by Rob Joseph, Director, BeaconCFO Plus
Let’s say that your business has recently determined some Key Performance Indicators (KPIs) and created an automated financial dashboard. If you weren’t tracking your progress against any KPIs or utilizing your data before, this is great progress. But now comes the next challenge: How will you keep those metrics fresh? We have a couple of pointers to make sure your data remains meaningful and useful when making financial decisions for your company.
Regularly evaluate your organization’s KPIs.
If the last two years have taught us anything, it’s that change should be expected. As your organizations grow and adapt, your KPIs will do the same. For example, what was once an important KPI to track before the pandemic may now be less critical or even irrelevant. New KPIs may be needed to account for any operational or process-oriented changes. Each of the KPIs you track in your financial dashboard must:
- Be simple and easy to measure.
- Be relevant to the daily operations of your business.
- Be aligned with your overall business goals.
- Be actionable.
- Be measurable.
Focus on outcomes important to your clients and consumers.
This means tracking KPIs and CPIs. What’s a CPI, you ask? In this Harvard Business Review article, Gene Cornfield writes, “The more your company’s attention is focused on outcomes important to your customers (CPIs), the better your company will likely perform on outcomes important to the business (KPIs).” Cornfield says that any group that touches customers either directly or indirectly—such as marketing, product management, and customer service—can use CPIs to monitor success.
Use both quantitative and qualitative metrics.
Knowing your numbers is critical. But so is assessing your progress through non-numerical metrics. For example, are you tracking whether your business is meeting requirements for safety and regulatory compliance? What about your organization’s Net Promoter Score, a measurement of how likely a person is to recommend your company, service, or product? All of these things make a difference to your customers—and to your overall business goals. Depending on the nature of your business, you can collect qualitative data through focus groups, case studies, and regular conversations with your clients.
Add new metrics on a regular basis.
Set times for yourself or your team to assess the metrics you are tracking and provide ideas for additional timely and actionable metrics. A stagnant financial dashboard that is not being utilized does not serve any purpose to your organization. Make sure you are investing in the tool with regular monitoring and updates.
Are you currently utilizing a financial dashboard at your organization? Our fractional CFOs can provide guidance on how to establish and track stronger metrics that will guide your business to achieve its long-term goals. Reach out to our team today to schedule a complimentary session with one of our CFOs and have an opportunity to ask questions and get advice specific to your business.