Your Business As Usual is everything you need to do to maintain the status quo.
Business As Usual typically consists of processes that you execute on an ongoing basis.
A KPI: a Key Performance Indicator, is a tracking mechanism that defines the results that your Business As Usual is required to accomplish.
A KPI, therefore, defines what your critical business is usually or should be and enables you to easily monitor if it is successful.
A KPI is an important instrument for every results driven organization. To get the most out of KPIs you need to be sure that you
are working on the right ones, and you need to be sure that everyone in your organization and team understands the KPI.
In this video I'll explain how to achieve that.
But, before we proceed, make sure to also check our video about the anatomy of a KPI, so that you understand the different components that make up a good KPI.
You'll find a link to this video in this video's description.
To make sure everyone understands the KPI, you need to provide proper context and you need
to ensure that it's not open to more than one interpretation. For each KPI answer the following questions:
1. Why is this a KPI? This question forces you to think critically about the KPIs that you are creating for your team or company.
Your explanation for why you believe this should be a KPI helps others follow your train of thought and put the KPI into context
which is especially valuable in larger teams and organizations, where you don't have the chance to talk to everyone directly.
2. How is the current value calculated? When people see the current
value for a KPI, they need to know which data set the value is based on.
If one of your KPIs is the customer renewal rate, you can calculate the current value in many different ways.
You can look for instance at the renewal rate for the past 12 months or you can look at the rolling 90 days.
Keep in mind that the longer the time period that you base the current value on, the
more time it usually takes for the value to change. In other words it will usually take longer to get feedback.
3. Explain the target value or threshold value. Every KPI should have a target or threshold value,
and everyone needs to understand why this is the target a threshold value.
Sometimes this value is derived from your strategy, other times it's based on industry benchmarks.
For B2B SaaS companies like Perdoo for instance, it's a well-known industry benchmark that gross churn should not exceed 2%.
In Perdoo you can store the answers to these questions in the description field of each KPI.
That way they're easily accessible to everyone in your organization.
There is only one way to make sure that you're constantly working on the right KPIs and that is
to regularly review them. At Perdoo we review our company and team KPIs at the beginning of each quarter.
Sometimes we realize that we never looked at a particular KPI throughout the quarter.
That could be an indicator that the KPI wasn't really important for us.
Other times we realize that the KPI didn't influence any of our behaviors, which could be another indicator that's not a right KPI for you.
Regularly reviewing your KPIs is also important because what could be the right KPIs
for a team or your organization for one period doesn't automatically mean that it's the right KPIs for the next period.
If you'd like to learn more about KPIs then you'll find more articles
about KPIs in the video description below. If you are a Perdoo user, then you'll also find links
in the video description that explain how you can add company and team KPIs in Perdoo.