Choosing the Right Compass: Setting Simple and Relevant KPIs for your Agency
Market researchers are adept at navigating the complexities of data, wielding it to uncover valuable insights for their clients. However, when it comes to steering our own agency’s success, the question arises: are we equally skilled at setting Key Performance Indicators (KPIs)?
There is no shame in feeling you aren’t adept at identifying the right metrics. It’s an area that took a while to land for me and something I was asked during our Level Up with .team Drop-in sessions recently, “Jane we’re nearly a quarter of the way through the year, but how can I get a better handle if I’m on track to achieve my annual pan?”
Like most things in market research, it’s nuanced. While our data-driven approach and analytical skills provide a strong foundation, our effectiveness in setting KPIs can be influenced by several factors, including specific training, experience, and the overall structure of the agency.
This article delves into these factors, equipping you with the knowledge and tools to set simple, relevant KPIs that act as your compass, guiding your business toward a prosperous future. Regardless of your experience level, understanding the key principles and best practices will empower you to make informed decisions and optimize your performance.
We’ll explore the difference between lead and lag metrics, understand the importance of departmental KPIs, and delve into practical examples with relevant calculations for various functions within your agency. By the end, you’ll be well-equipped to set KPIs that not only measure your progress but also propel your agency towards achieving its full potential.
Understanding the Landscape: Lead vs. Lag Metrics
KPIs come in two main flavors: lead and lag metrics.
- Lead metrics are proactive and predict future performance. These metrics, like proposal win rate or average time to complete a project, provide early insights into the effectiveness of your processes and help you identify potential problems before they arise. – As an analogy, consider it looking through the windscreen while driving, seeing the road ahead.
- Lag metrics are reactive and reflect past performance. These metrics, like client satisfaction score or revenue generated, tell you how well you’ve performed in the past but don’t necessarily offer insights into future results. – In contrast, they are equivalent to looking in your rearview driving mirror.
It’s crucial to strike a balance between both lead and lag metrics to gain a comprehensive picture of your agency’s health, with the former often the most difficult to identify. In the first instance you’ll probably find that it easier to identify lag metrics.
Departmental Focus: Not All KPIs Get the Spotlight
Every department within an agency plays a crucial role, and each might have its own set of KPIs relevant to its specific function. However, not all of these metrics deserve a place on the coveted company dashboard.
The key is to prioritize metrics that directly impact your overall business goals. For example, the marketing team might track website traffic or social media engagement, but only the conversion rate from leads turning into paying clients might make it to the company dashboard.
The Iterative Dance: Refining Your KPIs Over Time
The perfect set of KPIs isn’t a “one size fits all” solution. As your agency evolves, and your business strategy and processes shift, your KPIs will need to adapt as well. It’s important to regularly review and refine your KPIs to ensure they continue to reflect your current goals and priorities.
Route Setting: Start with the End in Mind
Before diving into specific metrics, it’s essential to define your desired destination. What are your long-term goals for the agency? Do you want to increase profitability, expand your client base, become a leader in a specific market niche or just do more work that excites you?
Once you have a clear understanding of your “why”, you can start selecting specific KPIs that will help you measure your progress toward that “why”.
Charting Your Course: Examples with Calculations
Let’s delve into some practical examples of KPIs, the first of which you’ll probably be very familiar with, but perhaps more used to using it on behalf of your clients
Net Promoter Score (NPS): This metric gauges client satisfaction and loyalty. A higher NPS score indicates higher client satisfaction.
In the table below you can see further examples.
Departmental KPIs for Market Research Agencies with Calculations
Department | Key Performance Indicator (KPI) | Calculation | Description |
Marketing | Website Traffic | N/A | Measures website visitor volume. |
Marketing | Lead Generation Rate | (Number of new leads / Total website visitors) x 100 | Tracks the percentage of website visitors who convert into leads. |
Marketing | Cost per Lead (CPL) | Total marketing and sales expenses / Number of new leads acquired | Calculates the marketing expense associated with acquiring a new lead. |
Marketing | Social Media Engagement Rate | (Total interactions / Total number of followers) x 100 | Analyzes the level of interaction on your social media posts. |
Sales | Proposal Win Rate | (Number of proposals won / Total proposals submitted) x 100 | Tracks the percentage of proposals accepted by clients. |
Sales | Sales Cycle Length | (Total time to close deals / Number of deals closed) | Measures the average time to close a new client. |
Sales | Average Deal Size | Total revenue from new clients / Number of new clients acquired | Calculates the average revenue generated from each new client. |
Sales | Client Churn Rate | (Number of lost clients / Total number of clients) x 100 | Tracks the percentage of clients leaving the agency after a specific period. |
HR | Employee Satisfaction Score | N/A | Measures overall employee happiness and engagement (use scoring system from survey). |
HR | Time to Hire | (Total time from opening a position to filling it) / Number of positions filled | Analyzes the average time it takes to fill an open position. |
HR | Employee Turnover Rate | (Number of employees leaving / Total number of employees) x 100 | Tracks the percentage of employees leaving the agency within a specific period. |
HR | Training Completion Rate | (Number of employees who completed training / Total number of employees required to take training) x 100 | Measures the percentage of employees who complete required training programs. |
Research Operations | Project Completion Rate (on time & within budget) | Percentage of projects completed on time and within budget compared to total projects undertaken. | Tracks project adherence to agreed timelines and budgets. |
Research Operations | Data Quality Score | N/A | Measures data accuracy and completeness (use custom score or specific data quality tools). |
Research Operations | Average Project Cost | Total project costs / Number of projects completed | Calculates the average cost of conducting a research project. |
Finance & Compliance | Revenue Growth Rate | ((Current period revenue – Previous period revenue) / Previous period revenue) x 100 | Tracks the growth of your agency’s revenue over a specific period. |
Finance & Compliance | Profit Margin | (Profit / Revenue) x 100 | Calculates the percentage of revenue remaining after accounting for all expenses. |
Finance & Compliance | Accounts Receivable (AR) Turnover | (Cost of goods sold / Average accounts receivable) | Measures how efficiently your agency collects payments from clients. |
Finance & Compliance | Compliance Audits Passed | Number of successful audits / Total number of audits conducted | Tracks audits passed related to data security and privacy. |
Remember, these are just examples, and the specific KPIs you choose will depend on your strategy.
Beyond the Basics: Unlocking the Power of OKRs
While KPIs are essential for measuring performance, objectives and key results (OKRs) originally pioneered by Google, can provide an even more comprehensive framework for setting goals and tracking progress. OKRs are ambitious, time-bound objectives with measurable key results that define how success will be achieved.
Using OKRs in conjunction with KPIs can help your agency align its activities with strategic goals, improve transparency, and foster a culture of ownership and accountability.
Remember:
- Keep it Simple: Don’t overwhelm yourself with too many KPIs. Focus on a handful of metrics that truly matter.
- Relevance is Key: Ensure your chosen KPIs directly correlate with your business goals.
- Embrace the Journey: Be prepared to adapt and refine your KPIs as your agency evolves.
- Collaboration is Key: Involve different departments in the process of identifying and tracking KPIs to ensure everyone is working towards the same goals.
By following these steps and continuously refining your approach, you can set the course for your market research agency toward success, ensuring you reach your desired destination with clear direction and measurable progress.
Join our weekly Wednesday drop-in sessions and ask our market research experts your burning questions! Get the guidance you need to set impactful KPIs and navigate towards success.
