Realizing how important Business Intelligence (BI) is for your company is only the first step towards maximizing your data. Once you have decided to implement a BI solution, you need to find out what are the most relevant key performance indicators (KPIs) for your organization. One of the biggest mistakes companies make is trying to improve many different aspects all at once, generating chaos. Instead of doing this, what you should do is focus on putting your finger on what will help you progress towards achieving your goals.
Establishing clear KPIs will help you get more accurate business insights, so make sure you choose and analyze the right ones. Will a detailed comparison between last year and this year take you closer to your objectives? Is understanding the cost of acquiring new clients what you need to make smarter decisions?
It is true that a performing Business Intelligence solution can work wonders for your company regardless its dimensions and field of activity, provided you set appropriate KPIs to track.
Defining Your KPIs
If you want to potentiate your team’s efforts and build sustainable business objectives, you must use your BI tool wisely. In order to achieve the results you want, you should analyze the right things and measure the right indicators, which means identifying relevant KPIs is crucial. Once you do this, the road towards a decision-making process based entirely on data will become smoother. Your employees will be able to concentrate their efforts on achieving meaningful goals, instead of chasing after vague objectives and struggling with vanity metrics.
Taking into consideration the fact that every industry is unique and each company is seeking different outcomes, you need a brief evaluation before establishing the most relevant KPIs. These will vary depending on what the end user of the BI tool is trying to figure out. Our general advice is to define what success means for your company or department and find out what directly correlates with your goals.
Relevant KPI examples, according to field of activity
Companies operating in the marketing sector have to deal with vast amounts of data on a daily basis. So, whether you work in a dedicated agency or you are part of the in-house department of a company, as a marketer the information you have to analyze is extremely diversified.
Fortunately, Business Intelligence will come to the rescue. From ad reach figures to customer demographics, conversion rates, and ROI – all of these can become relevant KPIs to track with your BI tool, as long as they are related to your objectives. For example, if you want to evaluate brand awareness, then maybe you should take a closer look at the number of subscribers and followers, posts and ad impressions, click-through rates, page visits, and so on. To find out cost-related insights, check out the conversion rate for each channel or the average amount each customer spends.
The financial department is all about figures and percentages, and being successful means knowing how to leverage this numerical information. You can easily achieve this with a suitable Business Intelligence tool and the right KPIs. For instance, if your goal is to analyze revenue variation in a certain number of months, then there is no point in focusing on the number of likes your Facebook page has. Instead, check for client retention, number of new customers or purchases and sales representatives’ activity (such as the number of closed deals).
All of these will indicate where the variations come from and help you devise strategies for improvement. Other relevant KIPs related to finances include the operating cash flow, inventory turnover, gross profit margin and even – yes, why not? – marketing ROI.
Retailers are often overwhelmed by the amount of information they must gather and analyze. It is difficult enough to keep track of everything from customers and sales data to supply chain information, without having to also know how valuable each detail is. When it comes to KPIs, establishing them depends on what you want your business to look like in the future. If you are thinking about expansion, for example, then you should check the ratio between new and existing customers, as well as which locations are generating most sales. Speaking of which, revenue is another crucial KPI you need to keep track of. It will help you see if your company is performing according to the investments made and allow you to act in case you notice you are overspending.
Building performance takes more than just step-by-step planning and diligent implementation. It also means constantly analyzing, understanding, and using data to achieve business goals. Fortunately, Business Intelligence tools enable decision makers in organizations all around the world to measure performance in an exact, fast, and easy way.
However, if your company is committed to using BI and making data-driven decisions, then setting the right KPIs is essential. A clear overview with these will help every employee understand their purpose and focus their efforts towards a concrete outcome, whether that is brand visibility or increased sales.