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How to Define KPIs for Successful Business

Intelligence
Posted by Eran Levy on February 18, 2016 at 2:30am
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Realizing that you can only improve what you measure is a good way to think about KPIs. Often companies
want to improve different aspects of their business all at once, but cant put a finger on what will measure their
progress towards overarching company goals. Does it come down to comparing the growth of last year to this
year? Or, is it just about the cost of acquiring new customers?

If youre nervously wondering now, wait, what is my cost per deal, dont sweat it. Another growing pain of
deciding on KPIs is discovering that there is a lot of missing information.

The good news is that in the business intelligence world, measuring performance can be especially precise,
quick and easy. Yet, the first hurdle every data analyst faces is the initial struggle to choose and agree on
company KPIs. If you are about to embark on a BI project, heres a useful guide on how to decide what it is that
you want to measure:
Step 1: Isolate Pain Points, Identify Core Business Goals
A lot of companies start by trying to quantify their current performance. But again, as a data analyst the beauty
of your job and the power of business intelligence is that you can drill into an endless amount of very detailed
metrics. From clicks, site traffic and conversion rates, to service call satisfaction and renewals, the list goes on.
So ask yourself: What makes the company better at what they do?

You can approach this question by focusing on stage growth, where a startup would focus most on metrics that
validate business models, whereas an enterprise company would focus on metrics like customer lifetime value.
Or, you can examine this question by industry: a services company (consultancies) would focus more on quality
of services rendered, whereas a company that develops products would focus on product usage.

Ready to dive in? Start by going from top-down through each department, and isolate the pain points and health
factors for every department. Here are some examples of KPI metrics you may want to look at:

Product

Product related tickets

Customer satisfaction
Usage statistics (SaaS products)

Marketing

Brand awareness
Conversion rate
Site traffic
Social shares

R&D

Number of bugs
Length of development cycle
App usage

Step 2: Break It Down to A Few KPIs

Once you choose a few important KPIs, then try to break it down even further. Remember, while theres no
magic number, less is almost always more when it comes to KPIs. Thats because if you track too many KPIs,
as a data analyst you may start to lose your audience and the focus of the common business user. Choosing the
top 7-10 KPIs is a great number to aim for and you can do that by breaking down your core business goals into
a much more specific metric.

For example, in Sisenses Professional Services Team, success is measured by our annual contract value (ACV),
the number of opportunities that have been created, and by comparing renewals from this year to last year. Hila
Kantor, the BI Consulting Team Leader at Sisense let us in on her thought-process when choosing KPIs:

Managing a BI consultant group has some unique pain points. Initially I thought, how do I
prevent tickets from being opened? Then that pointed to ensuring high quality work from the
solutions architect. I discovered the best KPIs to measure is how many tickets were created
following the a specific solution project, and measuring if the solution easily withstands a version
upgrade.

Remember, the point of a KPI is to gain focus and align goals for measurable improvement. Spend more time
choosing the KPIs than simply throwing too many into the mix, which will just push the question of focus
further down the road (and require more work!).

Step 3: Carefully Assess Your Data

After you have your main 7-10 elements you can start digging into the data and start some data modeling. A
good question to ask at this point is: How does the business currently make decisions? Counterintuitively, in
order to answer that question you may want to look at where the company is currently not making its decisions
based on data, or not collecting the right data.

This is where you get to flex your muscles as a data hero or a good analyst! Take every KPI and present it as a
business question. Then break the business questions into facts, dimensions, filters and order (example).

Not every business questions contains all of these elements but there will always be a fact because you have to
measure something. Youll need to answer the following before moving on:

What are the data sources

Predict the complexity of your data model
Tools to prepare, manage and analyze data (BI solution)

Do this by breaking each KPI into its data components, asking questions like: what do I need to count, what do I
need to aggregate, which filters need to apply? For each of these questions you have to know which the data
sources are being used and where the tables coming from.

Consider that data will often come from multiple, disparate data sources. For example, for information on a
marketing or sales pipeline, youll probably need Google Analytics/Adwords data combined your CRM data. As
a data analyst, its important to recognize that the most powerful KPIs often comes from a combination of
multiple data sources. Make sure you are using the right tools, such as a BI tool that has built-in data connectors,
to prepare and join data accurately easily.

Step 4: Represent KPIs in an Accurate and Effective Fashion

Congrats! Youve connected your KPI data to your business. Now youll need to find a way to represent the
metrics in the most effective way. Check out some of these different BI dashboard examples for some
inspiration.

One tip to keep mind is that the goal of your dashboard is to put everyone on the same page. Still, users will
each will have their own questions and areas where they want to explore, which is why building an interactive,
highly visual BI dashboards is important. Your BI solution should offer interactive dashboards that allow its
users to perform basic analytical tasks, such as filtering the views, drilling down, and examining underlying data
all with little training.

Closing
As a data analyst you should always look for what other insights you can achieve with the data that the business
never thought of asking. People are often entrenched in their own processes and as an analyst you offer an
outsiders perspective of sorts, since you only see the data, while others are clouded by their day-to-day
business tasks. Dont be afraid to ask the hard questions. Start with the most basic and youll be surprised how
big companies dont know the answersand youll be a data hero just for asking.

This post was originally published by Elana Roth here and has been republished with permission.

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