Are you forever benchmarking your company’s results against your competitor’s, others in your industry, and virtually everyone else? It’s common practice to see how you stack up against the competition, but you may spin your wheels. With the variety of variables, data sets, and contexts between organizations, you’re comparing your apples to their oranges. What you really need is to focus on your own metrics or key performance indicators (KPIs) first.
What are your KPIs?
Most companies know their KPIs intimately. First, you ask a question (e.g., on a scale of 1 to 10, how likely are you to…). Then you set a goal, collect data, and measure that data against your goal. And you keep retesting for consistency.
Finally, apply this methodology to how your business interacts with and engages your customers. To measure and manage your Customer Experience (CX) KPIs, for example, you might focus on improving your Net Promoter Score (NPS). Then you benchmark your current NPS against your goal.
Why do your metrics matter more than your competitors’?
Your KPIs help you measure your ability to set and achieve your goals and initiatives. Customer satisfaction, employee performance, and audience engagement metrics allow you to transform the data you collect into ways to improve. As an example, surveys and other data collection methods help you to drive a better CX. And since most companies are inundated with data today, it’s easy to capture and interpret this golden intel.
More importantly, carefully measuring your metrics is critical to improving and growing your business. Bernard Marr, a leading expert in KPIs and metrics, states:
“Used along-side effective strategic planning, the right KPIs and business metrics act as essential navigation tools that help organisations understand how well they are doing in delivering on their strategic goals. If managers don’t want to fly blind, then they require relevant and meaningful business measures to inform their decision-making.”
Peter Drucker said it best, perhaps:
“You can’t improve what you don’t measure.”
Experts such as Drucker and Marr believe it’s best to capture data and measure your own metrics instead of benchmarking arbitrary numbers against competitors. If you don’t, how will you know if you’re succeeding?
How to set KPIs and business metrics
Everyone has their own take on how best to set your goals, such as the SMART and SMARTER methods. However, the following “Six A’s” of KPI best practices will help you set up a system that works best for you.
- Aligned: The KPI aligns with the activities of its specific targets. As long as business continues as normal, collecting the data should be effortless.
- Attainable: The indicator is easily attainable so it can be measured. If data doesn’t start regularly flowing once the trial has begun, there may be something amiss.
- Acute: The KPI makes others well-informed, or acute, of the goal and its measurement. If the purpose of the KPI is at all unclear, it may be a sign to try a different indicator.
- Accurate: The data pulled from a KPI will be used to accomplish future objectives; it must be reliable and accurate so that it does not lead to any misinterpretation.
- Actionable: KPI results produce data that influences a plan of action. KPIs should fuel new processes – if there is no follow-up, then the metric loses its value.
- Alive: The data can be leveraged throughout the company’s lifespan. It should become a constant throughout an ever-evolving business.
How to manage your KPIs
Finding the right tools to help you manage your KPIs is critical. You want something easy to use and interpret and is accessible to everyone in your organization. Clear, concise data is important to measuring your business metrics and creating more challenging KPIs. So if you currently have dozens of spreadsheets and heavily complex files, you’re likely not getting the most out of your metrics or data.
Tools to help you capture business metrics should empower you to customize what data you collect and present it in a clear and beneficial way. When you can, automate your process to reduce the time and effort needed to collect and analyze business metrics.
Instead of asking how your company matches up to the competition, first determine how you’re matching up to the business metrics and goals you set internally. If you’re not achieving the objectives you need to grow and improve operations, all the benchmarking in the world won’t help you get to where you want.
Benchmarking has its place, and both business metrics and benchmarks give your employees a measurable target to meet. And when your employees meet their targets, they’re more engaged and empowered, and your company’s overall performance increases exponentially.
It’s better to master your internal KPIs and routinely meet or exceed those targets before you compare your apples to others’ oranges in your industry and beyond.