Choosing the Right KPIs for Your Business

Unsure which KPIs to track in your business?

The wrong KPIs can cloud your judgment and lead to bad decisions.

Grab some sticky notes and do this 7-step exercise to choose the right KPIs:

— Kurtis Hanni (@KurtisHanni) June 24, 2023

1) Identify a goal you want to reach

Ask: what do you want to achieve?

But many businesses set bad goals.

Use the SMART goals framework to make sure your goals are:

• Specific
• Measurable
• Achievable
• Relevant
• Time-bound

— Kurtis Hanni (@KurtisHanni) June 24, 2023

2) Write down your KPIs on sticky notes (only 1 per note).

Use both financial and non-financial KPIs.

Find more by:

• Googling them
• Talking to trade associations
• Asking coworkers & industry contacts

Group them by similarity.

— Kurtis Hanni (@KurtisHanni) June 24, 2023

3) Evaluate the importance and ease of collection (rate them)

Now, one-by-one ask:

▸ How important is this metric?

▸ How easy is it to collect it?

— Kurtis Hanni (@KurtisHanni) June 24, 2023

▸ How important is this metric?

Impact on desired outcome + gut feeling = rating

Ask:

• What is the impact on the goal?

• What before this could impact the goal?

• If changed by 10%, what would happen?

Score them between 1 (low impact) and 10 (high impact).

— Kurtis Hanni (@KurtisHanni) June 24, 2023

▸ How easy is it to collect?

If it’s hard to track, you will fail.

Ask:

• How difficult is it to gather?

• How annoying is it to gather?

• How motivating (or not) is the number?

Score them between 1 (hard) and 10 (easy).

— Kurtis Hanni (@KurtisHanni) June 24, 2023

4) Cull the list

Importance + Ease of collection = Score

Write that score in the top middle of the sticky note.

Collect the top 10 scored KPIs and set aside the rest.

— Kurtis Hanni (@KurtisHanni) June 24, 2023

5) Identify 1 leading and 1 lagging measure per goal

Leading measures should be predictive of the lagging ones.

Example:

• Leading = Sales Calls
• Lagging = Revenue

Ask which metric will:

• tie most closely to the goal?
• cover blind spots of the other?

— Kurtis Hanni (@KurtisHanni) June 24, 2023

6) Document your process

Answer the following:

• Where you’ll get it
• Frequency of reporting
• Who is responsible
• Who needs to know

This assures you can pass off the collection and process when the time comes.

— Kurtis Hanni (@KurtisHanni) June 24, 2023

Monitor, report, and refine

You won’t be perfect at selecting the right metrics.

That’s okay, but it’s what makes this step so vital.

Swap out a metric when it’s not acting as you expected.

This will take 3-6 months to complete.

— Kurtis Hanni (@KurtisHanni) June 24, 2023

I wrote about this process in my latest newsletter.

You can read it below.

Join 25k subscribers so you get more content like this in your inbox every week:https://t.co/vw3re5t1NU

— Kurtis Hanni (@KurtisHanni) June 24, 2023