KPI Reports explained

What is a KPI Report?

A KPI Report is a performance analytics tool that helps companies recognize, measure, and visualize their Key Performance Indicators (KPIs). This enables an organization to track progress against specific objectives.

Through graphical representations such as charts and graphs and tabular data, the report is an indispensable resource for organizations aiming to gain insights and monitor performance.

What are KPI Reports used for?

In today's data-driven world, organizations generate massive amounts of data, from website visitor numbers to microdata from manufacturing processes. While some of this data is crucial for business operations, much of it lacks real business value. Reports help to make sense of this overwhelming volume of data by summarizing the information, making it more manageable and useful.

A KPI Report is a refined method of compiling this data and visualizing key metrics that specifically measure performance against objectives. These reports are essential for structured performance monitoring and improvement processes.

What are KPIs and Metrics?

To understand performance reporting it is essential to establish what a KPI is? And what makes them different from metrics?

What is a KPI?

A Key Performance Indicator (KPI) is a metric aligned to a 'Key' business objective. It tracks how effectively an organization performs against that objective, including associated targets or goals.

Companies use KPIs to bring about performance improvements that drive growth. For example, if your objective for the next six months is to increase leads by 50%, simple KPI criteria might look like this:

• Objective: To Increase leads by 50%.
• Measurement: A combined total leads KPI - calculated by taking all leads from all channels.
• Activities: Increasing the number of lead generation channels.
• Responsibility: Who will be responsible for making sure these activities are completed.
• Time frame for success: 6 months.
• Reviewed and communicated: At the End of each month.

KPIs help you stay focused on the overall business objective by providing a structured and timely way to track progress, without getting distracted by too many or irrelevant measurements.

And what about Metrics?

Metrics, on the other hand, are measures or numerical values. In the example above, the individual leads generated from different channels are individually classified as metrics. Metrics are not just limited to individual measures; they can be calculated from a series of metrics.

Are Metrics important?

Metrics can be as important to an organization as KPIs. They offer a way to measure the health of business activities. For example, a metric that measures the defects in a production line can quickly alert the company when a problem occurs. The same metric can also be used to analyze the performance of different production lines over time.

How do KRAs fit into KPI Reports?

A Key Results Area (KRA) represents the overarching goal or objective that must be accomplished. Key Performance Indicators (KPIs), on the other hand, are specific metrics that gauge progress toward achieving the KRA. They serve as yardsticks to assess whether you’re on the right path. KPI Reports are commonly used to monitor and evaluate how well the KRA aligns with KPI objectives.

For instance, consider an excellent KRA: increasing sales revenue by 10% over the next quarter. To measure progress, relevant KPIs could include tracking website visits, conversion rates, and order conversions. Regular reports enable you to monitor your journey toward the KRA and maintain visibility into the essential metrics supporting the overall objective.

What is the difference between a KPI Dashboard and a KPI Report?

A KPI Dashboard is primarily a visualization tool. It employs a blend of graphs and charts to provide real-time performance of KPIs and Metrics that can be viewed at a glance.

A KPI Report focuses on an analytical interpretation of the underlying measures, using trend graphs and tabular formats to support the decision-making process.

The confusion

Reports and dashboards are often confused. They both share similar functions and advantages when it comes to visualizing KPIs. Understanding how each is applied in a business environment will help distinguish the variances.

The KPI Dashboard

Dashboards lend themselves to operational or day to day performance monitoring better than reports. By nature, they are designed to be understood at a glance. For example, a sales team may create a Sales Dashboard; this would be accessible by the entire team who would 'dip' in and out of the dashboard to see their performance (usually in a league table format) against others. These metrics could be the number of wins, calls, or leads.

The KPI Report

In contrast, the Report is usually where the analysis takes place. What makes up those KPI numbers? Why are there fluctuations in the data points? What caused this to happen? These questions are addressed by digging into the historical data.

Reports are also delivered at specific points for review, such as monthly sales meetings - where they would provide tabular data, offer historical context with trends, and interpretations of the metrics.

Which should I choose?

There is no hard and fast rule for this. Use whichever comes more naturally to you. Generally, we see reports for analysis and Dashboards for day-to-day monitoring. However, both can be interactive and offer almost the same functionality—and there is no reason you can't employ both in your performance monitoring. After all, measuring something is better than measuring nothing at all.

Different KPI Report Types

As you've probably gathered by now, there are different types of KPI Reports, not just categorized by which business department but by their purpose.

The three types of KPI reports are analytical-based, operational, and strategic.

• Analytical Reports provide details behind the KPIs and can be used across all areas of the business. They are designed to answer questions arising from peaks and troughs in the KPI data. A static version of this report typically shows historical values, while interactive reports allow users to investigate the data by dynamically breaking down the individual metrics.
• Operational Reports are focused predominantly on an organization's day-to-day activities. They provide information to those involved in those activities to help make decisions or take action. For example, a finance department's report covering the number of debtors may be used to keep debtor levels low.
• Strategic Reports aim to provide a clear and meaningful picture of a business's health and direction. These reports show the owners and shareholders how the company is performing against goals and objectives.

Creating a KPI Report

5 simple steps for creating effective KPI Reports.

1. Create an overview: This can be in the form of a simple outline document that aims to set the criteria of the report by answering the following questions:
   • What is the objective/goal of the Report?
   • Who will the audience be?
   • How will the Report be used? – is it Strategic or Operational? Static or Interactive?
   • When will it be distributed?
2. Define the KPIs: Once you've established the overall objective, you will have a good idea about the KPIs and metrics you need. KPIs need to answer questions such as how well sales are performing against their goals or if company growth is on target.
   
   Getting the data that fuels these KPIs can be tricky. Does it currently exist? Can it be automated? Is it reliable? These are just some of the questions you'll need to answer.
3. Present your KPIs: Choose appropriate charts/graphs and tabular data to present the information in the simplest possible way. Keep the charts relevant, focused, and in context.
   
   Aim to present your KPIs in a logical order to keep the flow of information or the 'story' from getting disjointed.
4. Build a prototype: Create the first draft using dummy data (if none exists) and distribute it to colleagues and stakeholders. Provide a single point of feedback, sometimes in the report itself, to help encourage consensus.
5. Refine and release: Finalize the report and distribute it. Just like any business process, reports need to be adjusted and evolved to stay efficient. Build in regular reporting review and maintenance periods; this will help avoid report 'bloat' and keep information relevant and up to date.

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Keep design simple

When designing a KPI report, consider these four essential tips to create an impactful and insightful presentation:

1. Consistent Color Scheme: Choose a harmonious color palette and stick to it throughout the report. Consistency enhances readability and reinforces branding.
2. Highlight Key Information: Use a single highlight color strategically to draw attention to critical data points or trends. For example, highlight positive performance in green and negative trends in red.
3. Avoid Overwhelming Colors: Too many colors can confuse readers. Opt for a clean, design with a few well-chosen hues.
4. Consider Color Blindness: Ensure your color choices are accessible to all viewers, including those with color vision deficiencies. Test your report using color-blind simulators.

Distributing a KPI Report

A successful KPI reporting strategy lies in the ability to create simple, informative, and insightful reports. Merely having an incredible report or dashboard means nothing without its audience.

Workplace communication is a recognized ‘success factor’ in employee motivation, satisfaction, and productivity, and the distribution of reports to those who can use the information to act is equally fundamental.

Project management is an excellent example of a business process in which report distribution is vital. Project stakeholders, managers, and staff can see the effects (and consequences) of their actions. They also inform the rest of the organization about the progress toward completing a project.

Distribution can either be through static reports or normally distributed via scheduled meetings. (This type of distribution typically has outdated data, as collating and distribution are done manually.)

Live reports can be either in a KPI dashboard format showing trends and graphs or a traditional report layout, where tables are used to display numeric data.

These reports are not distributed traditionally but rather through links to web pages or apps and can be accessed at any time and from any location.

Using live reports provides the audience with data they can rely on when making decisions. It also reduces the burden of collating the data, removing errors, and manually distributing.

The benchmark for a great KPI strategy is the combination of collection, visualization, and distribution.

KPI Reporting Examples

We've gathered practical KPI Report examples across different domains like operations, manufacturing, and marketing. These examples offer valuable insights into measuring success and making informed decisions.

The Operational Sales Reports

Good sales leadership understands that reporting is critical for determining whether you're on course to hit monthly or weekly targets. Which of your sales teams is producing the most wins? And which are the big closers? Sales efficiency is often tracked by presenting real-time sales information in league tables to show how each member is performing.

Strategic Organizational Reports

Organizations often set annual business objectives, such as increasing growth by 20%, reducing overheads, or increasing market share. A report showing how the company is performing against the objectives galvanizes the whole company to direct its efforts toward those goals.

Manufacturing Operational Reports

Accurate and timely manufacturing reports are vital in maximizing productivity. Managers are provided the information they need to make decisions that keep production lines running, such as machine productivity, the units produced or even lost, and the cause.

Marketing Strategic Reports

A strategically focused marketing report can determine whether all your hard work is paying off. Are we growing market share? Are we reducing marketing spend and increasing customers? Are we increasing the number of leads, and what is our ROI? Or is a change or shift in strategy required?

These reports are also an excellent way to identify potential opportunities, such as a hike in conversion rates for a specific lead generation channel that may be worth allocating more budget.

A Key collaboration and Communication tool

Good organizational reporting and communication are essential to business success. Building an environment where everyone works towards common objectives and goals is crucial if you want to succeed.

A KPI Report provides a structured system for communicating these business objectives and progress. Using simple graphical elements when sharing factual data has two unique advantages.

For starters, it offers an objective view of performance that instills trust in the workforce without involving opinion or interpretation. Secondly, any person connected to the goal can observe how they contribute to its success. Incorporating feedback into reports also provides the benefit of gathering ideas and perspectives.

Communicating performance is not limited to internal reporting; it is also an excellent way to keep shareholders and clients in the loop regarding your value and performance.

Keeping a single, factual perspective of the relationship, such as a shared KPI Report with your clients, will reduce those all-too-common frictions.

KPI Reporting Best Practice

Reporting brings about change. The very nature of reports challenges engrained business processes and drives performance. But how do we avoid getting tied up in the complexity? How do we generate meaningful insights? And how do you get the most out of your reporting? Here are six best practice tips to avoid pitfalls.

1. Set clear objectives. Create a clear brief for the report and stick to it. If it's a focused strategic report, keep it that way. Don't be tempted to 'bolt on' other metrics or KPIs just because it's convenient; build a separate report instead.lt-on' other metrics or KPIs just because it's convenient, build a separate report instead.
2. Keep it simple, really. Don't fall into the trap of having the data dictate what to measure. An almost infinite number of KPIs or Metrics could be tracked. The secret is to focus on what is 'Key.' Restrict your initial report to a small number of KPIs and measure only what matters.
   
   The most common KPIs are not the most important – as a recent study from the Association of National Advertisers found.
3. Embrace technology and the cloud. It's time to ditch the spreadsheet and take your reporting to the next level. Cloud-based solutions designed for KPI Reporting are now more accessible than ever. They are a highly secure and cost-effective way to build and distribute your reports.
4. Ensure data consistency. To demonstrate integrity in your reports, data accuracy and data is crucial. Nothing will ensure the short shelf life of a report than one that is misleading and relying on data that is out of date. Spend time testing various data-sets for their accuracy before committing to them.
5. Coordinate with colleges. Creating reports in isolation to the people who will use them is a recipe for disaster. Invite colleagues whose very responsibilities will be determined by the report to provide input on what needs measuring, when and how this will improve their processes.
6. Review regularly. Businesses change, as do objectives and goals. What's important to track today might be obsolete tomorrow. Keeping regular maintenance and review points in the diary will help to keep your reports accurate, relevant, and beneficial to your business.
   
   In most organizations, it’s the IT department who are responsible for creating and generating KPI and Analytics reports to support the business. You can find an interesting article here at Tech republic offering 8 Best practises for helping IT get the right information to the right people.

More Resources...

References

Survey Sparrow
Creating a KPI Report.

PWC
Guide to Key Performance Indicators

Business Jargons
Business Reporting.

Search Analytics
Creating Key Performance Indicator Reports

Monday blog
KPI reporting: what it is and how you could do it better

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