projections]
Now, the company has a key objective, the KPIs necessary to achieve the goal and individual targets for each. Add these key markers to an easy-to-use dashboard and you’ll have all needed items for accountability.
Fourth, Handle Accountability (at regular intervals)
What gets measured, does often get tracked. That said, it’s not always meaningful. Nor is KPI tracking guaranteed to translate into success. Ease of access (with the right tools), compiling it into an up-to-date dashboard and adding individual markers make it much more likely. At that point, the only missing piece is accountability.
When you and your team view the dashboard(s), is there action? Are there suggestions to improve lagging metrics? Do you even hold a regular meeting to review and manage the individual goals of your staff?
3 Ways to Improve Accountability
- Regular (meaningful) meetings: Don’t just meet and share how well/poor KPIs are moving along. Set expectations concerning the metrics the team is responsible for handling. Have them bring answers and suggestions and don’t get bogged down in a boring meeting.
- Hold yourself accountable (first): Whenever someone fails, ask yourself if there is anything more you could (or should) have done. Beginning with yourself could lead to better morale and improved performance.
- Provide access to the data: If it’s possible, allow permissions to key personnel for the dashboard or key metric-tracking tools. They may run with it, take ownership and ensure meeting the individual goal(s).
KPIs are the vehicle. Tools and dashboards are the engine. And accountability is the fuel. When it all comes together, you’ll likely get where you’re going.