How to make sure KPIs are not 'proxies' to what we want to achieve but directly measure it?
KPI’s are measured and recorded to track performance and business decisions are rendered with the use of this supporting data. The intent behind this movement is to provide managers and leaders with more information and drive better decision making. While there is a need for Proxies in some cases, it is very important to choose these with utmost care and deliberation.
Having clear goals to achieve will provide a great way to avoid choosing the false "proxies".
Choose KPIs that should be measuring the actual objective itself and any other key actions or outcomes that will lead to that objective.
Ensure the sanity of Data used so that when relying on data to make decisions, then what is being utilized needs to be accurate.
Every KPI exercise should start by asking, "What are the direct business outcomes we hope to move the needle on with this intiative?"
So often I see KPIs focused on something like pure adoption metrics. Ok great, we want people to adopt this feature but WHY do we want them to adopt it?
Do we think it will help reduce churn?
Do we think it will drive conversion?
Do we see a correlation between customers that adopt this feature and stay past the 30 day mark?
Is this feature a key part of our Aha moment?
I find that a good measure of if a KPI is more than just a proxy is if it cuts across at least two areas of measurement. For example, looking not only at the customers that adopted that feature, but also their overall net retention. The more data you can can layer on to a KPI to help understand the business outcome it's driving, the stronger measurement it will be.
