How to Find the Most Suitable Metrics for your Dashboard
Since 1770 when Britain’s James Hargreaves patented his spinning jenny that allowed a single spinster to run eight spindles and produce eight times as much raw thread and yarn as before – cutting both time to market and labor expense involved with producing textiles in Blackburn, Lancashire – doing more with less has been the driving force behind growing a business.
This productivity remains an elemental economic force – with a decisive effect on profit.
In our modern economy, software applications measure linear-feet equivalents of today’s “thread and yarn.” Such raw, furnished data, unlike cotton or wool fibers, begs translation, comparison, and analysis. Consequently, every team lead needs an agent by which to see, interpret and act on that data.
The Dashboard – 3 Types for Business
And that’s what dashboards – imperative to business intelligence software – do. Of course, dicing and splicing that data constitutes a need for tailored dashboards, of which three types are recognized:
- Strategic – aggregates critical, overarching metrics, presenting a 10,000-foot view of a business.
- Analytic – gathers and compares particular metrics across time and many variables, drilling down to actionable data per team.
- Operational – monitors data in real time, alerting a team to any issues that need to be addressed.
Regardless of a dashboard’s purpose, it should reflect a company’s particular needs and culture, displaying Key Performance Indicators (KPIs) based on a firm’s high-level (and/or low-level) objectives. These KPIs will stand as quantifiable measurements of each goal; metrics, by any other definition.
That’s important, because according to Sruthi Varanasi of ReportGarden, “A metric is a quantifiable measure that is used to track and assess the status of a specific business process.”
Metrics – Lifeblood for a business; Heart of a Dashboard
Suffice to say, metrics are the truest barometer of how your online business is doing.
Consider this: A 15 percent increase in conversions is just that, a successful trend. Subsequently, metrics serve as buoys that can keep your business sailing in deep water or warn you when shoals are near. A 21 percent dip in visibility over a month is just that, a falling trend, indicating you might need to revisit strategy and adjust – on the fly.
It stands to reason, then, that constructing a clean, uncluttered, incisive dashboard that represents key business intelligence metrics is equal parts science and art.
You want a dashboard whose widgets illustrate – at a glance – essential data from which sound business decisions can be made – whether those decisions concern the content of a webpage or the features of an actual product.
Dashboard enABLEd! How to Determine Which Metrics to Track
So, how do you decide which specific metrics should populate that dashboard from which you will extract actionable data? How do you identify those KPIs for each business goal? Following these four steps will enABLE you (apology for the acronym within the acronym) to populate your dashboard with meaningful data:
- Apply S.M.A.R.T. methodology.
- Bring the selection to the team.
- Limit KPI assignment to three primary, overriding goals.
- Eliminate the urge to add more metrics to the dashboard.
1. Apply S.M.A.R.T. to each KPI
For a basic example, if an overriding goal is to increase monthly recurring revenue (MRR), the questions to ask – and answer (more than yes/no) – to assess the validity of a KPI begin with:
- Is a metric Specific to a goal? What needs to be accomplished and why?
We want to increase MRR to increase margins and subsidize a new product launch next year.
- Is it Measurable? What kind of historical change has been evident? How will we know the goal was reached?
According to historical analytics, we can feel confident that an MRR increase of between 3 – 5 % would be achievable.
- Is it Attainable? Are the resources readily available to achieve success? Is the goal reasonable? Is it likely to bring success?
We can ramp up social media promotion, launch a campaign, or otherwise put effort behind ramping up sales to drive revenue.
- Is it Relevant? How meaningful and worthwhile is the goal? In the current situation can we commit to its achievement?
Our competition has lost revenue, so more of the market is available to us. The more revenue generated, the more reward for us.
- Is it Timely? Is the goal ahead of the curve, or behind? What’s the deadline for achieving it? What’s the overall timeline set for adopting the goal?
After strategic planning, we can achieve a substantive bump in MRR over the subsequent quarter.
So, your team devises this KPI: Increase MRR by 3% during Q2. What metric goes on the Dashboard? A monthly monitor of incoming revenue.
2. Bring KPI selection process to the team
Gain consensus on those metrics paramount to the team’s and the company’s success. Asking for a collective viewpoint not only helps distill the essence of paramount KPIs but also builds morale. Each team member gets some skin in the game.
3. Limit KPI assignation to no more than three primary goals
Segment’s Analytics Academy declares the purpose behind each solitary metric populating your dashboard should focus attention on a specific business process (goal!) that needs to be optimized. Using the sample KPI above, it could be one of three under an overarching goal to drive an increase of MRR.
4. Eliminate unnecessary metrics
The rule of thumb is to have no more than seven metrics displayed on any single dashboard because, after all, it functions as a quick-glance representation of a goal’s status. Thus, its design should advance easy comprehension, simple updating, and clean navigation without secondary data distractions.
Your team should make hard decisions on which metrics to include. Consider: secondary data get in the way, conflating interpretation, overwhelming the reviewer. Fewer metrics are better metrics.
Each time you visit the dashboard, you should remember that KPIs keep your business strategy agile, fleet, responsive. Positive data dictates stability and steadiness. Negative data compels your team to adjust, adapt and provide alternatives.
An effective dashboard illustrates this crucial data and discloses a course of action to take.
Metrics on Dashboard: What Are My Choices?
Once you’ve followed the ABLE steps to determine your KPIs, you’re ready to populate your dashboard. At this point, you may ask, “What are metrics that achieve near-universal adoption by businesses?”
That depends on the purpose behind your team, the audience (your team? An executive?) that will be reviewing the dashboard, the “actionability” of the selected KPIs, and the type of visuals preferred.
Metrics for a marketing team might include tracking web traffic sources, incremental sales, social sentiment, conversion rate, and SEO keyword ranking. A sales team might want to monitor sales growth, product performance, average purchase value, and average profit margin.
A financial team can follow working capital, debt-to-equity ratio, and current ratio. An e-commerce team might monitor customer lifetime value (CLV), customer retention rate, customer churn analysis, and monthly recurring revenue.
Other salient KPIs can address net profit, revenue growth rate, project schedule variance (PSV), and average revenue per customer. Because your KPI choices are ultimately subjective, the A.B.L.E. methodology can help your team judiciously arrive at which data would be most constructive to track and display.
Vital Metrics on (Dash)Board: The Skinny
As long as any KPI on your dashboard is based in company goals, is relevant to the team behind achieving that goal, is attainable, measurable and remains timely, the dashboard itself should render keen data from which you can take incisive action to engineer successes — as well as avert disasters.
Taking the time to apply the SMART methodology, bring in the team, limit primary goals and amount of KPIs assigned to each, and eliminate the urge to overpopulate a dashboard with secondary data, will help you select the most meaningful metrics for your business onto your dashboard.
Perform these steps. Pick your metrics. Build your dashboard. Mine your data.
Grow your business.
Author: Keith Craig