Whether KPI management is new to you, or you've been tracking, visualizing, and reporting on your KPIs for some time. There are always new processes, strategies, or even just a couple of tips that can help you maximize all your hard work.
This guide will help you understand everything you need to know about delivering genuinely engaging and visually appealing KPI reports.
In this article...
- What is a KPI Report?
- What are KPIs and Metrics?
- What is the difference between KPI Dashboards and KPI Reports?
- Different Report Types
- Building a KPI Report
- Distributing a KPI Report
- Practical Examples
- A Key Collaboration and Communication Tool
- 6 of the best Reporting best practices
- More Resources
What is a KPI Report?
A KPI Report is a business-performance tool that effectively visualizes Key Performance Indicators. Companies use these reports to track progress against targets and goals to improve performance. A KPI Report will typically contain a mixture of Charts, Graphs, and Tabular information.
What are they for?
Today, more than ever, organizations unwittingly produce enormous sums of data, from the number of visitors to a website, the number of products sold to the microdata produced in a manufacturing process. Some of this data is critical for a business to operate, others automatically collected, and some is just well, irrelevant.
Reports allow us to slice through this constant deluge of data. They summarise the information to make it more manageable and ultimately more usable.
A KPI Report is not only a more refined way to collate this data; it visualizes KPIs and Metrics that specifically target performance against objectives. They are the pinnacle of a structured performance monitoring or improvement process.
What are KPIs and Metrics?
To understand performance reporting it is essential to establish what a KPI is? And what makes them different from metrics?
What is a KPI?
A Key Performance Indicator (KPI) is a metric aligned to a 'Key' business objective. It tracks how effectively an organization is performing against that objective, including associated targets or goals.
Companies use KPIs to bring about performance improvements that drive growth.
For example, if your objective for the next six months is to increase leads by 50%, simple KPI criteria might look like this:
- Objective: To Increase leads by 50%.
- Measurement: A combined total leads KPI - calculated by taking all leads from all channels.
- Activities: Increasing the number of lead generation channels.
- Responsibility: Who will be responsible for making sure these activities are completed.
- Time frame for success: 6 months.
- Reviewed and communicated: At the End of each month.
KPIs help you keep focused on the overall business objective. They provide a structured and timely mechanism to see progress towards this objective - without the distraction of tracking too much or the wrong things.
And what about Metrics?
Metrics, on the other hand, are measures or numerical values. In the example above, the individual leads generated from different channels are individually classed as metrics. Metrics are not just limited to individual measures; they can be calculated from a series of Metrics.
Are Metrics important?
Metrics can be as equally important to an organization as KPIs. They offer a way to measure the health of business activities. For example, a metric that measures the defects in a production line can quickly alert the company when there is a problem. The same metric can also be used to analyze the performance of different production lines over time.
What is the difference between a KPI Dashboard and a KPI Report?
A Dashboard is primarily a visualization tool. They employ a blend of graphs and charts to provide real-time performance of KPIs and Metrics that can be viewed at-a-glance.
A KPI Report focuses on an analytical interpretation of the underlying measures, using trend graphs and tabular formats to support the decision-making process.
Reports and dashboards are often confused. They both share similar functions and advantages when it comes to visualizing KPIs. Understanding how each one is applied in a business environment will help distinguish the variances
The KPI Dashboard
Dashboards lend themselves to operational or day to day performance monitoring better than reports. By nature, they are designed to be understood at a glance. For example, a sales team may create a Sales Dashboard; this would be accessible by the entire team who would 'dip' in and out of the dashboard to see their performance (usually in a league table format) against others. These metrics could be the number of wins, calls, or leads.
The KPI Report
In contrast, the Report is usually where the analysis takes place. What makes up those KPI numbers? Why are there fluctuations in the data points? What caused this to happen? These questions are addressed by digging into the historical data.
Reports are also delivered at specific points for review, such as monthly sales meetings - where they would provide tabular data, offer historical context with trends, and interpretations of the metrics.
Which should I choose?
There is no hard and fast rule for this. Use whichever comes more naturally to you. Generally, we see Reports for analysis and Dashboards for day to day monitoring. However, both can be interactive, both offer almost the same functionality - and there is no reason you can't employ both in your performance monitoring. After all, measuring something is better than measuring nothing at all.
Different Report Types
As you've probably gathered by now, there are different types of KPI Reports, not just categorized by which business department but by their purpose.
The three types of KPI Reports are:
- Analytical based.
- Operational based.
- Strategic based.
Analytical Reports provide detail behind the KPIs. They can be used across all areas of the business. These reports are designed to answer questions arising from peaks and troughs in the KPI data. A static version of this report will typically show historical values, while interactive reports allow users to investigate the data by breaking down the individual metrics dynamically.
Operational Reports are focused predominantly on the day to day activities of an organization. They provide information to those involved in those activities to help make decisions or take action. For example, in a finance department, a report covering the number of debtors may be used to keep debtor levels low.
Strategic Reports aim to provide a clear and meaningful picture of a business's health and in which direction it is heading. These reports show the owners and shareholders how the company is performing against goals and objectives.
Building a KPI Report
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This section will focus on the five steps you will need to build a KPI Report.
Create an overview.
This can be in the form of a simple outline document that aims to set the criteria of the report - answering the following questions:
- What is the objective/goal of the Report?
- Who will the audience be?
- How will the Report be used? – is it Strategic or Operational? Static or Interactive?
- When will it be distributed?
Define the KPIs:
Once you've established the overall objective, you will have a good idea about the KPIs and Metrics you need. KPIs need to answer questions such as, how well are sales performing against their goals? Or is company growth on target?
Getting the data that fuels these KPIs can be the tricky part. Does it currently exist? Can it be automated? Is it reliable? are just some of the questions you'll need to answer.
- Present your KPIs: Choose appropriate charts/graphs and tabular data to present the information in the simplest possible way. Keep the charts relevant, focused, and in context. Present your KPIs in a logical order to keep the flow of information or the 'story' from getting disjointed.
- Build a prototype: Create the first draft, use dummy data (if none exists) and distribute this to colleges and stakeholders. Providing a single point of feedback, sometimes in the report itself, to help encourage consensus.
- Refine and release: Finalize the report and distribute. Just like any business process, reports need to be adjusted and evolved to keep them efficient. Build-in regular reporting review and maintenance periods; this will help avoid report 'bloat' and keep information relevant and up to date.
Distributing a KPI Report
A successful KPI Reporting strategy lies in not only the ability to create simple, informative, and insightful reports. Merely having an incredible report or dashboard means nothing without its audience. The distribution of reports to those who can use the information to take action is equally fundamental.
Project management is an excellent example of where reports distribution is a vital aspect of a business process. Project stakeholders, managers, and staff can see the effects (and consequences) of their actions. Also, they inform the rest of the organization as to the progress towards completing a project.
Distribution can either be through static reports, normally distributed via scheduled meetings. (Although, this type of distribution typically has outdated data, as collating and distribution are done manually.) And distribution can also be achieved using live reports.
Live reports can be either in a dashboard format showing trends and graphs or a traditional report layout, where tables and used to display numeric data.
These reports are not distributed in the traditional sense but rather exist through links to web pages or apps. They can be accessed at any time and from any location.
Using live reports provides the audience with data they can rely on when making decisions. It also reduces the burden of collating the data, removing errors, and manually distributing.
The benchmark for a great KPI strategy is the combination of collection, visualization, and distribution.
We've put together some practical examples for you to take a look through.
The Operational Sales Reports
Good sales leadership understands that reporting is critical for determining if you're on course to hit monthly or weekly targets. Which of your sales teams are producing the most wins? And which are the big closers? See sales efficiency by tracking closing ratios of leads to sales. Presenting real-time sales information in league tables shows how each member is performing.
Strategic Organizational Reports
Organizations often make annual objectives for the business. For example, increase growth by 20%, reduce our overheads, or increase market share. Having a report that shows how the company is performing against the objectives galvanizes the whole company to direct its efforts towards those goals.
Manufacturing Operational Reports
Accurate and timely manufacturing reports are vital in maximizing productivity. Managers are provided the information they need to make decisions that keep production lines running, such as machine productivity, the units produced or even lost, and the cause.
Marketing Strategic Reports
A strategically focused marketing report can determine whether all your hard work is paying off. Are we growing market share? Are we reducing marketing spend and increasing customers? Are we increasing the number of leads, and what is our ROI? Or whether a change or shift in strategy is required.
These reports are also an excellent way to identify potential opportunities. Such as a hike in conversion rates for a specific lead generation channel that maybe worth allocating more budget.
A Key collaboration and Communication tool
Good organizational reporting and communication are essential to business success. Building an environment where everyone is working towards common objectives and goals is crucial if you want to succeed.
As any business needs good, motivated leaders with good communication skills, they equally need quality, reliable reporting – both internal and external.
KPI Reports offer a consistent framework used to communicate the business's objectives and how they are being met. Primarily, sharing factual data using simple graphical elements has a couple of advantages. Firstly, it provides a single transparent view of performance, devoid of opinions or interpretations – great to build trust from a workforce. Secondly, everyone connected to the outcome of an objective can see how they contribute to its success. Employing a feedback mechanism in reports also has the benefit of collecting ideas and interpretations.
Communicating performance is not limited to internal reporting; it is also an excellent way to keep shareholders and even clients in the loop regarding your value and performance. Keeping a single, factual perspective of the relationship, such as a shared KPI Report with your clients, will reduce those all too common frictions.
6 of the best Reporting best practices
Reporting brings about change. The very nature of reports challenges en-grained business processes and drive performance. But how to avoid getting tied up in the complexity? How to generate meaningful insights? And how to get the most out of your reporting? Here are six best practice tips to avoid pitfalls.
- Set clear objectives. Create a clear brief for the report and stick to it. If it's a focused strategic report, keep it that way, don't be tempted to 'bolt-on' other metrics or KPIs just because it's convenient, build a separate report instead.
- Keep it simple, really. Don't fall into the trap of having the data dictate what to measure. There's an almost infinite number of KPIs or Metrics that could be tracked. The secret is to focus on what is 'Key'. Restrict your initial report to a small number of KPIs and measure only what matters.
- Embrace technology and the cloud. It's time to ditch the spreadsheet and take your reporting to the next level. Cloud-based solutions designed for KPI Reporting are now more accessible than ever. They are a highly secure and cost-effective way to build and distribute your reports.
- Ensure data consistency. To demonstrate integrity in your reports, data accuracy and data is crucial. Nothing will ensure the short shelf life of a report than one that is misleading and relying on data that is out of date. Spend time testing various data-sets for their accuracy before committing to them.
- Coordinate with colleges. Creating reports in isolation to the people who will use them is a recipe for disaster. Invite colleagues whose very responsibilities will be determined by the report to provide input on what needs measuring, when and how this will improve their processes.
- Review regularly. Businesses change, as do objectives and goals. What's important to track today might be obsolete tomorrow. Keeping regular maintenance and review points in the diary will help to keep your reports accurate, relevant, and beneficial to your business.
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Originally Published on 07 November 2017, this post was updated to include an additional section for distributing reports. Some outdated reference links were removed, and more relevant ones have been added.