Why KPI systems should be house made

KPI Prozess
This is how you structure KPI docutmentation – ideally. Graphic: dotSource GmbH

There are areas in (online) business in which copy/paste as a strategy has gained a certain raison d’être. But this does not apply when defining business metrics. Every company is different, which is why different KPIs are important. Each has its own priorities and challenges to overcome and this should be reflected in the business metric portfolio.

This is why it is hardly possible to compare numbers from different companies. A newsletter opening rate of seven percent is a letdown for one shop manager, for another it’s a success. It’s the same with the number of newsletter subscribers. a niche provider in B2B would value 10,000 subscribers differently to a B2C bargain portal. Even within one branch and among direct competitors, comparisons should be taken with a grain of salt.

For this reason, the goal is to become your own yard stick and to view historical data in context. In this way, >>common knowledge<< can be tested. For instance, it is conceivable that new customer acquisition is not always more expensive than reactivating existing customers – at least in some channels, customer segments, or branches.

The company is broken down to its individual parts, which simplifies goal achievement. Goals becomes measurable and the steps towards achieving them visible. KPIs can depict the entire company and quantify it, because all its part build on each other:

  • For the entire company
  • Each channel (advertising, sales, communication)
  • Each campaign
  • Each department
  • Each staff member

This goals aren’t just for the company as a whole, but are part of each measure and campaign: which campaign measures had the best cost/benefit (e.g. print vs. web format for acatalogue) / the highest ROI? The complete marketing budget is the sum of all campaigns. This is part of the company’s profit/loss calculation.

How should KPI documentation be structured?

Looking at KPIs, you quickly hit the question: how many statistics are actually important? At what point it is too much or not comprehensive enough? There is no simple answer to this question, as a look at the plethora of systems, channels, and departments makes impressively clear.

The only point of orientation when selecting and systematizing business metrics is your own company strategy. Because each company (and each department in that company) has to find their own system, it isn’t possible to automate all reports and tailor them to external requirements right at the start. This has to happen step by step and be developed constantly.

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Busniess Metrics: something for all businesses and staff

Grafik:Jorge Franganillo
Graphic: Jorge Franganillo

Word is getting around: the use of business metrics has nothing to do with business size. Defining metrics makes sense for businesses of all sizes and is already a competitive advantage for some companies. Online pure players, like Zalando, placed a high value in automation and testing early on to achieve excellent results.

Web analysis makes it possible to analyze the customer journey across all end devices. Businesses can collect data from all monitoring tools and systems and display it on spread sheets. This makes it possible to build up dashboards for a quick overview and detailed reports, making the entire business process transparent.

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KPIs – Measuring the digital world, but what for?

Grafik:Isaiah van Hunen
Graphic:Isaiah van Hunen

Data, data, data – everyone collects it, saves it, few know what to do with it. Whether you’re measuring the latest results of a Facebook ads campaign, the development of conversion rates, or traffic…what are you going to do with it? Deploying (key)metrics for analysis, controlling and planning effecitively is not just logical in this time of digital changeover, it is essential.

But which KPIs, business metrics and measurement values play which roles? How can companies obtain advantages or define goals from these? Before everything goes up the proverbial creek and the numbers threaten to explode, there has to be a solid basis which makes “big data” useful.

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