Key Performance Indicators (KPIs) are metrics used to assess the effectiveness of a wide array of business initiatives such as sales and marketing activities. A KPI report is an analysis of these important figures that is used to evaluate overall performance.
Most businesses have numerous technologies and tools that track performance metrics like traffic, conversions, sales, and revenue. So why create a separate KPI report? In this article, we look to answer that question while providing some handy tips on how to create an impactful one.
All marketing channels come with a long list of metrics that can help delineate performance. When analyzing all of them in isolation, it’s easy to get bogged down by the details and miss the big picture of performance. KPI reports only include the most critical metrics to measure initiatives.
KPI reports also include data from different sources which would normally be analyzed separately. This makes it possible to understand how various business initiatives might work in harmony to improve outcomes. Unifying data analysis can surface new insights into how certain initiatives impact overall performance and how individual departments work in unison to drive key marketing goals.
A KPI report is a powerful tool company leaders and decision-makers can utilize to monitor performance, identify optimization opportunities, and make changes to work towards marketing goals. However, a KPI report must include all the right metrics and analyses to maximize its value for your business.
Here are seven tips you can implement to ensure you create an effective KPI report from the beginning:
In order to choose the right KPIs, you first need to have a clear understanding of what your business goals are, both in the short and long term. All businesses have general goals in mind when trying to optimize performance, such as driving more sales, improving conversion rates, increasing retention, etc. However, these general goals must also be measurable.
The best approach is to outline your business goals and ensure each of them is SMART (Specific, Measurable, Achievable, Relevant, and Time-Bound).
Here are some examples of SMART goals:
The more specific and measurable your business goals are, the easier it is to select the right KPIs to improve them.
An effective KPI report must include metrics that directly reflect your business goals. Once your goals are outlined, you can select KPIs to measure them. It’s important to remember that each goal will have a number of relevant KPIs that can help paint a picture of performance.
It all depends on what strategies you’re using to drive your goals. For example, if your goal is to increase website conversion rates by 10% in Q1, and you’re using PPC ads, SEO, and social media to nurture leads and drive site traffic, then KPIs from these channels would all be relevant, as well as marketing KPIs that reflect on-site behavior. If your aim is to boost sales across channels by 20% this year, then sales performance metrics are key to follow.
Here are some general and channel-specific KPIs you may want to track based on your goals:
It’s crucial to remember that different metrics are relevant for businesses based on their industry and what strategies they utilize in sales and marketing. You don’t want to overlook important KPIs just because they’re not as commonly used as others.
- SaaS and other online subscription-based businesses will want to measure recurring revenue as a KPI.
- ECommerce businesses will want to track average order value and new vs returning customers.
- Retail businesses will want to track average customer spend and stock turnover rates.
Other critical metrics to follow will depend on what strategies you use to drive key goals. Businesses that sell high-ticket or specialized items rely heavily on content marketing and email marketing to nurture leads into making a purchase. While metrics like site traffic and sign-ups will be important for this type of business, time on site, page views, and email engagement rate will also be strong indicators of performance.
Once you’ve chosen your KPIs, you’re ready to start building your reports. You can do this by exporting data to a spreadsheet and running your own analyses, or you can use software to create automated dashboards.
Dashboard software is a powerful tool because it can collect data from all your sources, then run analyses for you. This saves significant time that can be reinvested into other initiatives, like performance analysis, strategy optimization, and exploring new business initiatives.
Dashboard reports can be updated in real-time with the latest data, always providing you the most updated summary of KPIs. You can also utilize any number of premade dashboard templates, then customize reports to focus on the KPIs that matter most to your business.
Always look for potential gaps in your understanding of performance using your KPIs. This is vital when first setting up your KPI reports as well as in the long term. Start by listing out your business goals and then grouping your KPIs around every one. (It’s possible that a single KPI is relevant to more than one goal.)
Next, consider what you might be missing when using these KPIs for each particular goal. For example, someone with a sales goal would want to track revenue metrics, but shouldn’t ignore influencing factors like traffic and conversion rate.
If necessary, you may need to add in more KPIs to get the full picture. Just make sure you don’t overwhelm your data reports with too many metrics. Only include the most essential KPIs you need to effectively track performance (between five and nine metrics is a good guideline).
If you want to get the clearest picture of your marketing and sales performance from your KPIs, it’s essential to use visual representations of data. Summaries using tables of key metrics show you what the hard numbers are, but you often have to dig into the data to really understand performance. When you use visual representations (such as graphs, charts, and funnels), it’s much easier to understand your current performance and how it compares to the past.
When you use an analytics dashboard for your KPI report, you can create custom visuals to illustrate your most important insights. These are nothing like static charts or graphs — they’re interactive and adjustable. You can hover over elements to get more detailed information, adjust the date range, or filter certain data types to really understand what factors are impacting performance. Your KPIs can tell you a lot about performance, especially when you use visual representations to track them at a glance.
An effective KPI report will provide you with insights you need to make changes that optimize your strategy. In order to get an idea of what kind of changes need to be made, you need to link KPIs back to financial investment.
Where is your money going and what are the results? If PPC takes up 20% of your marketing budget but is responsible for 50% of your sales, that’s a good investment. If another channel or marketing initiative isn’t performing well considering your investment, then you might want to reduce the allocated budget.
Always tie your most important performance KPIs back to wherever your money is going so you can avoid wasted spending and optimize your financial investment in sales and marketing initiatives.
There are myriad ways to create KPI reports, including making your own spreadsheets and using automated dashboard software. Many businesses opt to create their own reports manually so they can include all the metrics and analyses they want. However, this is not the best approach. Dashboards are actually much more flexible than manual spreadsheets. With dashboard software, you can include any type of analysis you want using customizable widgets.
When you use dashboard software, all you need is a single report. There’s no need to run new analyses every time, updating your spreadsheets using the latest data. Dashboards automatically pull from all connected sources to give you the most recent analysis every day.
Reporting software is also adaptable — it’s easy to make small adjustments to get insights that are most pivotal to you at certain times. You can adjust the time-frame of your reports, or dig into key metrics with filters. KPI reports are designed to offer a snapshot of performance, but dashboards make it possible to have this and more specific analyses at your fingertips.
Dashboards simplify everything related to reporting, freeing you up to focus on other important business initiatives, like strategy and growth. If you want to get the most value out of your key performance indicators, then invest in a quality dashboard and follow the tips outlined here to create an effective KPI report.
At Basis Technologies, our universal reporting and analytics dashboard empowers marketing teams to make better, data-driven decisions for campaigns. You can view metrics from programmatic, direct, search, social, and connected TV via one platform. Ready to learn more? Get in touch with us today!