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Domo Knowledge Base

Best Practices for Designing KPIs

Intro

The most effective KPIs (Key Performance Indicators) enable execution of company objectives by

  • providing insight when it comes to making important and timely decisions,

  • showing how you might better align the departments in your organization, and

  • improving your organization's focus towards achieving goals.

To create KPIs that meet these objectives, it pays to know and apply best practices for choosing and designing KPIs.

For more information about how KPIs are represented in Domo, see Understanding KPI cards. For more information about creating KPI cards, see KPI Cards.

Types of KPIs

There are different kinds of KPIs: outcome KPIs (lagging indicators) and driver KPIs (leading indicators). Outcome KPIs are indicators of past performance (such as a high level of customer satisfaction during the last year, quarterly revenue, or a low number of help desk calls for a single month). Driver KPIs are indicators that show the organization's progress towards achieving goals (such as product quality, number of sales calls placed, or monthly self service incidents for the previous month or quarter).

Effective use of outcome and driver KPIs can enable you to identify key behaviors that may have a beneficial or detrimental impact on achieving goals. After you identify these behaviors, you can work to propagate or eliminate them.

Steps for implementing KPIs

Your pages of cards in Domo can convey information effectively if you carefully choose the measurements and KPIs that appear in them. To this end, develop a design blueprint (preferably written by a business manager, product owner, or someone else who deals with the business end of the company) that defines your desired measurements, key performance indicators, user access, and so on. This blueprint, when finished, can be sent on to a technical resource for implementation.

Here are steps that may help you implement the KPIs that appear in your dashboard.

  1. Create a framing statement.

    A well-designed framing statement serves as a guide to your KPI implementation process by describing your short-term and long-term goals and allows you to decide which elements belong in the page and which do not. A good framing statement

    • is concise,

    • states goals, milestones, and benchmark comparisons,

    • has the buy-in of key team members, and

    • is the action plan Domo helps you execute.

      The following image shows an example of a framing statement:

  2. Create a list of questions based on your framing statement.

    For the example framing statement, possible questions might include "How does my MTTR compare to industry average?", "What is my Customer Satisfaction rating?", "Am I meeting my Self Service Ratio goals?" and so on.

  3. Determine a preliminary list of KPIs.

    Create KPIs for each question you came up with in, determining measures and dimensions. Some questions require more than one KPI, and some KPIs can answer multiple questions. You can learn more about measures and dimensions in the following table:
     

    Attribute

    Description

    Measure

    What you are measuring or calculating. Examples might include customer satisfaction, revenue, profit margin, or contract renewal rate, to name a few.

    Dimension

    An attribute of your measure that makes it meaningful, such as time, product type, etc. For example, in a line graph showing total revenue by year, the revenue would be the measure and the years the dimension. You may include more than one dimension in a KPI, but be careful not to show too much information at once or your audience may become confused. To avoid this, consider having more than one KPI or implementing a drill path.

     

  4. Assign goals, targets, benchmarks, and ranges.

    Your KPIs are more effective if they convey goals to be reached, rather than only depicting data. Answer the following questions, and make any changes to your preliminary KPIs:

    • Is there a target or stretch goal for this KPI?

    • Is there a benchmark that this can be compared against?

    • Would a range be better than a target?

    • Can the target, benchmark, or range be relative instead of absolute?

    • Is there consensus on the goals between key team members?

    • If there is a year-end target, can you interpolate milestones to compare against?

  5. Add structured navigation and analysis.

    Diagram how navigation is to occur (drill path or linking, for example). The following screenshot shows an example of a KPI navigation diagram.

     

  6. Determine your indicator types.

    Decide whether your KPIs are outcome KPIs (indicators of past performance) or driver KPIs (indicators of current progress). You should have a balanced combination of outcome and driver KPIs. If you have more outcome KPIs, go through those KPIs and list any factors you think could be used as driver indicators. Decide whether the link is meaningful enough for you to consider adding this indicator to your dashboard.

  7. Check data availability.

    Ask yourself the following questions, and make any changes to your KPIs:

    • Can this metric be accurately measured?

    • Is there a DataSet available for this measure?

    • Will IT give me access to this data?

    • Is the data available for the benchmark I am comparing myself against?

    • Is the data updated frequently enough?

    • Is the data feed reliable and accurate?

    • Is the data contaminated?

  8. Check for compliance and balance.

    Compliance, when applied to BI, refers to a KPI's ability to reach all users effectively, and balance refers to the overall perspective of a KPI and its impact on other measures. Ask yourself the following questions, and make any changes:

    • Does the KPI use standard definitions and terms that everyone can understand in the same way?

    • Is the KPI understandable?

    • Is the calculation easy to understand?

    • Will optimizing this measure be detrimental to other measures (for example, will focusing too much on finance hurt my customer base), or does a balance exist between this measure and other measures?

  9. Assign owners and users to each KPI, and assign triggers and alerts.

    All KPIs should have a business owner and a data owner. The business owner understands the KPI, can answer customer questions, and is responsible for the KPI. The data owner is in charge of the KPI's data integrity and can answer questions about the data feed. For more information about changing owners, see Assigning or Changing a Card Owner. At this point, decide which users are allowed to see which KPIs. For more information, see Managing Users and Groups. After sharing a card with users, create alerts to be sent out when certain criteria are met—for example, if successful sales calls drop too low, an alert could appear to draw your attention to this. Ask yourself the following questions, and make any changes to your KPIs:

    • Is there an alert state for this KPI?

    • Is it a visual alert or a notification alert?

    • How often does the KPI need to be monitored for the alert state?

    • Who receives the alert notification?

For more information about alerts, see Managing notifications and alerts.

Other tips

Also consider the following when choosing KPIs:

  • Don't wait for perfection or total consensus before deciding on KPIs.

  • Designing KPIs is an iterative process, and your business needs change over time.

  • Come up with your best guess as early as possible, then use iterative refinements to arrive at the perfect set of KPIs.