Key Performance Indicators are information systems, that indicates the growth metrics of your brand or organization.
Growth metrics such as KPI’s are resourceful in helping all individuals of an organization keep oversight on how the business is going on.
KPI’s can be divided into two categories which are Leading KPI’s and Lagging KPI’s, which are exactly what they sound-like.
Before we get into the two different forms of KPI’s, we need to look at what they are, and what purpose they serve in more detail.
Key Performance Indicators : The Basics
Key performance Indicators have an artisanal representation of giving insights into an organizations growth.
We can think of KPI’s as the compass of a brand or an organization, KPI’s help to provide directions to your destination.
When using KPI’s, an organization or individual must direct their attention towards all segments of their business.
Often organizations lack familiarity with how changes are taking effect in their business. So KPI’s step in to gauge the performance of such a change, and lets you know, how you’re doing.
As an example, let’s take Social Mentions, how often do your customers talk about your product? Do they tag your page, use a branded hashtag to mention you. And what have they got to say, most of the time.
Identifying the performance of your brands social media recognition can be crucial to know how your social growth metrics are changing.
Hopefully by now the importance of Key Performance Indicators is clear. so, let’s find out the different categories of methods in which we could categorize KPI’s within a report.
Key Performance Indicators : The Divergence
KPI’s are categorized in two different ways, Leading and Lagging. Let’s find out how they differ between each other in this section.
A Leading KPI, is used to measure the future goal of a business. By setting up a target to achieve and working towards it, you can keep track of its status.
Likewise, goals help towards targeting an achievement and making progress on it as we are familiar with. So, in order to achieve that goal we need to make sure to keep track of its progress.
This is the very reason why we make sure to identify the purpose of leading kpi’s and implement it on our key performance indicators research and analysis.
Working alongside with a leading kpi is the lagging kpi, which helps to identify the current status of your growth metric and asses how further it is from your goal.
Also, by keeping track of your end-goal as a destination metric for your organizations growth, you can identify, how to strategically grow your business towards your end goal.
Lagging kpi’s are an eye opener to many in marketing and other sectors of a business as well. Since, mostly lagging kpis the reminders we set, to keep checking on how much progress you’re making, everytime.
Key Performance Indicators : Best Methods to Follow
Since the definition of a KPI has been put out, and the divergence between kpis has also been highlighted.
Let’s take a look at how we can create a defining kpi for an organization:
Five Factors for a KPI
- Detailed - Try to be more specific with your KPIs, identify what it targets and how you’re going to achieve it. A KPI such as “Create Engagement” can mean many things. But specifying it such as “Create Engagement to reduce bounce rates on blog posts” makes the key performance indicators more specific and detailed.
- Necessary - Your KPI shouldn’t go far from the overall scopes and ideals of your organization, having a KPI means to develop your business, so make sure to align your work with the organizations objectives.
- Realistic - Having high hopes is always optimistic and great. Its even better to have a goal that is realistic, by including your environment, taking into account measures such as competition, the marketplace, production costs and other factors that are important to identify the right kpi, can be a crucial detail in your kpi reports.
- Time-Oriented Checkpoints - Your master plan is only as good as your constant corrections of it and modifications. If your strategy is left as-is, you’ll end up being over-powered by others.
- Quantitative - Make your kpi’s well-measured and directed at your resources properly. Make goals oriented on costs, human resources and other expenses. This also includes other metrics that you might have to take into account to make your kpi more realistic.
To get a better idea of how to select and orient a kpi you can read our article on 7 defining kpis to help with brand awareness.
Ok so with the definition of a kpi pretty well summed up. Let's find out how we can start reporting on it.
Key Performance Indicators: Reporting and Analytics
Reporting on your key performance indicators can be done based on the following standards:
- Analytics - A detailed input on the performance of your kpi, you can explain what made your kpi perform best in fine-detail.
- Operations - Insights matter to your management, by giving performance indicators of how your individual sectors are working to management, you can set a clear path for your kpi as a part of your growth metric.
- Strategy - The two main categories of kpi’s (Leading and Lagging), as i mentioned earlier were the compass that directs the organizations towards its goal. A strategy is something that takes into consideration on how to overcome across hurdles and move towards your destination.
Key Performance Indicators : All-in-All
In this article I’ve discussed thoroughly about key performance indicators and how they affect an organizations goal-oriented focus. We went into depth about kpi’s and how they diverge by categorizing them to leading and lagging types.
In a similar way that a southern point on a compass indicates the direction of south, if the arrow is facing it. Then the direction in the opposite way is north. Similarly, we can also use kpis to identify where we’re headed towards and away from.
And then, we also have looked into 5 different factors that define our kpis and help to asses if they’re rigid and future-proof. This would help to enlighten our kpi reporting structure of which we have many different ways to represent such as analytical, operational and strategic.
By following these principles in making your key performance indicator well-structured. You can make your organization more effective and strategize more practically with a time-conscious execution strategy.
In this article, i’ve looked at many different elements of forming, analysing and improvising a key performance indicator. With this knowledge, many Fortune 500 companies have been able to develop their brands and move forward.
So if there’s anything that i need to highlight. It is that, you always need to keep moving forward and that change is only natural.