The Business of Key Performance Indicators

The price of light is less than the cost of darkness. – Arthur C. Nielsen

Agencies struggle with managing their KPIs (Key Performance Indicators). Here’s why KPIs are so important to your company.

Reason #1 KPIs are the pulse of your project.

Key Performance Indicators are numbers. These numbers indicate whether or not your project is on track.

A strong KPI consists of the following:

  • Number (#)
  • Percentage (%)
  • Dollar ($)

In the agency world you want to create a KPI that impacts the bottom line.

Reason #2 KPIs save your agency money, time, and resources because you’re forced to focus on work that matters.

When a KPI is attached to the bottom line the tasks become clear. How? Everything you do is driven toward a number, a percentage or a dollar.

For example, if I tell Joseph to update the eCommerce catalog but the directions he’s given are piecemeal and unclear what do you think will happen to the eCommerce catalog? What type of eCommerce catalog will he produce?

Most likely it will be a waste of your time, your company’s money, and your resources. And Joseph will have wasted his time as well.

Here’s some examples of waste in an agency environment taken from a Lean Six Sigma perspective:

Type of Waste in Lean Six Sigma Symptom Examples of Waste in an Agency Environment
Transportation Unnecessary movement Moving images and files to different libraries with different naming conventions.
Inventory Overproducing Producing more content (copy, images, video) than what the requirements demand.
Motion Inappropriate sitting Content “sits” for a week without any one checking to see what the status is.
Waiting Delivery failure Waiting on images to be delivered so they can uploaded and then alt tagged. (Typically, multiple projects are in backlog.)
Over-Processing Performing unnecessary processing steps Outsourcing eCommerce work to a third-party. The third-party then produces multiple image sizes where one size was required.
Over-Production Producing more work or producing earlier Database information is beyond either the scope of the project or additional client requests.
Defects Rework Images are the incorrect size for the flash banner ads.

Johann Lohrmann Business KPIs Chutes LaddersOne symptom of not having clear KPIs is poor process flow.
It’s not “Chutes and Ladders.”

A strong process flow shouldn’t be a maze.

Here’s a (very simple) sample flow I use when building out a digital strategy for a website.

Johann Lohrmann Digital Strategy KPIs

Get your KPIs firmly established. Then, create the tasks.

Reason #3 Your KPIs influence the metrics and the analytics.

If you don’t know what the numbers are how will you know whether or not your work was successful? It’s the equivalent of covering up your car’s speedometer and guessing how fast you’re going.

Your clients want to know the numbers. They deserve to know. Choose your KPIs wisely and let them guide you.

Definitions

  • A KPI is a metric directly related to a business goal. It is actionable.
  • A metric quantifies performance.
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