Creating effective KPIs
|How to visualize metrics that are easy to comprehend and drive decisions?
With the advent of modern self-service BI tools, its become super easy to create reports. The easy-to-use drag and drop UI interface makes it easy to populate it. Creating views/charts is easy, but creating a meaningful chart is difficult.
KPIs (Key Performance Indicators) are important metrics, quantifiable measures of business processes that when defined and represented correctly, help determine business health. Coming up with these KPIs is an important business process. Again, coming up with 20 KPIs for your business is easy, filtering it out to the most important 4–5 is hard (hence the term Key).
To key or not to key
What’s even harder is to get it to 1 Key metric (also called the North Star metric). But our concern in this post is how to visualize these KPIs.
All BI tools have some form of KPI visual available (called card, widget, metric, etc). We are using PowerBI, but most of these functionalities are available in all tools, with few tweaks.
So here is the first KPI. Profit
Bam, this number hits your business stakeholders. (in SQL terms it's just the sum of profit, which can be a field available in our dataset). Okay, we have a number, but what is this profit measure for, the time period. Turns out, this is the total profit till date, since the inception of our business (pretty high :) )
Decision-makers definitely need more context. Let's look at profit only for this year. (TY | This year)
The added unit also adds details. In the case of profit, you might infer that it's not important, but what if the business operates in different countries, using different currencies. Also, a few metrics are not intuitive on the unit part, and additional unit helps put things to scale. (For eg NPS is out of 100, but we have to give users additional visual cues for the same)
But is the profit number good or bad? Some additional details would definitely help make more sense. Let's add it
Now, the user knows if the profit is healthy, meeting goals, or behind.
(I am using dummy calculations for the KPIs)
Few tools (including PowerBI) have options to add more details. Let's added a trend as a background to these KPIs.
Here's another one, when we don’t meet the goals :(
We can add more details for the axis, annotate the KPIs but we need to tradeoff between making the visuals very cluttered or with way less information. What we can do is take constant feedback from users, create standard design templates and use it across all reports. This not only makes the reports easier to build and maintain but can also improve adoption.
