How Do I Determine Which KPIs To Use?

KPI’s help one measure their progress towards goals and navigate their journey. As an organization, envisioning to drive impact through your work and growing your business, KPI’s can be your ready reckoner to enable the right checks and balances in place.

As the renowned management expert Peter Drucker put it, “If you cannot measure it you cannot manage it, and what gets measured gets done”.

Hari Nallan & Mohita Jaiswal

In the 1990’s the balanced scorecard  was created to first monitor performance (not just related to the financial progress of companies) by Dr. Robert Kaplan and Dr. David Norton as a modern KPI framework. Today, as we step into a constantly evolving business and technology ecosystem, working without the right KPI’s and frameworks, is detrimental to measuring organizational progress and making key business decisions.

Steps to determine your right KPI’s

For most organizations, it is difficult to create and measure the right KPI’s as data can often feel overwhelming. Trying to absorb everything at once, only lends you to hitting with an analysis paralysis going further. 

Let us take a pause and break down this seemingly complicated task to a simple process of determining your winning KPI’s. Whether you wish to measure your business performance or need to create metrics for your next data product.

Example: Imagine yourself as a healthcare provider who wishes to create and monitor their KPIs to derive value for their business and customers.

Step 1: Determine your goals

What are your business goals? Which of the business goals does your product meet? How does the product benefit the company?

As a healthcare provider, one of your business goals is to Deliver world-class quality emergency care and other healthcare services

Create a list of all your business goals. Indicate the performance of your product/service as aligned and measured against your business goals and check if the product/service strategy is working. Once aligned with business objectives, product/service goals can be listed and thence pave way to the creation of optimal measures and targets for performance.

STEP 2: Identify behaviors aligned to goals

How does your goal translate into positive and negative customer behaviors or service team/product behavior?

  • Having World-class processes.
  • Consistency in our service delivery.
  • Getting great Customer feedback.

Identifying behaviors helps us to understand what we need to measure. If you are already collecting and storing data, simplify and clean this data to understand which of the behaviors are getting measured at the moment and which of the listed behaviors yet need a metric to collect data for. For eg. for the above scenario, having existing data regarding customer rating indicates that customer feedback(as a behavior) already has a measurable KPI in place. Ascertain for all other behaviors listed.

STEP 3: Research but do not go for readymade templates

It is of value to research as many key performance indicators as you can, corresponding to the behaviors/measures listed in step 2. It can help you to determine which KPI’s are appropriate for your industry and used most prominently. However, since KPI’s should match your strategy and not just your industry, always define KPI’s which would be most relevant to your goals and your stakeholders rather than choosing ones while trying to fit the bill.

For eg. to measure customer feedback, user satisfaction score is often used as a standard metric. However, since consistent service delivery is stated as a desired behavior aligned to your goal, it would be of greater value to have user satisfaction score for consistency in service delivery as a KPI to track.

STEP 4: Create SMART KPI metrics

Are your metrics specific, measurable, achievable, reliable and time-bound and also accountable?

Chosen KPI’S

  • Customer satisfaction score for each service: Not time Bound
  • Customer retention rate/year: SMART
  • Task completion: Not specific
  • Innovative products used yearly as compared to competition: Not Reliable
  • Change in yearly Rating as per international standard: SMART

Assigning KPI’s to specific stakeholders ensures accountability for it getting tracked. In order to ensure KPI’s are not too difficult to measure you’ll need to do some analysis of the data, you’ve already collected to decide what’s most appropriate. It is of value to define KPI’s by normalizing raw counts to make them more meaningful, for example by using averages or percentages.

STEP 5: Check and balance KPI’s between quantitative and qualitative/leading and lagging indicators

What are your leading/lagging and quantitative/qualitative KPI metrics?

  • Lagging metrics: Revenue generated/year.
  • Leading metrics: International rating for the year as per standards in healthcare processes.
  • Quantitative and Qualitative: Customer satisfaction feedback and score.

Once KPI’s have been created to take a balanced outlook, between having leading and lagging indicators as well as qualitative and quantitative once. Lagging KPIs generally measure what has already happened: such as sales, number of customers etc. While leading indicators are input-oriented activity metrics that anticipate a company’s progress towards its goals. Choosing to have both quantitative and qualitative indicators helps in validating numbers, ensuring greater richness and reliability to the measures.

STEP 6: Choose the right number of KPI metrics

Which of the KPI’s created can you drop?

Customer satisfaction score for emergency care is relevant to measuring the progress of the business towards its stated goal to provide world-class emergency care services. Hence it is of the highest priority and should not be dropped.

You do not need to measure everything which could be measured and overpopulate with metrics. Too many metrics get difficult to manage and track and at the end of the day create it a task to crunch data rather than gather insights relevant to your goals. Avoiding vanity metrics as you scale is important. So, prioritize and segment KPI’s as per goals.

STEP 7: Define your KPI targets and link them together

What are the targets for KPI’s and how will this impact other ones?

  • Customer retention rate target for the year is 75%
  • Here customer retention rate might also affect revenue targets.

While KPI’s tell you what to measure, setting KPI targets can help you measure your progress towards success. However, it is also important to consider how different KPI targets are interlinked and align with one other while deciding KPI targets. For instance, you cannot expect to meet financial goals without meeting a certain level of performance in other domains like service quality, customer retention etc. Avoid this by reviewing each target and ensuring that they are linked suitably and strategically.

STEP 8: Visualize KPI’s well

KPI’s are of value if they give you actionable insights on the basis of which decisions could be taken. Numbers are hard to understand and hence having data visualizations that are clear, concise allow your data to tell a story. Make sure you can capture & report on the data and check if the KPIs provides the actionable data needed to achieve set goals. Dashboards which allow you to interact with your data also stand at a leverage point of allowing you to brainstorm if any other angles should be examined.

STEP 9: Check for consistency

Looking at key performance indicators should not occur just once but should be a process that occurs at stated intervals over time. Although several people may have an effect on a KPI, each one having a single owner ensures accountability in tracking progress and taking actions. A/B optimization can further be used to check the reliability and optimality of the metric and then used to decide on working with an improvised one or dropping it altogether.


Commonly used KPI’s:

Financial indicators

  • Lifetime value
  • Average Transactions
  • Costs
  • sales per region/demographic
  • acquisition costs
  • innovation spending
  • Turnover (i.e., revenue) generated by segments of the customer population
  • Units sold

Customer and product indicators

  • Customer number
  • Engagement and referral rate
  • Customer activation score
  • Customer retention rate
  • Customer happiness score
  • Customer task completion rate
  • Customer churn rate
  • Customer attrition

Process and team indicators

  • Employee performance and satisfaction metrics
  • salary competitive score
  • training, career growth metrics
  • process efficiency
  • support and redressal score
  • Average time to delivery
  • Estimate to task completion

Specific departments and functions would have their own targets and KPI’s. Eg for something as specific as content marketing metrics like click-through rates, bounce rate, cost per lead etc.

Accelerate progress holistically…
Insights should lead to actions, KPI’s in isolation would not affect that. But insights drawn out of KPI’s can definitely lead to business getting a new lease, enable key decisions to reconfigure technology, processes or the people function. As a strategic driver, KPI’s can boost and support your organizational engine right, as you invest in choosing them well!
Hari Nallan

Hari Nallan

Founder and CEO of Think Design, a Design leader, Speaker and Educator. With a master's from NID and in the capacity of a founder, Hari has influenced, led and delivered several experience driven transformations across industries. As the CEO of Think Design, Hari is the architect of Think Design's approach and design centered practices and the company's strategic initiatives.

Mohita Jaiswal

Mohita Jaiswal

Research, Strategy and Content consultant. With a master's from IIT Delhi, Mohita has diverse experience across domains of technical research, big data, leadership development and arts in education. Having a keen interest in the science of human behavior, she looks at enabling holistic learning experiences, working at the intersection of technology, design, and human psychology.


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