20 DECEMBER 2024

How to Choose and Track Key Performance Indicators That Really Matter

As we approach the new year, we work with our clients to set themselves up for success in 2025. How can we ensure the strategy is moving in the right direction? Usually it’s by working in partnership with the team to identify Key Performance Indicators (KPIs) that tell us if we’re on track. Choosing performance metrics that are effective in demonstrating meaningful outcomes is sometimes just as important as the outputs themselves. In this blog, we’ll discuss how we work with organizations to select meaningful performance metrics that support the strategy, best practices for tracking KPIs and mistakes to watch out for.

Why KPIs Matter

Data is king, right? But it’s not just about collecting data, it’s about collecting the right data…and, let’s not forget the qualitative assessments. KPIs are more than numbers on a dashboard – they’re the compass that guides the strategy, helping the team to understand what’s working, what’s not and where to focus.

The Art of Choosing Meaningful KPIs

1. Identify your strategic objectives…and align: Start by figuring out what really matters to the business – whether it’s growing revenue, expanding into new markets, or organic growth. Here are a few examples of performance metrics that can be tracked based on goals:

a. Revenue growth: Total Revenue, Revenue Growth Rate, Average Transaction Value (ATV), Customer Lifetime Value (CLV)

b. Market expansion: New Market Penetration Rate, Number of New Customers Acquired, Market Share Growth, Sales in New Markets

c. Customer retention: Customer Retention Rate, Churn Rate, Repeat Purchase Rate, Net Promoter Score (NPS)

d. Brand awareness: Social Media Reach and Engagement, Website Traffic, Media Impressions

e. Product innovation: Time to Market, Adoption Rate, R&D Spend as a Percentage of Revenue

If you made it through that list – well done. The real takeaway here? There is no shortage of KPIs you could track. But don’t muddy the waters by trying to track everything. Keep it clean, clear and focused on what really moves the needle.

For example, if brand awareness is an objective, tracking social media reach and engagement might be more valuable than immediate sales conversions. It’s important to not get distracted by flashy metrics just because they seem “right,” metrics need to make sense and align with your goals. Which takes us to our next consideration…

2. Focus on quality over quantity: It’s tempting to track everything, but to our earlier point, more metrics don’t necessarily mean better insights. Think primary vs. secondary – what are your top two or three metrics that will really demonstrate success. And then, examine secondary metrics that you’re interested in and can also help you learn.

3. Ensure Your KPIs are SMART:

  • Specific: Your KPIs should be crystal clear and focused. Instead of “increase social media presence,” try “grow Instagram engagement rate by 25% quarter-over-quarter.“
  • Measurable: If you can’t measure it, you can’t manage it. Your KPIs need numbers attached so you can track progress and outcomes.
  • Achievable: Set goals that push the team, but are grounded in reality. Let’s say your Instagram channel is well-established and has about 10K followers. A 500% increase in engagement rate in one quarter would be nothing short of a miracle. However, an increase of 25% makes sense within the bigger picture and builds on where you are today.
  • Relevant: Your KPIs need to tie directly to what matters most for the business – no busy work, just impact. If your goal is to “grow Instagram engagement rate by 25% quarter-over-quarter,” look at metrics that indicate whether your audience has interacted with your content – likes, comments, shares, saves, etc. – not follower count.
  • Time-bound: Establish a clear timeframe to stay on track. That “quarter-over-quarter” timeframe matters. Without it, you may be calculating engagement rates without understanding progress against the fiscal year.

Best Practices for Tracking KPIs

Implement the right tools: You need the right tools to keep your KPIs on track and give you the insights you need. Sure you can invest in analytics platforms, which are great, but if that’s not where you are at scale, you may also consider establishing an Excel template that gets you where you need to be. Ultimately, the goal is the same:

  • Integrate multiple data sources: Bring everything together so you’re looking at your metrics holistically.
  • Stay consistent: Ensure consistency around when and how you’re examining data. Are you pulling raw data on the last Friday of every month? Do you know what the data source is for every metric?
  • Generate actionable insights: Ensure that the numbers meaningfully connect to  strategies that drive action. Whether you’re using an analytics platform or Excel, ensure that you have a method for translating your metrics.

Create a regular review schedule: Don’t just set it to forget it – track and adjust regularly to stay ahead. A solid schedule looks like this:

  • Monthly deep-dive analysis: Every month, take a hard look at the numbers and dig into what’s really going on.
  • Quarterly strategic reviews: Every few months, step back and see if your KPIs are still on point with your big-picture goals.
  • Annual comprehensive assessment: Once a year, do a full audit, figure out what worked and plan for the year ahead.

Be prepared to pivot: The most successful organizations view KPIs as an evolving set of metrics. Assumptions that inform your initial thinking might not work as you examine your KPIs. Build flexibility into your tracking approach, and be ready to adjust and learn from your KPIs as your organization evolves.

Common KPI Mistakes to Avoid

Vanity metrics: Sure, getting likes and followers feels good, but they don’t always pay the bills. Don’t get caught up in shiny numbers that may not drive real results. Focus on metrics that demonstrate real impact and align with your objectives.

Inconsistent tracking: If you’re only measuring KPIs here and there, you’re missing the full picture. Sporadic tracking leads to incomplete insights and makes it tough to spot trends or adjust quickly.

Ignoring context: A number without context is just a number – it doesn’t tell you what’s really going on. Make sure you’re looking at KPIs in the right context: compare them to benchmarks, track them over time and relate them to your strategic goals. Without that context, you’re flying blind.

In Closing

Choosing the right performance metrics is part art, part science. It requires a deep understanding of your organization, your goals and the stories hidden within your data. As you plan for the new year, remember that the most valuable KPIs are those that provide clear, actionable insights that drive meaningful decisions.

Mindful Marketing Tip: Involve your entire team in the KPI selection effort. This ensures that the team is engaged and has ownership in the outcomes. In addition, different perspectives can help you identify metrics you might have overlooked.