Welcome to Step 2 of the digital strategy roadmap planning. In our previous article we explained the importance of setting goals in the short, mid and long term and how we work closely with our clients as a part of our overall client success programme.
A key part of being able to celebrate success is to have “success” defined early in the process—what does success mean to you as a merchant? One of the best ways to do this is by ensuring your digital strategy roadmap is well defined and understood by all stakeholders.
To briefly recap, below are some important stages in our digital roadmap strategy planning process:
- Identify business and digital goals for the short, mid and long term
- Identify the key performance indicators that will drive success
- Collate and brainstorm tactics (activities & projects) that will drive these KPIs and goals to success
- Prioritise the activities & projects based on cost and impact
- Build a thematic high-level plan
- Create a visual time-based roadmap
In this article, we'll be looking at our best practice approach to setting KPIs, the suggested frequency of measurement, why KPIs fail and some additional recommendations to ensure that your KPIs are not only set up correctly, but your targets are met and help you to achieve your goals. It's important to setup your KPIs so they have a direct impact on your ability to achieve your goals.
A KPI is defined as a metric with a target that is integral to your business’s success. Every business has goals and objectives, and these usually touch on areas such as financial performance, customer satisfaction, operational efficiencies etc.
KPIs are set up to track the efficacy of goals and ensure that the roadmap's planned activities and projects help move the needle in the right areas.
It's important to know how often to track KPIs. The frequency of evaluation can open up new opportunities and even assist with finding different ways to achieve your goals. The following frequencies are commonly used when tracking KPIs:
- Live (tracked continuously)
Also important is to set short and long term KPIs. Having a good view of your immediate targets and a longer-term vision of where you want to get, gives a good overview of your strategy. Start with long term KPIs and work backwards from there to define the short term targets. The real benefit of setting short term KPIs is that it can give you rapid feedback on how you are performing and allow time to course correct.
Leave room to re-evaluate KPI targets and be realistic about actual performance and what you feel is achievable going forward.
When setting KPIs there are some important aspects to cover. First, ensure you have clearly defined what the KPI is. Usually, these are well known and well-used metrics attached to customer experience and financial performance, but these can also be based on time and cost savings, should this be a goal for the business.
- Conversion rate
- Revenue per visitor
- Customer lifetime value
- Net promoter score
- Customer satisfaction
- Average order value
- Time on site
- Customer service ticket rate of resolution
Next, it's crucial to set a baseline. This means capturing the “as-is” or current state. From there, you can set your targets for the long and short term. In some instances, stretch targets can be used to further motivate teams to achieve beyond the initial targets.
Finally, attaching a timeline to your targets and KPIs is critical. A good approach is to use the following and fill in the blanks:
Increase/ Decrease (KPI) from X (baseline) to Y (target) by Z (date)
Increase turnover from £1M to £2M by 2023
All KPIs should have an owner who is responsible for monitoring KPIs and achieving the targets set. KPIs need continuous grooming and assessment. KPIs can also be associated with an individual's performance. This can have a direct and positive impact on achieving the targets and goals set out by the business.
Finally, it's important to remember that KPIs can fail. Some common reasons for this are KPIs lacking specificity and not being defined properly. KPIs can also fail when it is unclear how to measure them. Ensuring you have access to the data you need, and having defined the data source upfront is critical for alignment. The last check is to make sure your KPIs are achievable. Looking at short and long term targets at the right frequency will help you understand if you are on the right path or not.
Later in this blog series, we'll circle back on KPIs and their importance. When planning your roadmap you need to identify the KPIs that will tell you if your roadmap themes and activities are the right ones to help you achieve your goals.
In the next article of our Building a Digital Strategy Roadmap series, we'll cover how to brainstorm tactics (digital activities & projects) that will form your roadmap and drive your KPIs and goals to success. Stay tuned…..