KPI tracking provides a means of examining a company’s metrics to increase performance. It helps to easily identify areas of improvement, set goals, and measure progress within a time frame. Regular KPI tracking is useful for any organization struggling with a clear direction. It enables them to identify trends in their performance, find problems, and come up with solutions to reach their overall performance goals. In this blog, you will learn how KPI tracking can help you measure and improve business performance.
What are KPIs?
Key performance indicators (KPIs) are important metrics that help organizations evaluate their progress toward specific goals. Organizations can determine their strengths and weaknesses and improve performance by setting KPIs and monitoring them.
Why is KPI tracking important?
- KPIs are quantifiable. Therefore, tracking and monitoring KPIs help industries easily measure organizational progress.
- KPI tracking in a business is important for frequently determining an organization’s poorly performing areas. This can help users look for the root cause behind low performance and develop the best strategies to attain higher growth.
- Tracking and monitoring KPIs in real-time can give you an accurate picture of your company’s performance as it happens, enabling you to see your current standing. This enables you to see what still needs to be done, and therefore improves your processes by evaluating the success of your strategies.
Now that we have an overview of why businesses track KPIs, let’s look at some of the benefits enjoyed by organizations that do so.
How KPI tracking improves business performance
KPI tracking is essential to businesses, as it demonstrates how effectively a company achieves its key objectives. It enables users to spot changes in key performance based on past strategies, efforts, and decisions. It benefits industries in the following ways:
- Boosting business performance.
- Enhancing collaboration.
- Improving risk mitigation.
- Improving decision quality.
Boosting business performance
One of the most important reasons for tracking KPIs and metrics is to identify a company’s areas in need of improvement. KPI reports and trackers enable users to set informed goals and measure their performance and metrics to see how successful they are toward achieving their strategies. This way, they can spot their strengths, weaknesses, opportunities, and threats, enabling them to work with the insights to improve their business and step ahead of their competitors.
Tracking relevant key performance indicators in an organization allows team members to easily interpret results. This enables them to capture new opportunities and spot areas where extra effort is needed, encouraging them to collaborate and exercise their creativity in ways that eventually benefit the company through new ideas and increased commitment.
Improving risk mitigation
KPI tracking allows you to compare your past and current data to see changes and improvements in your performance and metrics. This enables you to determine which business practices and strategies worked and which were highly exposed to danger. Using this information, necessary adjustments can be made earlier before risks occur, thus helping the company minimize loss and adapt easily when necessary.
Improving decision quality
Understanding business financial health is crucial for everyone across an organization. Therefore, by tracking your company’s KPIs, you can easily explore and analyze when and where the business is performing well and where it is not. This enables you to confidently make short- and long-term decisions based on the insights, thus increasing revenue in the company.
How to track KPIs to measure business performance
KPI tracking is one of the best ways enterprises can collect KPI data to gain insights into the current situation of their business. Here are a few steps to guide you on how to track the right KPIs.
Step 1: Set achievable goals
Before tracking KPIs in your business, write down the details of your goals so that they can help you identify quantitative indicators and targets for tracking your progress and results.
Step 2: Define your audience
Define your targeted audience to help you understand their needs. This makes it easier for you to focus your efforts on what will be more efficient for them.
Step 3: Determine the KPI to measure for each goal
You need to determine the right metrics to analyze for each objective. This helps you track your progress and ensure that you are achieving your goals.
Step 4: Set the target
Set the standard you need to meet to help you monitor your progress toward achieving your goals. This can help you measure and compare your progress, thus motivating you to reach your target while becoming more adaptable to change.
Step 5: Choose a tracking tool
KPI tracking tools are essential for businesses to measure and monitor the performance of their operations. Choose a tracking tool to help you identify patterns in your KPI data and make informed decisions about your operations.
Step 6: Choose the right visualization
Choose the right visualization to help you store all your KPIs in one place and create more efficient models and relevant reports. This makes it easier for users to see, interact with, and better understand the variance between your KPI’s actual and target values from the KPI data.
Step 7: Gather insights and feedback
Allow everyone across the organization to test your preferences to determine whether the KPIs selected can provide an accurate value of the actual outcome of your goals. By gathering these results, you can understand whether your KPI tracking processes are aligned with your real-time requirements.
Step 8: Track KPIs regularly
You need to review your key performance indicators before tracking to help you identify unnecessary or irrelevant information. Removing these impurities can help you optimize your KPI tracking processes to ensure you are on the right track.
Step 9: Analyze KPI data
In this stage, use the KPI data you have gathered to evaluate your performance in order to have accurate visibility into the success or failure of specific initiatives. This provides valuable insights for making data-driven decisions to improve efficiency and maximize your company’s profitability.
Step 10: Communicate results
Finally, communicate your KPI results to your stakeholders to allow everyone across your organization to determine how their efforts are contributing to the business’s overall success and to see the company’s progress and performance. This enables your management team to easily spot areas that need adjustments and make more informed decisions.
How is Bold BI helpful for tracking KPIs?
Bold BI enables you to extract key insight from your data by visualizing information using a wide range of widgets and hundreds of data sources. It is a business analytics tool that helps you analyze your business data through your chosen metrics with its insightful widgets.
Without switching context, your end users can see the analytics as part of your business application through embedding. Explore 15 of the most important KPI metrics that help sales executives and managers improve company performance.
I hope now you have a better understanding on how to track KPIs to grow your business. Get started with Bold BI by signing up for a free 15-day trial and create interactive business intelligence dashboards. If you already have an account, you can log in to get access to Bold BI.