A comprehensive guide to KPI Dashboards

What is a KPI Dashboard?

A KPI Dashboard is a graphical representation of Key Performance Indicators, Metrics, and Measures used to monitor performance. Companies, departments, and managers use this KPI management tool to track the progress of business objectives via digital graphs and charts, enabling businesses to make data-driven business decisions more efficiently.

A KPI dashboard provides management a platform for monitoring and analysis. It allows companies to track the performance of individuals, departments, teams, or the entire organization. Dashboards enable management to see trends quickly and can be alerted to KPIs that have exceeded set thresholds.

What is a Key Performance Indicator (KPI)?

KPIs come in three types: strategic, operational, and Individual. Although they are often tracked in tandem, they have distinct differences.

1. Strategic

   KPIs used at the strategic level would typically reflect the business's health and track the performance of future business goals, such as growth. These KPIs aren't generally measured on a daily basis as they aim to provide an accurate representation of progress over time.

2. Operational

   Operational KPIs are typically connected to strategic KPIs; however, they focus on core activities or departments like product development, marketing, or internal projects. This information is then used to run day-to-day management decisions.

3. Individual

   Individual KPIs are used to measure how an employee is applying their skills to a task. They are also used to provide managers a tool for appraisal, including how remuneration in departments such as sales can be managed.

More Key Performance Indicator definitions can be found here:

• Wikipedia

  https://en.wikipedia.org/wiki/Performance_indicator

• Investopedia

  http://www.investopedia.com/terms/k/kpi.asp

• Bernard Marr

  The Difference Between Strategic And Operational KPIs

What is the difference between a KPI and a Metric?

KPIs and Metrics are not created equal. Well, sort of. A metric is defined by similar values to a KPI, such as it’s a quantifiable measure against actual performance.

However, the ‘Key’ is the real difference. You may, for instance, have a series of products or services that you’re selling across the web; the data captured, such as ‘signups,’ could be referred to as a ‘metric.’

In contrast, the conversion rate to paid customers would be a ‘KPI,’ not because it consists of several metrics, but because - it drives actions or practical steps to improve those ‘conversion’ rates.

Richard Hatheway provides an in-depth read on the subtle and not-so-subtle differences between Metrics and KPIs.

How to build your Key Performance Indicators

Creating KPIs is a relatively straightforward process. Establishing the objective is the first step. Then identify the best measure to use and when this will be tracked( also known as the frequency).

This basic structure is then supplemented with targets or goals and where the data will come from.

For example, if you were looking to track incoming leads from social media, your setup may look like this:

• Objective: Increase social Media Leads.
• Measure: Number of Leads generated and tracked from all social media sources.
• Frequency: Monthly (Daily, Weekly, Monthly, Quarterly or Annually).
• Data Points: How and where will this come from (data sources, manual entry).
• Target or Goal: Goal 50% increase in 12 months.

Once you have the detail, it’s also good practice to establish an owner of the KPI. Usually, an owner would have responsibility for the outcome of the KPI and be directly involved with the actions needed to fulfill the objective.

More on developing Key Performance Indicators can be found in this Business Chron article.

Creating KPI Graphs and Charts on a Dashboard

A KPI Dashboard should display all your KPIs and Metrics for a specific objective in a concise and visually helpful way. It is a tool to deliver information at a glance to the right audience to achieve goals and objectives.

But it’s easy to get carried away when designing dashboards. With so much data available from an ever-expanding array of sources - how do you avoid counterproductive dashboards and overpowering your audience with information overload?

Well, here’s a few key points to keep in mind:

• Keep it simple: Aim for a limited number of KPIs on a single screen for a single objective, project, or department. If data is hidden or there is ‘graph’ overload, the user can miss vital information, trends, and opportunities.
• Show Trend over time: For a graph or data to be truly useful, the information needs to establish some context and history. This will allow the audience to make decisions based on seasonal trends that may have been missed.
• Tell a story: As with any graphical interpretation, it’s best understood if it’s in the context of a story. Metrics showing the completion stages of a signup process can chart an understandable flow.
• Avoid rainbow overload: Overpowering color schemes can quickly render the dashboard illegible. Stick to a simple color pallet.

5 Simple Steps for Creating KPI Dashboards

Follow these five simple steps to get your dashboard up and running as quickly as possible:

1. Choose the KPIs and metrics to track.
2. Select your data sources.
3. Understand the intended audience.
4. Build your dashboard with meaningful and straightforward graphs.
5. Share the dashboard.

The difference between a KPI Dashboard and a KPI Report

There is a general belief that if a dashboard covers more than a single web page (without scrolling), it is considered a report. Although having all your graphs in a single view is perceived as best practice, there are occasions that out-of-sight views can be beneficial. For example, if the owner/creator of the dashboard is the only audience – they may use ‘longer’ dashboards with graphs’ out of sight’ as they understand where and what information is present.

A KPI Report, in contrast, serves to provide detailed information in many formats, mainly (although not limited to) tabular data, lists, graphs, tables, notes, actions, and feedback. You can find out more about KPI Reports and KPI reporting here. KPI Reports can be as long or as short as necessary.

Chartio also has a great article delving into the differences between dashboards and reports in more detail.

What are the benefits of tracking KPIs on a Dashboard?

It’s vital for the health of an organization to know where they are, where they have been and where they want to be. Performance tracking provides a framework to monitor the journey and plan future goals.

Research suggests that those companies who implement a performance strategy using KPIs benefit more in terms of growth, market share, and staff retention than those who do not. The KPI institute study noted that 68% of respondents indicated a positive upturn in business performance. Tracking KPIs is an integral part of this process and offers a multitude of benefits across the company, such as:

• Highlighting the most appropriate data for managers and individuals to make informed management decisions.
• Offering an early warning system for potential problems, with the analytical tools to quickly diagnose the causes and take corrective action.
• Can highlight potential business opportunities, enabling companies to take advantage quicker than competitors.
• Provide a transparent framework for everyone to realize the company objectives.
• Financial savings can be made by monitoring cost metrics against projects; this can assist companies in accurate future costings.

Read More on the benefits of tracking KPIs.

Choosing KPI Dashboard Software

When selecting the right software, there are three main questions to focus on:

1. What do you need to track with the software?

   KPI Dashboards come in various flavors, from simple free dashboards that allow you to track a limited number of KPIs, Dashboards that follow strict methodologies such as the ‘Balanced Scorecard’ or ones that come as part of a more extensive Business Intelligence (BI) solution.

   It’s essential to understand what you need to track and how you will use the software. For example, if you are looking to track a limited number of high-level KPIs, a simple Dashboard would suffice. If you need lots of data integrations feeding thousands of metrics with hundreds of users, a more advanced BI solution that incorporates a dashboard would be more suitable.

2. What features does your business require from the KPI Dashboard?

   Feature comparisons can be a big challenge. Most tools have a similar set of basic features such as integrations, full-screen modes, and all the graphs you could ever need. However, features such as additional analytics tools, KPI reports, and optional manual data entry will prove beneficial as you expand your performance tracking.

   We’ve put together the 7-Golden Rules for Creating-KPI-Dashboards that are worth bearing in mind when selecting a supplier.

3. What’s the budget?

   Most KPI dashboard software is delivered online and caters to annual and monthly subscription plans. While this model can provide many cost savings in hosting, hassle-free maintenance, and automatic feature updates, the costs can mount up.

   Some provide all-inclusive pricing, whereas many dashboard suppliers also charge extra users, data storage, and the number of KPIs and dashboards.

   Spending time researching feature matrices and cost structures can make a big difference to your annual performance budget.

   Here are some notable providers of KPI Dashboard Software:

   • Klipfolio
   • Geckoboard
   • SimpleKPI
   • Tableau
   • Yellowfin

Different Dashboard Types

KPI Dashboards cover three main aspects of business performance tracking. An organization may use one or all three types, and each is aimed at a specific purpose:

1. Strategic dashboards are predominantly used to view the business in its entirety. They contain high-level financial and process-based KPIs. These dashboards are a great way to see the company’s current state and growth. Strategic decisions are made using these dashboards, highlighting opportunities and weaknesses to key individuals.
2. Operational dashboards provide real-time data to managers and employees on a regular basis - vital for making insightful decisions on day-to-day operations. They interpret large amounts of information from many sources into a single understandable visual. Industries such as Construction and Manufacturing, and departments such as Sales and Marketing make these dashboards an indispensable part of their business process.
3. Analytical dashboards allow for further investigation of any unexpected anomalies in the data. Sometimes referred to as KPI Reports, they are a tool to investigate any fluctuations to determine the root cause. They likewise offer a way to compare performance and trends using historical data.

KPI Dashboard Examples

Different industries and departments utilize dashboards in very specific ways. From fast-paced sales environments to the production-orientated manufacturing industry. Here is a selection of focused dashboards that are used to highlight performance across a range of businesses.

You can view eight inspirational KPI Dashboards for performance tracking in this blog post.

Sales Dashboard

Sales leaders need to monitor sales executives and revenue data to hit targets. In the fast-paced world of sales, performance is closely tracked. An effective sales dashboard provides ’at a glance’ sales information to efficiently manage a sales team.

See a Sales Dashboard Example.

Marketing Dashboard

One of the most significant growth areas in dashboard adoption has been in marketing. The sheer volume of data increasingly generated from digital channels lends itself to being visualized via dashboards. Due to this rapid expansion, marketing dashboards now cover many subcategories such as SEO (Search Engine Optimization), Web Analytics, Content Marketing, Social Media, and funnel/pipeline dashboards.

See a Marketing Dashboard Example

Manufacturing Dashboard

Efficiency drives manufacturing. Keeping processes and equipment performing at their optimum can differentiate between success and failure.

Typically manufacturing dashboards are used for both real-time monitoring of performance and analyzing trends. Both help to pinpoint opportunities to improve processes.

See a Manufacturing Dashboard example

SAAS Dashboard

SaaS (software as a service) companies operate in a fiercely competitive global market, using an unconventional business model. The entire lifetime of a customer, from the initial web search to the acquisition, support, and customer churn is tracked meticulously. SaaS dashboards are an indispensable tool in visualizing all this data so that informed decisions on marketing, product development, support, and investment can be made.

See a SaaS Dashboard example

Security Firm Dashboards

To remain competitive, Security firms benefit from using KPIs Dashboards across vital areas of their operations. Worker safety, incident management, and compliance are amongst the most influential areas of performance tracking.

These dashboards provide real-time information to managers, supervisors, and security personnel. They can then make an informed decision on staffing levels, health and safety, and infrastructure.

See three Security Firm Dashboard Examples

Review, revise and repeat

As business environments change over time, organizations need to adapt and adjust accordingly - and KPI Dashboards are no different. It’s a continuous cycle of reviewing, revising, and repeating.

Communication is key; regular feedback from all business areas, including KPI owners and users who interact with the dashboard, is vital. Frequent review points are a great way to keep your dashboards from falling behind.

A flexible dashboard, streamlined and working at its optimum, provides advantages such as:

• More efficient processes.
• Even quicker management and strategic decisions can be made.
• Highlighting underlying issues before they become major problems.
• Removes dashboard bloat – (the common affliction of KPI dashboards to become a monitoring mechanism for just about anything.)

Finally, some practical Dashboard tips

Here are some tips and best practices that will help you make the most of your dashboards:

KPIs need owners

When KPIs have owners, you get good performance. Without owners, it’s unclear who should interpret the data, communicate the results and initiate any actions that are needed.

Divide your dashboards by function

Group your KPIs and create individual dashboards focused on a specific audience. Strategic Dashboards visualize growth and the organization’s goals. Operational Dashboards for day-to-day operations such as those for Sales teams. Analytics dashboards for investigation and trend analysis. Avoid trying to create a single dashboard to cater to all these functions. Splitting them out will provide the audience with a single purpose to focus on.

Keep it simple

Less is more when it comes to Dashboard design. Aim for a single screen with no more than nine views. Limit the number of colors and use consistently sized graphs. With each graph, ask yourself, is it necessary to show all the historical data if the audience only needs Real-time data?

Use Vanity Metrics Sparingly

Actionable KPIs, such as the number of users completing a particular stage of a signup process, provide information for you to make decisions that can improve performance. Vanity metrics, on the other hand, like the number of website visitors, are helpful but are prone to fluctuations, manipulation and don’t tell the real story. Are these visitors genuinely interested in purchasing your product or service?

Avoid gimmicky widgets

With so many dashboard providers competing for a unique selling proposition, new and unique widgets appear almost daily. For example, the ‘latest time in London,’ an image rotator, or a ‘latest tweet’ provide little to no real actionable information – they just add to the clutter.

Timely Reviews and adjustments win

As with any business tool, regular reviews and maintenance are needed to keep them performing at their best. Having KPI owners contribute to regular ‘optimization’ reviews will reduce information overload and further improve performance.

Set your dashboards free

There is no point in creating beautiful dashboards when they are limited to a single person or hidden behind numerous logins. The information contained needs to be communicated to all shareholders involved in the process. Consider sharing dashboards freely, both internally and externally, and provide a feedback mechanism.

Combine metrics to create actionable KPIs

Consolidating metrics into a single actionable KPI will provide direction for practical actions. For example, dividing the number of signups to a service by the number who completed a specific stage will give you the information to help change areas of the process that are under-performing.

Clean and accurate data

Rubbish in rubbish out. If data is inaccurate, then it does not matter how beautifully designed your dashboard is; it just won’t have the right fuel to perform. As much as is reasonably possible, try to test data for reliability and accuracy.

Measuring something is better than measuring nothing at all

Implementing an organization-wide set of Dashboards can be a daunting prospect. Start small; even a single graph might provide a welcome insight - and let’s face it, without any measuring, would remain undiscovered.

More References and Resources...

Explaining Key Performance Indicators

http://smallbusiness.chron.com/explaining-key-performance-indicators-913.html

KPI Institute

https://kpiinstitute.org

Stacey Barr

https://www.staceybarr.com/

Also see...

What are Key Performance Indicators?

https://www.simplekpi.com/Resources/Key-Performance-Indicators

KPI Library with over 200 KPIs and Templates to use

https://www.simplekpi.com/KPI-Library

From the blog...

What are Metrics and Measures

https://www.simplekpi.com/Blog/metrics-and-meassures-a-definitive-guide

Choosing the right KPIs for your business

https://www.simplekpi.com/Blog/Choosing-the-right-key-performance-indicators-KPI-for-your-business

5 Examples of KPI bad practice

https://www.simplekpi.com/Blog/5-Examples-of-KPI-bad-practise

Originally Published in March 2017, this post was updated in January 2022, and has been updated once more information on strategic KPIs. Some outdated reference links were removed, and more relevant ones have been added.