A Key Performance Indicator (KPI) is a quantifiable value that a company can use to track the progress of its efforts towards the achievement of a business objective. A KPI report is a document that showcases how those KPIs were affected (either positively or negatively) within a set timeframe: weekly, monthly, quarterly, etc.
What are KPI reports? They're documents used to monitor and evaluate a company’s success at reaching certain targets such as annual sales revenue, quarterly lead generation, and more (Key Performance Indicators, or KPIs in short).
There are different KPI types to measure success based on specific business goals and targets. KPIs can be tracked either in real-time or on a set schedule.
The late business management expert—Peter Drucker—famously said “what gets measured, gets managed” in his 1954 book titled The Practice of Management. The successful management of any company relies heavily on the proper application and interpretation of values referred to as Key Performance Indicators (KPI).
Why reporting on KPIs is important in business
Through the course of day-to-day business, your company is producing massive amounts of useful data: from the number of people visiting your website, to the number of email exchanges with your customer service department, to the tickets closed that day, and more.
KPIs are powerful management tools that can harness this data and present it in a way that shows your company’s progress towards achieving a strategic business objective.
"What gets measured, gets managed."
- Peter Drucker
The feedback that a company gains from monitoring a set of applied KPIs over time is then used to make operational or strategic improvements. KPIs can also be applied to provide a company with the analytics necessary to make more informed business decisions.
KPIs can also help intensify a company’s focus on its most pressing concerns.
The benefits your company can gain from the application of KPI metrics is expansive—tracking operational efficiencies, progress towards sales goals, gauging the performance of personnel, and more.
The different types of KPIs
There is a wide array of KPIs available to you, and KPIs are generally not specific to any unique industry. The KPIs you choose to apply will depend on your company’s industry and they will also depend on the specific departments whose performance you wish to monitor. KPIs are often broken down in:
There are “sub” KPIs within each of the above categories.
For example, the marketing KPIs category includes measurable values that can provide your company with data on the effectiveness of your marketing efforts over a set period of time, and a sub-KPI within that timeframe could be how many lead conversions you're generating from your website compared to social media.
The KPIs you use depend on your company’s industry, business model, and other factors like partnerships, departments, and long-term goals.
Marketing KPIs include customer engagement, avg $ per customer, and more.
Some quick facts around KPIs:
- They go beyond sales and revenue
- KPIs can be established for operations as well
- Each business will have their own set of unique KPIs
KPIs also apply to concepts you may not expect, like tracking performance metrics of Human Resources (HR) departments. They are an extremely flexible tool for any business to leverage.
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Turning the right business metrics into KPIs
Consider these factors to determine which KPIs will offer you the best business insights:
- KPIs must align with the strategic goals of your company
- They should be attainable - and they should provide accurate data
- KPIs should always provide your company with actionable insights for further growth
As your company begins to work with KPIs, perhaps for the first time, you should test a few and see what type of value they bring to the table. That’s to say that your KPIs can (and most definitely will) change as your company evolves, and your interest in tracking certain business metrics evolves with it.
Focus on the word "indicators"
Using KPI metrics as a component of your business management process includes setting the desired level of performance, a.k.a. target, and then monitoring the progress your company makes toward that target.
Managing your business by using KPIs means working to improve leading indicators. A leading indicator is a precursor of future success whereas lagging indicators are representative of how effective a company already is at meeting certain goals.
How to create KPI reports from scratch
To benefit from the KPIs you set, you need to be constantly aware of your metrics and there needs to be a routine reporting protocol so your company can understand where your company needs improvement, and how well your company is achieving its business objectives.
Processing the information and turning it into a useful report can be done with either a KPI Report or a KPI Dashboard… or both depending on your audience. So what are the best KPI reports tools for you?
Are KPI dashboards worth it?
A KPI dashboard is best described as a live “snapshot” of your key metrics in real-time, allowing you to do a quick review of all your KPIs together in one place.
Dashboards can employ a series of graphs or charts with the key concept being that dashboards are a visual tool that translates extensive amounts of data into an understandable format, again, at-a-glance.
They're also more practical in monitoring the day-to-day performance of your company as opposed to KPI reports because they are designed for quick cursory analysis.
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Type of KPI reports you can design
The distinction between reports and dashboards is that the latter is for quick analysis. Reports on the other hand are prepared as a resource to be used for extensive data and trend analysis.
A KPI report provides more metric depth than dashboards are designed to do. Also, historical data plays a much larger role in reports than they do in dashboards. For example, a KPI report would be much more useful for trend analysis than a KPI dashboard.
KPI reports are generally broken down into the following three categories:
- Strategy Reports – The “bird’s eye” view of your company’s progress against goals and objectives set at the strategic level; oftentimes designated for the board of directors or company leadership.
- Operational Reports – Focused on the day-to-day operations, like support tickets or business hours.
- Analytics – KPI analytical reports can be used for a wide array of business purposes, but businesses rely quite heavily on them for their historical analysis.
These are only 3 examples but a KPI can be anything that's valuable to your business, e.g. the number of affiliates signing up to your affiliate program vs the # of sales they pass through in a given month.
The sky is the limit here.
Designing & Working with KPI reports
Transferring your KPI data into a visualization and discovery tool like a dashboard is tedious but not impossible to do. The 7 most common steps to build your first dashboard are:
- Define what KPIs you want to include in your dashboard
- Have a clear understanding of the dashboard audience – who will see it and what type of decisions will be made upon seeing the dashboard
- Craft a design of your dashboard. What charts or graphs do you want to include? Sketch it out.
- Select your KPI dashboard software
- Collect your main data points
- Gather feedback from your target audience after seeing a demo of the dashboard
- Fine-tune and deploy, regularly
It's important that you use the right reporting solutions for your needs as a business.
Here are some of the best options available today.
Dashboards & KPI report tools for service providers
Google Data Studio is a popular free online tool that you can use to get some exposure to KPI dashboards, at no charge. Data Studio allows you to view your data through customizable charts and tables.
For a project management tool, Data Studio is very robust in its functionality and can connect with a wide variety of data sources. A generic online search for dashboard solutions will be overwhelming. Many resources will purport to be your ‘one-stop shop’ and will likely even offer you a free trial to entice you.
Track & share customer KPIs effectively
It is crucial to not only understand KPIs but equally as important to understand how KPIs can affect the culture of your company. There is a widely held belief that KPIs are deployed oftentimes to micromanage.
For example, KPIs can be used to measure how many sales calls or meetings your salespeople attend. If there is a quota for weekly meetings, this can lead to “gaming” the system where sales staff makes calls and sales appointments with prospects that are unlikely to buy simply to achieve their quota and boost their KPI values.
KPIs aren't just for management to control but also for your entire staff to understand as they boost alignment in the company and make for a growth-oriented culture where employees are more aware of their contributions.
Your staff should understand that KPIs metrics are being used to strengthen the competitive position of your company and your staff can be more effective at their jobs by applying what can be learned from KPIs.
KPIs can be used to empower all of your staff—not just executives—to work towards the achievement of a business objective that strengthens your company by giving everyone at your company access to vital information that they can use to steer your company as a collective.
A company-wide “buy-in” of KPI applications can lead to significant enhancements in the performance of your company and the achievement of important objectives.
Originally published May 20 2021
Frequently asked questions
What is the best way to follow up with customers? There are a few different ways to follow up with clients. Some of the most efficient methods include: creating follow up triggers or re-engagement emails, being clear and concise about what you need, tailoring all of your communications, calling them, sharing proactive content to provide value, sending out customer surveys, or creating & sending personal handwriting.
How do you write a follow-up email to a client? The number one rule is to be clear, concise, and give direction to your clients or leads as to: 1) What you need from them; 2) Acknowledge their needs and reiterate how you can help, and; 3) Show your appreciation for their time. You should also use a direct and compelling subject line and a strong call to action for them to get hooked in the sales process.
How do you politely follow up? Make sure you include an intro that triggers your client or lead’s memory by reminding them of your discussion. Thank them for their time and for sharing their pain points with you the last time you spoke to them. Then, offer something of value before incorporating a strong call to action.
How do you follow up after a meeting with a client? A good practice is always to thank your contact for their time and the conversation. Then you can recap the key points you discussed together and list the next action steps.