How to define KPIs and improve Marketing Processes

The purpose of KPIs is to provide insights that we can act on. Meaningful KPIs enable us to monitor and re-design today’s systems and processes, so that we can achieve the desired objectives with greater efficiency and effectiveness tomorrow.

The Big Picture

The purpose of KPI reporting is to support decision-making on critical issues. The content is deliberately selective. It doesn’t aim to cover everything. Instead, it highlights key issues within a larger area. But what it does cover, it reports faithfully and without distorting the scale of the issue.

Reports highlight and summarise the essential issues accurately and concisely so that the Audience can understand the current situation. Their next step will be to ask questions and discover whether discussions are needed, whether decisions must be made.

The Audience

When you stop and think about it, a KPI is a form of communication between a Reporter and their Audience. Ideally the reports will communicate meaning to the Audience without the presence of the Reporter. For that communication to work successfully, the Reporter and Audience have to share a common understanding of:

  • Context – what the report refers to;
  • Content – what it means: why these units, why this layout;
  • Implication – which decisions can be taken using this information.

There’s simply no way that happens by accident. Reporter and Audience must sit down together to define the essential business issues; identify what business decisions are linked with those issues; and sketch out how the relevant information should be communicated. In my experience, it’s a lot more productive to create, review, and refine those sketches on a white board before diving into the details.

Form follows function

The idea that report content must be self-contained and the display intuitive, is important. But in the initial design stages, I think the graphical issues around Design of Information and Visual Communication are a distraction.

“Design is not just about look and feel,design is about how it works.”
Steve Jobs on the iPod

I especially like Steve Jobs’ quote about the iPod, because I think it’s also at the heart of the whole KPI thing. If we take functionality as our starting point, a useful first question to discuss with the Audience is: “what function should the KPIs perform?

A status report shows how something was at a specific point in time (“high tide was 1,2 m above normal sea level”), or how it is now (“body temperature is currently 36.8 Celsius”). To be meaningful, the display should also indicate whether the value is acceptable or not.

Revolutions per Minute. Kilometres per hour. Website visitors per day. Purchases per week. Counts, volumes, values per unit of some other yardstick, such as time. These are often a variation on the status report.

How an effect (by convention the y-axis) changes with variation in a cause (the x-axis). A classic example is revenues over time (months, quarters, years). A trend report is often a status or performance report that includes recent history (“we got here via this path”). The danger of trend reports is the temptation for eye and brain to think it sees a pattern and use them as a predictive tool – which they most definitely are not.

Alarm Bell
The function is to trigger action, so there has to be prior discussion and agreement between the Reporter and their Audience. First about the sensitivity of the trigger setting and second about the follow-up procedure. After all, there’s a serious difference between: “ten minutes after the alarm went off, the team had put the fire out” and “the building is burning because no-one knows what to do when the alarm goes off”.

Reports that suggest how things may evolve in the future (i.e. time-orientation). For example: “there’s enough reliable historical data available to indicate, via sound statistical calculation, how a situation might evolve in the near future within defined confidence limits”. And yes, the data analysis does have to be that pedantic to be valid.

What’s coming into view (i.e. spatial or conceptual orientation). Vitally useful in business and yet tricky to do because there are so many eventualities to cope with. You might for instance, devote resources to following the science of new materials to identify opportunities for creating new products. Or you might put resources into tracking the evolution of customer needs. But it’s only by doing both that you can create a new product which satisfies customer needs.

We might want to show how far we’ve come (“Year to Date”); or we might want to show how much remains to do (“quantity remaining”). To run a quantitative analysis, we need a data source of units that can easily be counted, such as time, resources, money or whatever. If quantitative sources are missing, or to do a qualitative analysis, you might show milestones instead – “Stage 2 of the project is now complete; only Stage 3 is left to do”.

Flashing Lamp
An exception report. “Hey! We spotted something unusual. It looks like this and we evaluate it  this way. Let’s discuss whether we need to take action.”

Applying these ideas …

It helps enormously if Marketers begin by clarifying who the Audiences for their reports are, and what information those people need.

Cars provide easy-to-understand examples.

A car dashboard enables the Driver to operate the vehicle safely: the fuel tank is full, no warning lights are flashing, the seat belts are in use. “Let’s go!

When the vehicle goes in for maintenance, the Mechanic accesses an entirely different set of (historic) data, from a different system, for in-depth analysis – and gives the Driver recommendations. “It’s time to change the brake pads.

The car navigation system enables the Driver to tell the Passenger how far it is to the destination, and the expected time of arrival. “No delays expected on this route.

In much the same way, Marketing departments need different types of report, according to the specific needs of the Audience. You get the idea.

… to Marketing Reports

In my experience, Marketing creates two different types of report and they’re very different in content and style.. There are the reports about itself, for its own use; and there are the reports that communicate about Marketing to non-Marketers.

Reports for Marketers

Operation reports
Imagine for a moment Marketing as a ‘Black Box’. There are resources inputs (staff, budget, data) which are combined into processes (online, offline, etc.) to create outputs (events, leads, prospects).

The operation reports provide an overview of the health (effectiveness, efficiency) of that ‘Black Box’. They answer questions like. “are the operational systems and processes consuming the expected levels of resource and delivering the desired level of output?”.

Maintenance reports
These might be the reports from Team Leaders / Head of a function or system (website, eshop, CRM, etc.) to the Marketing Director. The top level is the summary of recommendations for action; below that is an analysis that explains the recommendation; below that, the details. Once the method has been jointly agreed, the Marketing Director probably does not need to see these.

Reports for Non-Marketers

In parallel, there’s a set of reports that Marketing Directors want to share with other department heads and Stakeholders or business Sponsors.

Navigation reports
The purpose of these reports is to make sure that both left and right hand are working together to achieve business objectives. The format and content depend on the audience: Sales, Business Development; or Finance, IT, HR, CEO.

A brief word on data

It’s not always a good idea to begin with the data you’ve got, or what standard reports a system can spit out easily. Why? Because it limits your thinking.

Standard reports reflect an existing process. Using those reports the best you can do is optimise that process – which may actually be inefficient or unfit for purpose. A 1984 Rolls-Royce Corniche may be in tip-top condition – but the fuel consumption is unlikely to be better than 28 litres per 100 km (9 mpg UK).

If optimising an existing process will only ever deliver a marginal improvement, then the best approach for making significant gains, is to re-think how to achieve the objective – and to re-design the process. In practice, that often means collecting new data.

Defining what data you need to control processes (but don’t have yet) is itself a strategic objective. Rather than ignore it, you could put a hand-drawn sketch in the Report book labelled “feedback wanted” or “coming soon”, with a status update on the milestones toward delivery (data need defined / data capture started / report available).


Once you’ve outlined a report, you will probably need to think about data granularity. At what level of detail do you need to collect the data so that you can roll-up to totals, or drill-down to details?

The choices for data dimensions are almost limitless, but they typically break down into generic and company-specific categories.

Here are two real-world examples of generic dimensions at various levels of detail:

  • Time: years, quarters, months, weeks, days, hours, minutes, seconds.
  • Geography: ZIP code, City, State, Country, Region, Continent.

And in addition to the generic ones, there are all your company-specific dimensions:

  • Customers: segments, Key accounts, etc.
  • Product and Services: categories, items, etc.
  • Internal organisation: sales regions, divisions, departments, etc.
  • Financial: pricing, discounts, contracts, etc.

Roll-up, Drill-down

Combining data from different systems can be very messy and resource intensive – but you probably knew that already. And precisely because it’s messy, now is the time – if you haven’t yet started to align data definitions across systems – to plan and implement that standardisation. First, because it’s the foundation for effective roll-up and drill-down. More importantly, because roll-up and drill-down creates the insights that you and your Management need to inform decision-making.

The most important long-term reason, however, is that simplification of data definitions and formats permits standardisation of processes which permits automation of data collection, consolidation and analysis. And by cutting reporting cycle time, automation gives you the opportunity to respond faster to changing market conditions. Ultimately, it’s all about addressing customer needs more effectively than your competitors.

Essential subjects for KPIs

Let’s go back to the opening comments. I suggested that: “KPI reports do not aim to cover everything. Instead, they highlight key issues within a large area”.

A useful question to ask is: “what criteria can we use to identify the key issues?” One set of considerations that works well here, is the input-output idea of ‘Marketing as a Black Box’, described above. For example:

  • “which activities or processes get the most Inputs?” (staff, budget, IT, etc.)
  • “which activities or processes create the most Outputs?” (by volume, value, etc.)

In this context, Marketing needs to communicate about things like:

Staff: development & retention, successor planning, building in-house skills.

Systems: data collection, quality, integration, privacy by design.

Processes: online and offline, how to join them seamlessly, digitalisation & process re-design.

Budgets: for ongoing operations; for investments in new capabilities & infrastructures.

If you’ve got these criteria nailed down,  you can define the KPIs.

The next step is to create the reports and present the results. This places the Marketer in a position to discuss the implications, too. Those reports can create strong business cases about resources for campaigns, projects and infrastructures when the subject of budgets comes up again.

In addition, a macro-scale version of the Navigation report is invaluable for Marketing Directors interaction with Management. The key question here is : “How well is the company achieving its long-term objectives?”

To be able to communicate on that subject we need to know what the company objectives are and how the company defines the short- medium- and long-term. Since effective design of reports requires collaboration between Reporter and Audience, this gives Marketers an excellent reason and opportunity to discuss key business objectives with senior Management and emphasise how the marketing strategy aligns with them.

Looking to the future

Let’s continue to expand the scope of KPI reporting – this time, out beyond the marketing department, beyond the company, to the wider world that our customers and competitors interact with. In an era characterised by rapid changes in the economy, in society and in legal and governance frameworks, we may also need to consider another issue: ”How quickly and how well are we adapting to change?”

Criteria that track our speed and direction, or our progress in building new staff skills, technical capabilities, processes and infrastructures, are thoughts that spring to mind here.

Looking forward to the future actually brings us back to the beginning of the article.