How to Measure KPIs the Easy Way (2023 Update)
In this article, you will learn how to measure KPIs (Key Performance Indicators) for your business using a 7-step framework. We will apply this framework to a fictional retail company called Sunflower Retail
KPI Measures Framework
1. Identify the KPIs
Determine which KPIs are most relevant to your business or project and what KPIs you want to measure. Make sure they are specific, measurable, and aligned with your goals.
2. Establish targets
Set targets or benchmarks for each KPI, such as a specific percentage increase in revenue or a certain number of sales.
3. Gather data
Collect data over a set period of time, such as a month, quarter, or year, depending on the KPI.
4. Analyze the Data
Use tools such as Lido.app to analyze the data in a dashboard and compare it to your established targets. The drag and drop dashboard builder makes data visualization, statistical analysis easy and helps you identify trends and patterns in the data.
5. Identify Areas of Improvement
Based on the analysis, identify areas where you need to improve performance. This could include optimizing processes, changing marketing strategies, or addressing areas of low performance.
6. Implement changes:
Take action to implement changes to improve KPI performance, whether it's through training and development, process improvements, or other means.
7. Monitor progress
Continuously measure KPI performance to ensure that progress is being made towards achieving your goals. Adjust targets or strategies as needed, and track progress over time to see the impact of the changes you have implemented.
Example
Sunflower Retail is a retail business that wants to learn how to measure KPIs in its organization to better understand its performance, identify areas for improvement, and make data-driven decisions to increase revenue and profitability.
1. Identify the KPIs
To start, Sunflower Retail needs to identify the KPIs that are most relevant to its business goals. Some potential KPIs for a retail business could include:
- Sales revenue
- Average order value
- Conversion rate
- Customer retention rate
- Inventory turnover
- Gross margin
- Website traffic
- Social media engagement
2. Establish Targets
Once the KPIs are identified, Sunflower Retail needs to establish targets or benchmarks for each one. For example, the company may set a target to increase sales revenue by 10% in the next quarter, increase the average order value by 5%, and improve the conversion rate by 2%.
3. Gather Data
To measure the KPIs, Sunflower Retail needs to collect data over a set period of time. For example, the company may collect sales data for the past quarter, website traffic data for the past month, and social media engagement data for the past week.
4. Analyze the Data
To analyze the data, Sunflower Retail can use tools such as Lido.app to create a dashboard and compare the data to the established targets. Lido.app's drag-and-drop dashboard builder makes it easy to visualize the data and identify trends and patterns.
For example, the company may notice that website traffic has increased over the past month but the conversion rate has remained the same, indicating a potential area for improvement.
5. Identify Areas of Improvement
Based on the analysis, Sunflower Retail can identify areas where it needs to improve performance. For example, the company may need to optimize its website to improve the conversion rate or launch a new marketing campaign to increase customer retention.
6. Implement Changes
Once the areas for improvement have been identified, Sunflower Retail can take action to implement changes. For example, the company may invest in website redesign or offer promotions to increase customer retention.
7. Monitor Progress
Finally, Sunflower Retail needs to continuously measure KPI performance to ensure that progress is being made towards achieving the established targets.
The company may need to adjust its targets or strategies as needed and track progress over time to see the impact of the changes that have been implemented. Lido.app's dashboard builder can be used to monitor KPIs over time and track progress towards goals.
Conclusion
In conclusion, measuring KPIs is essential for understanding business performance, identifying areas for improvement, and making data-driven decisions to achieve goals. Companies can leverage Lido’s KPI dashboard to easily measure KPIs across their organization.
