KPI report helps the businesses to analyze how their business is performing over the key business objectives. So a KPI report will tell you everything whenever you need an update about performance. It also tells you how well you’re doing to achieve a specific goal. But wait! How to track, visualize your KPI, and how to set up KPI reports for your business? Fret not; we’ll answer all these questions in this guide and discuss everything that you need for KPI reporting. This guide will surely help you understand how to deliver visually appealing and engaging reports.
What is a KPI report?
It is defined as a business performance tool that helps you understand the Key Performance Indicator effectively. KPI reports are used to track progress against the business goals and targets in order to maximize performance. A KPI report contains tabular information, graphs, and charts.
A KPI report is a digital or physical report that has the performance data overall key performance indicators you are tracking. On the KPI report, all the KPI data is combined that making it easier for you to better understand it.
A good KPI report will help you:
- Recognize performance indicator patterns
- Identify issues
- It helps to make a business decision to access performance data and deep insights.
For instance, if you have a goal to increase leads by 60% for the next six months, then the basic key performance indicator criteria might look at this:
Objective: To increase leads by 60%
Activities: Maximizing the total number of lead generation channels.
Measurement: It is a total leads KPI that is calculated by taking the combined leads from all channels.
Time frame to achieve the goal: 6 months
Responsibility: Identify the person who will be responsible for checking either these activities are completed or not.
Reviewed: At the end of each month.
It helps to keep focused on your business objectives as it provides you a structured mechanism to see your progress towards the business goal without tracking or monitoring a lot of things.
KPIs vs. business metric: What is the difference?
However, business metrics and KPIs seem alike, but there is one major difference between both of them. Let’s have a look at how you differentiate between business metrics and KPIs:
- If a metrics track your performance over a vital business goal, then it is KPI. On the other hand, if metrics track your performance over any business goal, core or non-core, then it refers to as a business metric.
- You can say that KPI is a subcategory of business metrics that focuses on the key business goal only.
For instance, if your business’s key goal is to increase revenue, then the KPI would be ‘total sales’ or turnover rate would be business metrics.
What are KPI metrics?
KPI metrics measure the numerical values. If the individual leads are generated from various channels, then these channels are individually categorized as metrics. They are not restricted to individual metrics. You can calculate them from a series of metrics.
What is the difference between KPI and objective?
Most people confuse key performance indicators (KPI) with objectives because they are too much closely related, but they are not the same thing. Here’s how KPIs do and objectives differ:
- An objective is something that you want to achieve to complete a specific goal. However, a KPI is a performance measure that is used in performance management. It helps you determine how well things are going in achieving your objective.
Let’s take the same example here that we discussed above:
If your ultimate goal is to increase revenue, then your aim will be to increase sales by 30%. Here, ‘increasing sales by 30% means it’s your objective that you need to achieve to meet your business goals. So, ‘total sales’ will be your key metric.
The KPI dashboard
KPI dashboard helps you to monitor day-to-day performance better than reports. They are actually designed to understand the performance data at a glance. For instance, a sales team creates a sales dashboard that would be accessible by all team members to see their performance. It is usually formed in league table format. It shows the metrics that could be the number of leads, calls, and sales.
KPI dashboard vs. KPI report: The main difference
A dashboard is a visualization tool
On the dashboard, you case see a mixture of charts and graphs that provide your real-time performance of metrics and key performance indicators. You can view it at a glance.
Analytical interpretation is a key focus of the report:
For underlying measures, the KPI report mainly focuses on the analytical interpretation with the help of tabular formats, charts, and graphs that support the decision-making process. Some people mix up the concept of dashboards and reports. To visualize KPIs, they both share the same advantages and functions. If you understand their function in the business environment, then it will help distinguish the variances.
Types of KPI reports
So you know what the KPIs are and how to use them for tracking the performance. The KPI reports of businesses are extremely comprehensive and have the capacity to handle the performance data. However, there are three types of KPI reports that are used to analyze your performance to achieve a key business goal.
The operational reports are focused on performance over the day-to-day operations of your business. Operational reports provide information about the daily repetitive activities that help you make decisions and take actions accordingly. For instance, the KPI report of the finance department covers the debtors that the finance department can be used to keep debtor levels low. The operational reports provide you with data that can be monitored regularly to evaluate the actual performance on a daily basis. The typical examples of operational reports are monthly, quarterly or annual sales of any company. You can use this to track your sales to see if it is as a big success as they expected it’d be.
This type of report provides detailed information behind the key performance indicator. Analytical reports can be used across all fields of the business. These reports are specially designed to answers the queries from troughs and peaks in the KPI data. The interactive report will show you the historical values and allow you to break down the individual metrics to investigate the data. Analytical reports are focused on giving you information about the analytical insights about KPIs. It will help you analyze either you are going in the right direction or not.
Examples of analytical reports: Year on year or quarterly seasonal sales growth, you can analyze and determine what are your most profitable months and how much money you earn in different seasons.
The main goal of strategic reports is to provide a clear picture of the growth of the business and where all the things are heading. The strategic report is to show all the shareholders and business partners how the business is performing against the set objectives. The aim of strategic reports is to give you detailed insights into the current business status. The business owners use these reports to make decisions and help you grow in the future.
Examples: The sales ratio from a specific product or region.
The strategic report helps your company to decide where you need to improve your marketing ideas and activities for a specific product.
How to build a KPI report?
Want to build KPI reports but don’t know how to build them? Here are five steps that you will need to build a KPI report.
Create an overview
Form a simple outline document that is created to set the criteria of the KPI report. Moreover, it should give the answer to the following questions:
- What is the objective of the report?
- How this report is used- in this report, static, operational, or strategic?
- Who will the target audience be?
- When will this report be distributed?
Define the KPIs
When you are going to establish your objective, you should have a good idea about the metrics and KPIs you need. KPI need to answer such question like what is your company growth on target or how well are things going or sales performing against your goals. Getting the data can be a complicated part of fueling these key performance indicators. Is it reliable? Can you automate them?
Present your KPIs
Now choose the graphs, tabular data, or charts to present the information in the simplest way. Remember to keep your graphs or charts focused and relevant. Present all your KPIs logically to keep the flow of your information.
Build a porotype
Create a draft and use dummy data if you have not too much information initially. Distribute it to all the stakeholders and employees, and get feedback.
Refine and release
Now finalize your report and distribute it. Like another business process, you can adjust and refine your reports over time to keep them more efficient. Build-in reporting reviews on a regular basis; this will help you keep the information up-to-date and relevant.