Measure what matters
When it comes to creating digital KPIs, keep it simple.
“Choose KPIs that you can measure easily. Don’t try to build a KPI hierarchy. Select just 5 to 9 metrics to track, report and act on,” Proctor says. “The value of a metric lies in its ability to influence business decision making.”
According to Gartner, the best metrics:
- Have a clearly defined and defensible causal relationship to a business outcome
- Work as a leading, not lagging, indicator
- Address a specific, defined audience
- Can be understood by a non-IT audience
- Drive action when they change from green to yellow to red.
“Get your transformation metrics right and you’ll improve your ability to succeed and describe that success to your key stakeholders,” says Proctor.
How to create digital KPIs that work
Proctor says that one of the most popular questions Gartner clients ask is how to create key performance metrics or digital KPIs — and whether a standard set of KPIs to choose from exists.
“Stop looking for a list everyone else is using, because done properly, someone else’s list won’t apply to your transformation,” Proctor says. “KPIs need to be industry-specific and then organization-specific to be meaningful and useful.”
To create a digital KPI, ask these five key questions:
- What is being measured? An example might be the percentage of customer interactions that are virtual/digital.
- Where are we today?
- What is our target goal?
- What is our desired business outcome/benefit (for example, 50% better customer outcomes and 20% lower cost)?
- What is our balance point?
A “balance point” describes the reasons why an enterprise shouldn’t overdigitalize. The law of diminishing returns applies in digital business, and sometimes it makes no sense to have 100% as a goal. For example, a South American company might want to move all its customers to mobile transactions, but in some countries 100% of consumers use a smartphone, while in other countries only 15% do.
This article has been updated from the original, published on October 31, 2018, to reflect new events, conditions or research.