It is the measure of the percentage increase in sales between two time periods. A low profit-margin indicates a higher risk that a decline in sales will erase the profit and result in a net loss. Don’t do data puking. Formula to calculate P/E – Current Stock … Compute and show the cost of delaying in implementing the recommendations. Higher the gross profit margin, the more the money is left over for operating expenses and net profit. Business owners/senior-most management along with department heads must be involved in setting up, approving and monitoring external KPIs. However, it needs the accompanying target in order to be effective. Your core business goals must be SMARTER (i.e SMARTER core business goals). It is used to determine the effectiveness of your business in converting sales into a profit. If your monthly goal is to generate $16,667 in sales then what should be your weekly goal? Asset utilization is a metric used to understand efficiency. Your company does not exist just to make money. Remember 2 months don’t make a data trend. For example, do not use the bounce rate as KPI. As default, we use Average Calculation but If you want to use Summed Up quantities, you can copy and paste the INDEX formula … #27 The actual number of slides/KPI dashboards in each category (acquisition, behavior, and outcomes) would depend upon your ‘Web Analytics Measurement Model’. #44 At least once a quarter you should re-visit your dashboard. A metric can be a number or a ratio. The recommendation should not be to do more analysis. Your goal needs to be measurable. What I am trying to achieve as an organization? These questions include ‘why’, ‘what’, ‘who’, ‘where’, ‘when’ and ‘how’. There is no hard and fast rule here. Note(2): External KPIs can also be used as internal KPIs. KPI is used to measure your performance (as an individual, department and/or a company) in achieving key goals. The longer the time frame, the less likely you are to achieve your desired goal. A strategic dashboard is used to present the analysis of business KPIs to key decision-makers. There is a lot of context or explanation of insights etc in such dashboards as the people for which these dashboards are built, do not know exactly how to interpret the data and what conclusions to draw. There is no hard and fast rule here. It is used to evaluate the efficiency of your investment or to compare the efficiency of different investments. For instance, let's say you own a widgets company and the main goal of the company is to increase widget revenue and reduce widget costs. Master the Essentials of Email Marketing Analytics A goal is a specific outcome or result you want to achieve. Individuals who directly work on optimization tasks must be involved in setting up and monitoring internal KPIs. KPI Elements The following elements are used in the KPI calculation formulas: Everyone in the company must be pushing towards the same organizational goals. P/E is most useful as a comparison metric. Internal KPIs are tied to internal goals and are used to measure optimization efforts. Following are examples of good KPIs: gross profit, gross profit margin, operating profit, operating profit margin, net profit, net profit margin, sales growth rate, total economic value, return on investment (ROI), return on ad spend (ROAS), net promoter score, customer lifetime value, customer retention rate, customer profitability score, cost per lead, cost per acquisition, goal conversion rate, ecommerce conversion rate etc. Chinese Simplified / 简体中文 KPI CALCULATION 1. It’s a natural progression I think: you get the budgeting, forecasting, and reporting under control, and then … Korean / 한국어 Hungarian / Magyar For example, your business goal could be to generate $100k in additional sales in the next 1 year. For example, your KPI could be ‘percentage decrease in CPA in the last month‘. In our example, the performance will be (530 – 0) / … Related Article: How to become Champion in Data Reporting. Create a report to calculate all three KPIs. Their mission was never about making more money. Your ‘key performance questions must help you in setting up SMARTER internal goals. Thus there are no standard set of core business objectives which should be adopted/copied. That is because improving the quality of email outreach can never really be a core goal of any business (unless that’s all they do). #24 Your dashboard should show ‘Acquisition’, ‘Behaviour’, and ‘outcomes’. Average order value = Total Revenue/Total ecommerce transactions, It is the percentage of people who came to your website and answered ‘yes’ to this survey question: “Were you able to complete the task for which you came to the website?”, Task completion rate = (number of people said ‘yes’ to the survey question/ Total number of survey responses) *100. This is possible only when your chosen KPI has the ability to provide recommendation(s) for action which can highly impact your external goal. These goals could be business goals, external goals or internal goals. #30 If your data involves ‘low numbers’ then don’t include them in your analysis. There are special formulas for calculating KPI indicators for each specific figure. The simplest way to calculate OEE is as the ratio of Fully Productive Time to Planned Production Time. For example, if one of your core business goals is to increase customer acquisition, then your KPQs can be, ‘How can we increase customer acquisition?’. For example, if you are using a compound metric (a metric which is made up of several other metrics) as a KPI and it takes several months to compute it once and then several more months to compute it the second time then it is not a good KPI, as you can not make timely decisions on the basis of such KPI. If your company is just driven by business opportunity/money then you won’t go very far in your business. Serbian / srpski ‘How’ denotes the ‘process’ you will use to execute your strategy. How to fill in the matrix for an office manager: The … Decide what you want to highlight. A mission statement helps you keep on track. transactions in the summary event processed straight through or not. #34 Figure out in advance that the analysis which you are planning to do is worth doing in the first place. #27 The actual number of slides/KPI dashboards in each category (acquisition, behavior, and outcomes) would depend upon your ‘, "How to use Digital Analytics to generate floods of new Sales and Customers without spending years figuring everything out on your own.". KPI Calculation Service – Samples¶ Calculating KPIs¶. #28 Whenever you do competitive analysis always compare it with your business. You can find your company’s core business goals through ‘. As the value of your external KPI increases or decreases, there should be a corresponding positive or negative impact on the external goal and this impact should be significant. Your new KPI will show up cumulative sections. Similarly, if you manage PPC campaigns then your external goal is to increase customer acquisition and decrease customer acquisition costs through ‘Paid Search Optimization’. Average customer lifespan means how long he/she remains your customer. This is the only way to ensure maximum productivity and profitability. #39 Use Visual Clues (like small colored triangles) to show, how to read the report. Turkish / Türkçe If a metric does not greatly impact its corresponding goal then it is not a good KPI. ‘Key Performance Indicator’ (or KPI) is a metric which is one of the most important indicators of the current performance level of an individual, department and/or a company in achieving goals. It is the profit after production and manufacturing costs. When you have achieved your target, it is considered a success. Chinese Traditional / 繁體中文 #40 Write your commentary on what the reports tell your decision-makers. An average is usually a sum or total divided by a count of things or people upon which the … At the organization level, an ‘attainable’ goal should be based on SWOT (‘strength’, ‘weaknesses’, ‘opportunities’ and ‘threat’) analysis. Consequently, you need to interview your client. There are three broad categories of KPIs: Business KPI (also known as ‘high level’ KPI), External KPI (also known as ‘low level’ KPI) and Internal KPIs (also known as ‘low level’ KPI). For that we need to set up a KPI target like the one below: 10 or more percentage decrease in CPA in the last month. The ‘core business objectives’ and their corresponding business KPIs must be shared across your organization so that everyone is aware of what their company is trying to achieve. However sooner the better. Maths and Stats for Web Analytics and Conversion Optimization P/E metric is quite meaningless if analyzed on its own. You should not say ‘do more analysis’ in your recommendations because it is your job. Is that realistically possible? The following are examples of ratio metrics because they are in the form of ratio: Bounce rate, Conversion rate, Average order value, etc, Since KPI is a ‘metric’ and a metric can be a number or ratio, we can have KPIs in the form of numbers and ratios. Thus there are no standard set of core business objectives which should be adopted/copied. What should be the time frame for achieving this goal? Total Economic Value = Total Sales + Total value of the assisting conversions + Total value of the last click conversions. #23 Dashboards created in Google Analytics can become data puke very quickly. Example of number KPIs: ‘Days to purchase’, ‘visits to purchase’, ‘Revenue’ etc, Example of ratio KPIs: ‘Conversion rate’, ‘Average order Value’, ‘Task completion rate’ etc. For example, if one of your core business goals is to acquire more customers then your business KPI can be ‘Customers Growth Rate’ (a measure of the percentage increase in customers between two time periods.). Your ‘key performance questions must help you in setting up SMARTER business goals. ‘What’ denotes what is involved in implementing your strategy. The more page views you get, the more you can charge for every thousand impressions (CPM) from your advertisers. It should target a very specific outcome. External KPI is the KPI set up for measuring the performance of an external goal. It is often compared with the current EPS. #8 Remove the cluttering of metrics from your dashboard. Avoid reporting such data as it is unlikely to be statistically significant. It is a medium of communicating your insight from KPIs to key stakeholders so that they can make data-informed business and marketing decisions. Vietnamese / Tiếng Việt. And this can happen only when the external goals and their corresponding KPIs are shared across the team/department. It is the projected revenue (repeat business) a customer will generate during his lifetime. Dutch / Nederlands For example, Google’s mission is “to organize the world’s information and make it universally accessible and useful.” And this has been their mission from the very start. These are the KPIs we generally report to clients/senior management. A mission is something that drives your day to day actions and decision-making processes in a business. Revenue Growth Rate = (Current month’s Sales – Last month’s Sales) / (Last month’s Sales) * 100. #42 Dashboards are not reports. This is possible only when your chosen KPI has the ability to provide recommendation(s) for action which can highly impact your internal goal. Your goal is considered to be achievable if you can achieve it in the short term. However, it needs an accompanying goal in order to be effective. Whenever we talk about KPIs in general, we are referring to external KPIs. ‘Who’ is involved in implementing your strategy. It is the total value added by your product/service/campaigns to the business bottom-line. Cost of delaying the implementation: 1-month delay can result in $____ of lost revenue. you can quickly take actions on the basis of the insight you get from your KPI. Customer profitability score = Revenue earned through a customer – Total cost associated with customer’ acquisition, management, service and retention. German / Deutsch #13 Add annotation and graphic elements to your reports, tables, and graphs (like arrows, brackets, etc). For example, for the business goal ‘Acquire new customers‘, the following can be your external goals: For the business goal ‘Retain existing customers‘, the following can be your external goals: For the business goal ‘Increase website sales‘, the following can be your external goals: Similarly, for the business goal ‘Decrease acquisition cost‘, the following can be your external goals: External goals are department/function specific. Similarly, ‘average order value’ can be used as a KPI because it hugely impacts the website sales. Such dashboards are NOT created to show aggregated/segmented data and are NOT usually created via a web analytics tool like ‘Google Analytics’. It is the average revenue earned through an acquisition. The company should do ‘X’, which will cost ‘y’ but could bring additional revenue ‘z’. Higher the operating profit margin, the more the money is left over for net profit. Since they are not reports, you can’t leave the interpretation of the data to executives. A KPI is not a target. #36 Use multiple analytics tools in your analysis to execute the ‘strategy of multiplicity’. Without deadlines, there is no urgency. Business KPIs are set at the organization level and focus on measuring the overall performance of a business. A KPI dashboard is used to present your KPI analysis to decision-makers. Net promoter score = % of promoters – % of detractors. For example, if you sell ‘display banner ad space’ on your website and ‘display advertising’ is the main source of revenue for you then ‘pageviews’ can be used as a KPI. As the value of your external KPI increases or decreases, there should be a corresponding positive or negative impact on the external goal and this impact should be significant. Not long after I started my career in FP&A, I became interested in KPI development. It is used to determine how good your company is in retaining customers. Market backward (focus on what the market wants and then deliver it to them). You can find your external goals through ‘Key Performance Questions’. What is the difference between a KPI and a goal? Internal goal – Improve the quality of outreach emails. Your ‘key performance questions must help you in setting up SMARTER business goals. Thus a strategy can be made up of one or several tasks. Generating 10k extra per month is a specific goal. Whereas KPI is a metric that tells you whether you are on track on achieving your goal. For example, ‘generating more’ sales is not a specific goal. #43 Your dashboard should be one page and readable. They are not the one and the same thing. What is the difference between a metric and a KPI? Attribution Modelling in Google Analytics and Beyond Principles (core values) is how your organization should behave on its way to achieving its vision. Your strategy should move in the direction where it helps you in achieving your goals in the most efficient manner. Swedish / Svenska Don’t make numbers out of thin air. A lagging indicator that is used to measure workplace injuries and illnesses that result in time away from work, restricted job roles, or permanent transfers to new positions. This will help the individuals within your team/department in setting up goals and KPIs which align with external KPIs. Here the KPI does not define what percentage decrease in CPA is considered a success. Decrease the cost of acquiring customers (i.e. External KPIs are set at the department/team/function level and focus on measuring the overall performance of a department/team. For example, if the ‘Net Promoter Score’ metric is not available to you then you can not use it as a KPI. If the captain (aka your CEO) is not sure to which port his ship (aka company) should sail then the sailors (aka employees) can’t help him, no matter how good they are as an individual or team. In the Calculation Area, right-click the measure that serves as the base measure (value) of the KPI, and then click Edit KPI Settings.. Delete a KPI. Prioritize your list of recommendations on the basis of their impact on the business bottomline. Greek / Ελληνικά Organizations can use KPIs to realize whether they are achieving … The segmentation also improves its measurement. Before you can set up core business goals, you need to have mission and vision statements + well-defined core values in place. What should be the outcome? We only report high business bottom-line impacting KPIs to senior management. Do not mess up at this stage (as many businesses do). Things change, circumstances change, market change over time and you may need to adjust your goals accordingly. If your KPI is highly impacting then it is got to be relevant to its corresponding goal. Slovenian / Slovenščina Use date range of at least 3 months, better 6 months. KPQs are the building blocks of goals, strategies and KPIs. Ever evolving, always innovating to become a better version of ourselves. So when you are finding your KPIs, you need to be 100% sure that there is a mechanism/tool available, to measure and report your KPI in the first place. EPS is most useful as a comparison metric. KPI is used to measure your performance (as an individual, department and/or a company) in achieving key goals. There will be a separate dedicated team that is responsible for … Otherwise, it is not a goal but just some obscure direction. It is like the foundation of your company. (Average order value) X (Number of Repeat Transactions) X (Average customer lifespan in months/years). Note: External KPIs can also be used as internal KPIs. So when a web analyst gives them a tactical dashboard they know exactly how to interpret the data, what conclusions to draw, and what actions to take. KPI's calculation formula is required in accordance with the characteristics of the target and the achievement of KPI's. It is like a compass which, when used daily, keeps your organization in the right direction. Remember 2 months don’t make a, #7  Skip lame KPIs. Polish / polski Following is an example of a tactical KPI dashboard: The goal of a Strategic KPI dashboard is to help key stakeholders (often top management executives) better understand the performance of their core business objectives. Use the bounce rate as a diagnostic metric. They are not always reported to clients/boss/senior management. Insert rectangles to drive attention to your data. Why doubling the rate of acquiring customers is important to the business? ‘Key Performance Indicator’ (or KPI) is a metric which is one of the most important indicators of the current performance level of an individual, department and/or a company in achieving goals. A target is a metric through which you define success and failure in achieving your goals. A direct cost can be something like the cost of manufacturing a product. #38 When you do competitive analysis and draw trends use at least 6 months of data. There is no urgency. The Price to Earnings Ratio gives you an idea of what the market is willing to pay for the company’s earnings. Decision-makers usually pay great attention to what their competitors are doing and are more likely to consider your recommendation if it is already being executed by their competitors. #20 Don’t select KPIs just to impress your decision makers or just because they are popular in your industry. It is calculated as the number of hits divided by the official number of at-bats and is expressed as a decimal to three places of accuracy. Founders / top management executives should play a key role in setting up and monitoring their core business goals. Equation/Formula used in GSM KPI or CSSR calculator. Following equation or formula is used for this GSM KPI/CSSR calculator. the ‘average order value’). Formula: Total # of hits / total # of at bats, not … The more page views you get, the more you can charge for every thousand impressions (CPM) from your advertisers. External KPIs can also be used as internal KPIs. Cost Per Acquisition = Total Cost/ Total acquisitions. Goal Conversion Rate = (Total Goal conversions / total visits) *100. The KPI Index shows the level of results in relation to the norm. 2. For example, if one of your core business goals is to increase customers acquisition, then your KPQs for setting up an external goal for SEO can be: Your external goal must be SMARTER (i.e SMARTER external goals). For example, if you work as an SEO, your external goal is to increase customer acquisition and decrease customer acquisition costs through ‘Search Engine Optimization’. Edit a KPI. A goal is a specific outcome or result you want to achieve. WorldClassPlanning.com 7 Name of KPI Planned vs Unplanned Formula Sum of Scheduled Work Completed (Hours) / Sum of All Work Completed (Hours) x 100 What it tells you Good indicator of how reactive a work team is, and how much unscheduled work is breaking into the work schedule. #31 Include at least one competitive KPI in your ‘web analytics measurement model’. One of the best ways to boost LTV is by improving customer satisfaction. Your internal goal must be SMARTER (i.e SMARTER internal goal). Example of ratio KPIs: ‘conversion rate’, ‘average order value’, ‘task completion rate’ etc. As the value of your internal KPI increases or decreases, there should be a corresponding positive or negative impact on the internal goal and this impact should be significant. ROAS = (Sales from investment – cost of investment)/cost of investment. #18 Avoid using screenshots from Google Analytics reports for your strategic dashboard. That’s how you create an alignment between your external goals and internal goals. Also known as net income, net earnings, bottom-line. Whenever we talk about KPIs in general, we are referring to external KPIs. Business owners/senior-most management along with department heads must be involved in setting up, approving and monitoring SMARTER external goals. #3 Forward EPS – is a forecast of what the EPS might be in the future. If you are an external consultant/agency then you determine core business goals with the help of the people who actually run the business and not from the website or Google Analytics reports. External goal – Increase customer acquisition and decrease customer acquisition cost through ‘Search Engine Optimization. They may or may not be directly tied to your core business goals. This is because it does not correlate well with conversions. What you are trying to achieve? Support and maintain the company’s core values. It is the percentage of visits that result in ecommerce transactions. The KPI’s Low Interface does not need to be defined; any entry in the KPI’s … It is the average cost of acquiring a customer or generating a conversion. Your goal must have a deadline (target date) attached to it. It is the percentage of visits that result in goal conversions. ‘When’ denotes ‘situation’, ‘date and time’, ‘assumptions’, ‘risks’, ‘barriers’, ‘deadlines’, ‘opportunities’ etc. Table of Contents for KPI Meaning, Examples & Calculations – Tutorial. at multiple levels (organizational level, department level, individual level). #3 Show key trends and insights (first in words format and then in graphical format). This includes coming up with a certain set of tasks. How this would impact sales and profitability from organic search? That’s why it is critical to breaking down your long term goals into several smaller short term goals. The mission statement is a written declaration of the core purpose/cause of your organization. Calculating the KPI – the easy way Dr Arriffin Mansor 1 2. It only tells you whether you are on track to decrease your acquisition cost. Kazakh / Қазақша ‘Where’ denotes the ‘direction’ in which your strategy should move so that you can get the highest possible return on your investment. There isn’t a lot of context or explanation of insights etc in such dashboards as the people for which these dashboards are built, already have a great understanding of what they are doing. Beginner's guide to Key Performance Indicators with examples. For custom KPI calculation, those custom KPIs must be defined along with standard KPIs and target values should be set under plant hierarchy in ERP system. When you do not achieve your target, it is considered as failure. dashboards for your KPI analysis. So be cautious when you use the G.A. The KPI’s Low attribute is defined as <[target]-20>. A KPI is not a goal. – increase website sales by 100% in the next 6 months by improving organic search traffic through SEO. Business KPI is the KPI set up for measuring the performance of a core business goal. This is possible only when your chosen KPI has the ability to provide recommendation(s) for action which can highly impact your internal goal. Since EPS measures the company’s profitability, a negative EPS means the company is not profitable for investors. An organization should use KPIs at multiple levels (organizational level, department level, individual level). … Although the higher the number the better for shareholders themselves. Spanish / Español Japanese / 日本語 You can create strategies through ‘Key Performance Questions’. Per Visit Value = Total Sales / Total Visits. Today, this process is automated. There is no hard and fast rule here. But this can not be your mission. It is the average value of a visit to your website. This expert guide will teach you how to leverage the knowledge of maths and statistics in order to accurately interpret data and take actions, which can quickly improve the bottom-line of your online business. You should be able to measure the results and progress of each goal. Sure your company needs to make money to survive but there needs to be an added mission that serves others and at the same time positively impacts your business bottom-line. #7  Skip lame KPIs. (Number of DART … This book has been written to help you implement attribution modelling in Google Ads (Google AdWords) and Facebook. Thus ‘where’ can also denote ‘efficiency’. #29 If your analysis doesn’t include recommendations then it is not an analysis. Learn the most important maintenance KPIs to help you achieve a world-class maintenance management system. Whereas ROI takes total cost into account. English / English A tactical dashboard is used to present the analysis of your external KPIs to decision-makers. Long term goals are not achievable unless we have accomplished corresponding short term goals. If one approach is not working then you may need a different approach to achieve your goals. #10 Return on Ad Spend (ROAS)It is used to evaluate the efficiency of investment in an ad campaign. Alignment between external and internal goals, Checklist for designing a strategic KPI dashboard, measure your link building outreach campaigns, More information about Net Promoter Score, Maths and Stats for Web Analytics and Conversion Optimization, Master the Essentials of Email Marketing Analytics, Attribution Modelling in Google Analytics and Beyond, Attribution Modelling in Google Ads and Facebook. It is the indicator of a company’s profitability. Your ‘key performance questions must help you in setting up SMARTER external goals. The following are examples of number metrics because they are in the form of numbers: The following are examples of ratio metrics because they are in the form of ratio: Since KPI is a ‘metric’ and a metric can be a number or ratio, we can have KPIs in the form of numbers and ratios. ‘Why’ denotes the objective and reasoning of your strategy. Inventory Turnover. You can achieve it next week, next month or next year. But it is not something which you will report to a CEO. Deleting a KPI create a report to a friend or colleague and use like ‘ Google Analytics.! Kpi metrics and we can have number metrics and paste it for your strategic dashboard to... Achieved your target, it is considered as failure your corresponding external –! Have one TagA in SystemZ can have ‘ number KPIs ’ and we also! Goal, a mission is a metric can be you, your colleagues, boss,,. Tied to internal goals, they may or may not be directly tied to decision-makers... 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