Do you find yourself with an endless supply of reports but unable to get answers to your most critical business questions? Don’t worry – you’re not alone. Many companies are faced with the same exact issues that you are. It’s very likely these companies have one or more of the following foundational problems:
- They don’t tie business results back to objectives or measure against goals
- They lack a cohesive strategy to measure their efforts across the business
- They tend to build reports from the ground up and overload their end-users with pages of data and metrics
Do you notice a theme here? It boils down to a lack of planning in report development. While many of these companies may have large data warehouses with endless amounts of information, they end up with numerous metric-heavy reports that don’t answer any specific questions. This is great for keeping report developers busy, but it is terrible for driving the business forward based on actionable insights.
So how do you fix these issues and avoid these pitfalls? Instead of diving right in and building another report, I’m going to recommend that you take a step back to outline a measurement framework using the following steps:
- Identify Business Objectives
- Determine KPIs
- Define KPI Goals
- Identify Supporting Metrics
- Determine Reporting Dimensionality
- Organize into a Framework
This process will help to provide structure to business questions. Using your framework as a base, better reporting and answers to your questions will follow. We’ll cover the first 3 steps today and finish it up in a future blog post, and wrap up the series with a comprehensive whitepaper which will include examples. Stay tuned!
1. Identify Business Objectives
The foundation of great reporting is built through first asking the following question – What business goals are we trying to achieve? It sounds really simple, but this question is often overlooked and left unanswered. By asking this basic question upfront, you can better define the objectives and scope upon which the reporting will be built.
2. Determine KPIs
After the main business objectives are defined, we need to determine how to measure success for each objective by defining key performance indicators, or KPIs, for each one. A KPI is the most important metric to measure for each objective. As reports are built, these will be the primary metrics that senior leadership should ask for and the ultimate measures that progress should be measured against.
3. Define KPI Goals
If you don’t have a goal against which to measure your KPIs, the results become completely arbitrary. I previously worked with a company that understood the first two points but skipped this important step. When it was time to report on the results of a promotion, it was easy for a campaign manager to pick out pieces of data from the results to shape his story into a success. He would tell management that the company earned $100,000 in revenue from a promotion without sharing that a similar campaign from the previous year earned $500,000 or that the campaign cost $1,000,000 in resources and discount expenses to run. The point is that you should define specific goals for each of your KPIs. This way, it is easy to measure performance against specified benchmarks when delivering results to management.
Goals for individual KPIs should be seriously considered prior to developing reporting. These benchmarks should not be set in stone; they can change over time or vary for individual campaigns. The purpose of these goals is to put into context each KPI so that you can determine if performance is better or worse than the target.
Part 1 Conclusion
We have laid the groundwork for an excellent reporting framework by outlining our business objectives, identifying KPIs that align to those objectives, and defining the goals to measure success. In the next blog post, we’ll continue to build our measurement framework outlining through the 3 remaining steps. You’ll also have the opportunity to download a free whitepaper on this subject. Then, you’ll have the keys necessary to develop your own frameworks that will be the foundation for better reports. Stay tuned!