I’m not often pleased with the establishment of KPI’s… I consistenly read “How to find KPI’s” but I miss articles about “How to define KPI’s” I feel there is a huge difference between those words.
Ok, I will be honest… I’m a party pooper ;) as Jaques Warren would say… let’s go straight to the point. I’ve found pretty good methodologies to built KPI’s.
1st Methodology: STANDARDIZED
- Understand Business Objectives
- Translate Business Objectives in to measurable goals
- Select KPI for each goal
“Your business objective could be increase sales”
“Your goal could be something like increase sales by 5% in the next three months by increasing the average order value from X to 2X”
I think the most important thing is not jumping in too fast to the KPI’S, the best thing is to understand Bussines objectives. I use a CANVAS to make a big picture of the model business (I think is a good idea beacause you have the core elements and also Revenue and costs ,what do you think?).
Sometimes I find tricky the 1st Methodology because goals are used to refer many stages of the process.
In the sentence above the goal is a combination of = Target, time, “the metric” .
And KPI= metric + Objectives ¡!!! :s
2nd Methodology: the Nokia way by Vincent Kermorgant & IIkka Manninen
I founded in the blog of Gemma Muñoz and then I have the luck to take part in a Master class of René Dechamps.
- Understand Business Objectives
- Translate Business Objectives in to measurable goals à MACRO & MICRO
- MACRO (composite KPI’S for essential goals)
- Granulate the MICRO in to the actions the user shouls accomplish & and built “operationals KPI’s” based on those concrete actions
KPI’s are correlated with massive business impacto so … I always think in Revenue = PxQ and try to aply that to Adquisition, Behavour, Conversion, Retention
-Business Objectives
-Translation to web objectives
Example:
1 MACRO OBJECTIVE (we could create composite KPI’s)
MICRO 1.1, -KPI (Indutry standard) + Operational KPI based in Concret actions
- Concret action 1.1
- Concret action 1.1
MICRO 1.2, -KPI (Industry standard) + Operational KPI based in
- Concret action1.2
- Concret action 1.2
This Methodology is more developped in the article of Nokia! I find very interesting this topic!
So I hope somebody could give me feedback! :)