How can you set better KPI targets?

1 What are KPIs and why do they matter?

KPIs are key performance indicators, which are measurable values that show how well your startup is achieving its objectives. KPIs can help you track your growth, retention, revenue, customer satisfaction, and other aspects of your business. They can also help you identify your strengths, weaknesses, opportunities, and threats, and guide your decision making and strategy. KPIs matter because they can help you demonstrate your value proposition, validate your product-market fit, and attract funding and customers.

2 How to choose the right KPIs for your startup?

When selecting KPIs for your startup, it is important to consider your stage, industry, and vision. To do this, ask yourself questions such as: what is the mission and vision of the startup? What are the long-term goals and outcomes you want to reach? What are the critical success factors and assumptions that underpin the business model and value proposition? Additionally, what are the key activities and processes that drive growth, retention, revenue, and customer satisfaction? What metrics best reflect performance and progress on these activities and processes? Lastly, how can you measure these metrics accurately, consistently, and frequently? Not all KPIs are created equal; some are more relevant, actionable, and reliable than others.

3 How to set SMART KPI targets?

Once you have chosen your KPIs, you need to set targets that define what success looks like for each one. Applying the SMART framework is a good way to do this, which stands for Specific, Measurable, Achievable, Relevant, and Time-bound. When setting KPI targets, make sure they are clear and precise with numbers, percentages, or ratios. It should also be trackable and verifiable with tools like dashboards, analytics, or surveys. Additionally, the targets should be realistic and attainable to challenge you but not frustrate you. Furthermore, the targets should be aligned with your vision, objectives, and strategy to support your value proposition. Lastly, they should have a deadline or timeframe with milestones, phases, or cycles.

4 How to review and adjust your KPI targets?

Setting KPI targets is not a one-time exercise. You need to review and adjust your targets regularly to ensure they are still relevant, realistic, and meaningful. To do this, you should review your performance and progress on your KPIs, comparing your actual results with your expected results. Identify any gaps, trends, or anomalies, as well as celebrating your achievements and learning from your failures. It's also important to analyze the causes and effects of your performance and progress. Understand what factors influenced your KPIs positively or negatively, as well as what worked well and what didn't work well. Finally, adjust your targets and actions accordingly. If your targets are too easy or too hard, revise them to make them more challenging or realistic. If your actions are ineffective or inefficient, improve them to make them more impactful or optimal.

5 How to communicate and align your KPI targets?

Setting better KPI targets is not enough. You also need to communicate and align your targets with your team, investors, and customers. To do this effectively, it is important to communicate your targets clearly and consistently using simple language and visuals. Additionally, you should communicate your targets frequently and timely, updating stakeholders regularly and promptly. Finally, involve your stakeholders in setting, reviewing, and adjusting your KPIs and targets collaboratively and transparently. Seek their input and feedback, their support and commitment, and their recognition and reward.

6 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?