Choosing the Right KPIs for your Business Dashboards
A Key Performance Indicator (KPI) is a business metric that demonstrates how effectively your business is doing in achieving its goals. These are the metrics used by the company management to manage its operations and growth.
Key performance indicators means factors by reference to which the development, performance or position of the business of the company can be measured effectively.
Based on what’s important for them, companies build KPI dashboards that help in keeping their teams informed and aligned around the important KPIs.
Which KPIs?
While building a KPI dashboard the starting point is to choose which performance indicators are key to a particular company. These KPIs must be aligned with the metrics used by the management for actually running the business. For example, most management executives will be interested in the financial performance indicators along with sales performance indicators. They may also be interested in building strategies for maximizing customer experience and retaining the best employees. The KPI dashboards should bring all these KPIs together so that they can be viewed easily and everyone talks about and aligns around the same metrics.
KPIs by Industry
The choice of key performance indicators is also affected by the industry type. For example, for a retail store, the indicators matter the most:
- Capital expenditure
- Store portfolio changes
- Expected return on new stores
- Customer satisfaction
- Same store/like-for-like sales
- Sales per square foot/metre
Another example is banking where the important KPIs would be something like below:
- Customer retention
- Customer penetration
- Asset quality
- Capital adequacy
- Assets under management
- Loan loss
How Many KPIs?
It is impossible to suggest how many KPIs a company should track. This depends on many factors such as the company’s strategy, the industry, and the competitive landscape the company operates in. Based on our experience suggests that most types of companies will have four to ten indicators that will be important for them. It is also important that the readers are provided multiple KPIs along with clear explanations of what they mean and why they are important for business.
Communicating the KPIs