How to choose which KPIs to track
KPIs can sometimes drift into metrics that look impressive but do not have real value for the client. Here is a step-by-step guide to help you determine the right ones:
1. Start with a clear goal
Deciding which KPIs to track should start with a clear aim. First, identify the one or two improvements that will make the biggest difference. A few examples of such improvements include cutting costs in production, lifting customer satisfaction or improving delivery speed. These priorities give your KPIs a direction to follow.
Once you've defined the outcomes that matter the most, draft a handful of action items that speak directly to those goals. This initial step ensures that everything you track serve a purpose rather than just filling space on a dashboard.
2. Link KPIs to Business Goals
Every KPI must connect back to a specific and measurable business objective. If your goal is to increase sales by 10%, a relevant KPI might be the number of new leads generated each week. If you're focused on improving quality, you might track the percentage of products that pass inspection on the first try.
Writing down the exact outcome you seek makes it easier to test whether your KPI actually reflects progress. Without this link to objectives, even a perfectly formatted metric can end up misleading your team.
3. Limit the Number of KPIs
It's easy to overload your reporting with dozens of metrics. However, more isn't always better. Stick to five or six KPIs so that you and your team's attention doesn't scatter.
4. Apply the SMART Test
Even once you've selected your KPIs, they still need to be put through a final filter to ensure they're useful in practise. Make sure each KPI is:
Specific (Know what you measure and how)
Measurable (Ensure data is available and reliable)
Achievable (Set a target that stretches the team without being unrealistic)
Relevant (Tie the measure back to a busines priority)
Time-bound (Give it a deadline or a regular review-cycle)
For instance, 'reduce average order fulfillment time from 48 to 24 hours within six months' meets all the above criteria. Embedding these checks from the start makes your KPIs far more actionable.
5. Ensure Data Reliability
All the planning in the world fails unless your data is consistent, accurate and up to date. Too often, metrics rely on spreadsheets or systems that don't integrate, which slows you down and introduces human error.
The answer is to centralise your data flows. Link your ERP, CRM and any specialist tools to a single solution that refreshes automatically or with minimal delay. Define clear user permissions so that only approced team members can modify critical figures.
6. Turn Data Into Action
A table full of figures won't help unless others know how to interpret it. This is where strong management reporting helps you visualise the data. For this, you can use dashboards that highlight performance at a glance with with visuals like trend lines, progress bars or colour indicators to signal whether each KPI is on track.
In addition, you can set up automatic alerts when a KPI slips out of bounds so you can respond quickly. Scheduling regular check-ins to review results and stay on track is also a good idea. This mix of automation and human insights ensures that KPIs spark action, rather than just sitting pretty in a spreadsheet.