Understanding and monitoring your business data is the only way to get an estimation of success – without data, there is nothing to back up your conclusions.

Once you have created systems to track and monitor your most important data, the process becomes a hell of a lot more streamlined. In fact – starting off is often considered the most difficult part.

In this guide, we will explore how to monitor KPIs:

Difference between KPIs and metrics

The two terms are often confused but can be differentiated with ease.

KPIs are the key measures that will have the most impact on the business moving forward, they clearly articulate and provide insight into what your business needs to measure and achieve to hit long-term goals. Most successful strategic plans will have between 5 and 7 clear KPIs to monitor and use to judge how the business is progressing with its plan.

Metrics are a bit more general and are used to essentially what is tracked/provide data on your businesses standard processes. Not all metrics are important to the strategic plan the business has, whereas KPIs are.

It is pretty easy to use the two terms interchangeably without too much confusion. The simplest way to understand the difference between the two is that KPIs help define strategy and clear focus, whereas metrics are the ‘business as usual’ measures that although they add value, aren’t a critical measure that needs to be achieved.

How to structure KPIs – 4 Parts

1) Define your measure

Activity measures: This measures activity and usually includes a number, percentage, processes, currency, or activities. An example could be a total number of leads in the first stage of your sales pipeline.

Outcome measures: These measure progress against a pre-defined outcome, so is usually presented as a percentage increase/decrease, change, or result from an outcome.

Project measure: This can be thought of as the overall progression of a project, so will most often be expressed as percentage complete.

Target structure: This is a numeric result against a date. For example, a certain amount of revenue before a pre-determined date.

2) Define your target

3) Outline the data source

4) Define an owner and tracking frequency

A checklist for KPIs

KPIs and metrics can be a little difficult at times, especially if you don’t have an appetite for big data sets. The most common mistake to be made is tracking something and treating it as a KPI when really, it is just not that important.

To help avoid this we have created a checklist for checking if your KPIs are worth tracking, or if they are just another metric.

Do they provide a way of seeing if the business strategy is working?

Do they focus employees’ attention on what matters most for success?

Do they provide a ‘common language’ for communication in regards to performance?

Are they valid and/or realistic?

Are they verifiable and/or accurate?