Establishing, measuring and tracking Key Performance Indicators is a major part of the work that any market research agency undertakes. Unfortunately all too often KPIs are tracked for their own sake, and too little thought is given to their real value in the business. Lets unpack that ‘KPI’ acronym in reverse order and see what it really means:
Indicator – a KPI is an indicator, not an end goal in itself. By all means watch the indicator, but focus your effort on the real world. Social media ‘follows’ and ‘likes’ are a classic example of a KPI which can become meaningless if targeted too directly (i.e. through non-organic means).
Performance – a good KPI should isolate your own performance from background ‘noise’. For example, a petrol station measuring fuel revenues might see them going up and up but this is not a measure of their performance – only of the fluctuating commodity price. Litres sold or footfall would be better measures.
Key – here’s where it often goes wrong. Is a measure really key to your business? A single KPI may only take up one small box on a spreadsheet but if you’re using your KPIs actively then you’ll be jumping right on top of any movements to understand them.
Having too many weak KPIs can dilute focus and reduce the likelihood of you spotting important changes and getting to the genuinely valuable insights that will help you succeed in the real world.
Back in the driving seat
Designing good KPIs takes time, discipline and a rigorous methodological approach. Unfortunately, many management teams inherit or have KPIs forced upon them. The solution is to do the research and statistical work to reverse-engineer the KPI and determine the factors which are most likely to influence it.
With this knowledge you may decide to take the courageous step of ignoring the external KPI altogether as ‘irrelevant’, or you may choose to start work on improving it. Either way, at least you’ll be in control.
For one example of how we put this into action for clients in the Higher Education sector, take a look at the short video on our microsite designed to help Students’ Unions get to grips with their new KPI in the National Student Survey (NSS) – http://www.question23.com.