Not All KPIs are Created Equal

Hey there! Welcome back to the JS Analytics newsletter.

Today, let’s talk KPIs. As you probably know, Key Performance Indicators (KPIs) are the top metrics companies use to measure business performance, health, and success.

There are tons of metrics you can track, but your KPIs are those that deserve the most attention. The right KPIs help you make strategic business decisions and ensure you’re on track to hit your business goals.

That said, not all KPIs are created equal. In fact, one of the biggest mistakes I see businesses make is focusing too much on lagging KPIs and too little on leading KPIs.

• Lagging KPIs: measure past performance, or tell you what happened (they lag behind the current moment)

• Leading KPIs: predict future performance, or signal future outcomes (more reflective of the current moment)

Intuitively, everyone wants to track lagging KPIs like customer churn and profit margin.

Problem is, lagging KPIs are not immediately actionable. By the time you see an increase in churn rate or decrease in profit margin per job, you’ve missed valuable opportunities to improve your business.

So what are some examples of more actionable leading KPIs and how can you identify them?

To start, I like to work backward from lagging KPIs to determine potential driving factors.

Take customer growth as an example. New customers acquired is typically driven by leads generated and lead to customer conversion rates.

And for many service businesses (at least those in competitive markets), lead to customer conversion rate is largely driven by lead response time. The faster you respond to leads, the more likely they are to purchase from you.

Point is, having the ability to monitor and address spikes in your lead response time today drives customer growth tomorrow.

That’s not to say you shouldn’t monitor lagging KPIs like customer growth. But actionable data that helps drive immediate and positive changes deserves your day-to-day focus.

Remember – time is money. If you’re spending too much time sifting through data that isn’t actionable in the short term, you’re stunting your business. Focusing on the right KPIs at the right time is crucial to your business’s growth.

What KPIs should you track? Well, that depends on your industry, products/services, and stage of growth. However, whatever your industry, don’t forget to focus on actionable data.

If you want more personalized help, that’s what JS Analytics is here for. I’d be happy to help you determine the most relevant KPIs for your business and get a dashboard together for you.

As always, thanks for reading!
Josh

P.S. To learn more about JS Analytics and what we do, check out our website here.

If you’re interested in becoming a client of JS Analytics, feel free to grab time on my calendar here.