Identifying, creating and visualizing your Key Performance Indicators (KPI) and metrics on a Dashboard.
Every business regardless of size has specific processes or metrics they should be tracking. Without measuring, companies are simply left in the dark. A KPI Dashboard is a great tool to visualize and communicate performance. But how to get started? What is a KPI? And how do I build a Dashboard?
This guide provides a comprehensive overview to KPI tracking and Dashboards, it contains valuable information and examples for both beginners and seasoned performance professionals.
- What is a KPI (Key Performance Indicator)
- What is the difference between KPIs and Metrics?
- How to build your Key Performance Indicators
- What is a KPI Dashboard
- Visualizing KPIs and Metrics on a dashboard
- The difference between a KPI Dashboard and a KPI Report
- What are the benefits of tracking KPIs?
- Choosing KPI Dashboard Software
- Types of Dashboards
- KPI Dashboard Examples
- Review, adjust and repeat
- Best Practice and practical tips
- More Dashboard References
What is a Key Performance Indicator (KPI)
No matter what type of business you're in you will have come across Key Performance Indicators (KPIs) at some point. Performance is almost used universally to evaluate either the success of an organisation, a project or a product. KPIs assist in not only monitoring the actual level of these activities, but can also be used to monitor performance against future goals – to put it simply a KPI helps you understand how you're performing against objectives.
A typical business may use KPIs at various performance management levels:
Looking at the overall achievements of an organisation. KPIs used at the strategic level would typically reflect the health of the business and track the performance towards future business goals such as growth.
Operational KPIs are normally connected to strategic KPIs, however will focus on the core activities or departments such as product development, marketing or internal projects. This information is then used to run day to day management decisions.
Individual KPIs are used to measure the level at which an employee is applying their skills to a task. They are also used to offer managers a tool for appraisal, including a means to which remuneration in departments such as sales can be managed.
More on the definition of Key Performance Indicators can be found here:
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', whereas the conversion rate to paid customers would be a 'KPI', not because it's made up of several metrics or measures but because the KPI is also 'actionable' - it drives practical steps to improve 'conversion' performance.
Do I need both? well yes. For example, if some of your KPIs fall off a cliff, let's say revenue then you will need the metrics or measures to identify if it's a normal seasonal variation or have leads suddenly dropped. These metrics help get to the root cause of the problem. They also show where things have outperformed expectations highlighting opportunities.
The difference between Metrics and KPIs: Richard Hatheway
How to build your Key Performance Indicators
Getting started with KPIs is a relatively straightforward process. First establish what the objective is for the KPI. What's the best measure (numeric, percentage). When this will be tracked also known as the frequency. Where the data will come from and what the target or goal will be. 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. Normally an owner would have responsibility for the outcome of the KPI and be directly involved with the actions needed to fulfil the objective.
More on developing Key Performance Indicators can be found here:
What is a KPI Dashboard?
In its simplest form a KPI Dashboard (also known as business dashboard) provides a graphical representation of Key Performance Indicators, Metrics and Measures used by an organisation to monitor performance. They provide companies, departments and managers a simple tool to track the progress of business objectives, and make data driven business decisions more efficiently.
A KPI dashboard includes monitoring and analysis of your data in one place, it allows you to track performance of individuals, departments, teams or the company. Dashboards allow you to easily see trends and be alerted to KPIs that have exceeded set thresholds.
Visualizing KPIs and Metrics
A KPI Dashboard should display all your KPIs and Metrics for a specific objective in a concise and visually appealing way. It is a tool to deliver 'at a glance' information to the right audience to aid in achieving 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 to get a limited amount of KPIs on to 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. The user shouldn't scroll to find information.
Show Trend over time: For a graph or data to be truly effective the information needs to establish some context and history. This will allow the audience to make decisions based on for example, seasonal trends that would normally 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 a flow that is understandable.
Avoid rainbow overload: Overpowering colour schemes can quickly render the dashboard illegible, stick to a simple colour pallet.
5 Simple Steps for creating KPI Dashboards
Follow these 5 simple steps to get your dashboard up and running as quickly as possible:
- Choose the KPIs and metrics to track.
- Select your data sources.
- Understand the intended audience.
- Build your dashboard with simple and meaningful graphs.
- 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 reporting here. KPI Reports can be as long or as short as necessary.
dashboards and reports: the difference
What are the benefits of tracking KPIs?
It's important 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 the road-map for future goals.
Research suggest that those companies who implement a performance strategy using KPIs benefit more in terms of growth, market share and staff retention than those companies 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.
- Providing a transparent framework for everyone in the organisation to realise the company objectives.
- Financial savings can be made by monitoring cost metrics against projects, this can then assist companies in accurate future costings.
Choosing KPI Dashboard Software
When selecting the right software there are three main questions to focus on:
What do you need to track with the software?
KPI Dashboards come in various flavours, 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 larger Business Intelligence (BI) solution. It is important to first 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, then a simple Dashboard would suffice. If you need lots of data integrations, thousands of metrics feeding your KPIs with hundreds of users then a more advanced BI solution that incorporates a dashboard would be more suitable.
What features do your business require from the 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 grow your performance tracking.
What's the budget?
Most KPI dashboard software is delivered online and cater for either annual or monthly subscription plans. Whilst this model can provide many cost savings in terms of hosting, hassle free maintenance and automatic feature updates the costs can mount up. Some provide all-inclusive pricing, whereas many dashboard suppliers charge additionally for extra users, data storage and the number of KPIs and dashboards. Spending the time researching features matrix's and cost structures can make a big difference to your annual performance budget.
Here are some notable providers of KPI Dashboard Software:
KPI Dashboards are designed to cover three main aspects of business performance tracking. An organisation may use one or all three types, and each is designed for a specific purpose:
Strategic dashboards are predominantly used for a view of the business in its entirety. They contain high level financial and process based KPIs. These dashboards are a great way to see the state of the business and its growth. Strategic decisions can be made from these dashboards which also highlight opportunity and weaknesses to key individuals.
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 lots of 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.
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 in the data to determine root cause. They likewise offer a way to compare performance and trends using historic 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.
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.
The KPIs and metrics used to feed this dashboard allow for the following graphs:
- Sales by Region: The overall revenue generated from all sales executives in a specific region.
- Cumulative sales: The cumulative revenue across the organisation displayed by month.
- Total Sales Revenue: The total generated revenue month by month.
- League Table: A performance league table detailing the top performing sales executives.
- # of Sales: The total number of individual sales by volume.
- Commission payable: Commission payable on generated sales revenue.
- Average Sales Value: The average revenue generated per unit sold or individual sale.
- Closing Ratio: The lead to sale ratio across all sales executives.
One of the largest areas of growth 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 sub categories such as SEO (Search Engine Optimization), Web Analytics, Content Marketing, Social Media and funnel/pipeline dashboards.
Here are a few of the marketing metrics and KPIs you may want to track:
- Marketing Spend: Marketing spend to date.
- Budget Remaining: Budget remaining from the marketing budget at this point.
- Leads Goal: The actual number of total leads across all channels against a target / goal.
- Website Visitors: Track the website visitor trend.
- ROI: Track the return on investment from marketing activities against revenue.
- Leads by channel: See the share of leads by channel.
- Social Reach: Visualize the growth of social media engagement from the previous year.
Efficiency drives manufacturing. Keeping processes and equipment performing at their optimum can make the difference between success and failure.
Typically manufacturing dashboards are used for both monitoring real time performance and analysing trends to pinpoint opportunities to improve processes.
- Units Produced: The overall total of units produced by the plant / factory / site.
- Product Rate: The number of units produced displayed by machine.
- Operators: The number of available operators on the line / machine.
- Units Lost: The total number of units lost in production.
- Causes: The reason for lost units displayed by the multiple causes.
- Units lost by machine: The number of units lost by machine.
- Plant productivity: Overall productivity of the plant / factory / site.
- Machine productivity: Productivity by individual line or machine.
SaaS (software as a service) companies operate in a fiercely competitive and global market, using an unconventional business model. The entire lifetime of a customer, from initial web search to acquisition, support and 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.
As a SaaS business is primarily subscription based; the return on investment to acquire a customer only comes after an extended period - with the risk that if the product or support service is not up to scratch then the customer will churn, and losing the initial investment to acquire them. A series of SaaS focused KPIs such as LTV (Life Time Value), CAC (Cost to Acquire Customers), ARPA (Average Revenue per account – Monthly) and Churn Rate provide Key indicators on business viability and sustainability.
With so much SaaS data generated most SaaS dashboards come in various subsets focusing on Acquisition, Product, Financial, Retention, Support and Marketing. Here are a few of the mostly commonly used KPIs and Metrics:
- LTV: The lifetime value of a customer, normally visualized by all accounts and accounts acquired this month.
- CAC: Cost to acquire customers through all marketing and sales expenses.
- ARPA: The Average Revenue generated Per account this period.
- Churn Rate: The churn rate of accounts or revenue during a specific period.
- New accounts: The number of new accounts this period.
- Net new revenue: New revenue minus the churned revenue this period.
- MRR: The current Monthly Recurring Revenue from subscriptions.
- Trial conversion rate: The number of trials that converted to customers this period.
Review, adjust 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, adjusting and repeating.
Communication is key, regular feedback from all areas of the business including KPI owners and users who interact with the dashboard is vital. Regular review points are a great way to keep your dashboards from falling behind.
A flexible dashboard, streamlined and working optimally 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.)
10 Best practice and practical tips
Here's some tips and best practice 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's dashboards focused on a specific audience. Strategic Dashboards visualizing growth and the organisations 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 for all these functions. Splitting them out will provide the audience with a single purpose to focus on.
Keep it simple
It goes without saying that less is more when it comes to Dashboard design. Aim for a single screen with no more than 9 views. Limit the number of colours and use consistent sized graphs. With each graph ask yourself, is it necessary to show all the historic data if the audience only needs Real-time data?
Use Vanity Metrics Sparingly
Actionable KPIs, such as the number of users completing a certain 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 useful but are prone to fluctuations, manipulation and don't tell the real story. Are these visitors truly 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 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 organisation wide set of Dashboards can be daunting prospect. Start small, even a single graph might provide a welcome insight - and let's face it without any measuring would remain undiscovered.
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