Realizing that you can only improve what you measure is a good first step in managing your key performance indicators (KPIs). The next step requires companies to choose what aspects of their business they want to improve, and how to measure their progress towards company goals. Comparing the growth of this year over last, isolating best-selling products, and understanding the cost of acquiring new customers should all be on your radar.
One thing I will note is that another growing pain of deciding on KPIs is discovering (or confirming) that there is a lot of missing information.
Defining Your KPIs
Choosing the right KPIs to focus on is crucial when making effective, data-driven decisions. While the right KPIs will concentrate your team’s efforts towards meaningful goals, chasing “vanity metrics” will simply be a significant waste of resources.
In order to get your team to buy-in to your monthly targets and to achieve your long-term goals, you have to measure the right things. For example, if the goal is to increase revenue at a medspa by 25% over the next two quarters, you couldn’t determine success by focusing on the number of likes on your Facebook page. Instead, we could ask questions like:
- What is our ratio of new spa clients to returning spa patients?
- What does our follow-up process look like to existing patients?
- Do we want to look at the outreach efforts of our patient care coordinator, and see whether there are fluctuations in canceled vs. kept appointments?
- Should we look at the impact of increased training for providers?
Similarly, if we wanted to evaluate the effectiveness of various digital marketing channels, we will need to determine a precise definition of success. In order to reach an end goal of increasing sales or brand awareness, you might include KPIs for ad impressions, click through rates, conversion numbers, new email list subscribers, page visits, and bounce rates. Looking at all these factors will allow us to determine which channels are driving the most traffic and revenue.
If your business is committed to data-driven decision making, establishing the right KPIs is crucial. Although the process of building a performance-driven culture could be daunting, having a good dashboard with clear metrics and reports will go a long way towards helping you stay organized. Establishing an effective KPI dashboard will help focus the efforts of your team towards your goals, whether it’s to move product off shelves faster, create better patient outcomes, or increase your revenue per customer.
If you are about to embark on a business intelligence (BI) project, the good news is that in the business intelligence world, measuring performance can be especially precise, quick and easy. Here’s a useful guide on how to decide what it is that you want to measure:
Step 1: Isolate Pain Points, Identify Core Business Goals
When working with doctors, we start by trying to quantify their current performance. Using AtlasKPI’s dashboard, you can drill into an endless amount of very detailed metrics. From revenue, expenses, and profitability, to site traffic, and conversion rates, the list goes on. So ask yourself: What can make the practice better at what we do?
You can approach this question by focusing on stage growth, a younger practice would focus most on metrics that validate their business models, whereas a doctor who’s been practicing for 20+ years would focus on metrics like average patient lifetime value. You could also examine this question by business unit: the surgical center vs medspa.
Ready to dive in? Start by going from top-down through each department to elicit requirements and isolate the pain points and health factors for every department. Here are some examples of KPI metrics you may want to look at:
- Revenue over time
- Profitability by service and provider
- Conversion rates
- Number of new consults and cancellations
- Appointments broken down by service type
- Leads by referral source
- Expenses by category
- Number of units sold
- The ratio of new to existing patients
- Top 3 products sold
Step 2: Break It Down to A Few KPIs
Once you begin creating KPIs, you’ll find it gets easier and easier to get lost in a sea of metrics. Choosing the top 10 KPIs to start with gives you a great number to aim for, and a manageable way to break-down your core business goals into specific metrics. Remember, the point of a KPI is to gain focus and align goals for measurable improvement.
Step 3: Carefully Assess Your Data
After you have your main 10 KPIs, you can start digging into the data and start some data reporting. A good question to ask at this point is: How much do I trust my data? In order to answer that question, you may want to look at what data you’re currently collecting and quantifying? This “data audit” will guide your decision of whether you first need to clean your data before being able to use it to make a data-driven decision. You may need to analyze your data sources and what data is being captured.
This can get tricky.
Consider that data will often come from multiple, disparate data sources. For example, for information on a marketing or sales pipeline, you’ll probably need Google Analytics as well as data from your EMR system. It’s important to recognize that the most powerful KPIs often comes from a combination of multiple data sources. Make sure you are using the right tools, such as a BI dashboard (like AtlasKPI) that has built-in data connectors to integrate and join data accurately easily.
Step 4: Represent KPIs in an Accurate and Effective Fashion
Congrats! You’ve connected your business data to your KPI dashboard. Now you’ll need to find a way to represent the metrics in the most effective way.
You can see a few sample AtlasKPI Dashboards here for some inspiration:
One tip to keep mind is that the goal of your dashboard is to put everyone on the same page. Users will each have their own questions and their own areas where they want to explore – which is why building an interactive, highly visual BI dashboards are important. Your BI solution should offer interactive dashboards that allow its users to perform basic analytical tasks, such as filtering the views, drilling down, and examining underlying data – all with little training.
See an example:
People are often entrenched in their own processes and as data analysts, AtasKPI offers an “outsider’s perspective” of sorts. We only see the data and are not clouded by day-to-day business tasks.
Don’t be afraid to ask yourself some hard questions about your business. Start with the most basic and you may be surprised about how many you don’t know the answers to. If you’re unsure about what questions to ask, give the AtlasKPI team a call, and we’ll be happy to help. And you’ll be a data hero just for asking and for picking up the phone to get a little guidance.