How do you identify and prioritize the key performance indicators (KPIs) for your benchmarking project?

1 Define your goals and scope

Before you start collecting and analyzing data, you need to have a clear idea of what you want to achieve and what aspects of your performance you want to benchmark. For example, do you want to improve your customer satisfaction, your product quality, your innovation, or your profitability? Do you want to compare yourself with direct competitors, industry leaders, or other sectors? Do you want to focus on a specific process, function, or outcome? Your goals and scope will help you narrow down your list of potential KPIs and align them with your strategic objectives.

2 Select relevant and measurable KPIs

Once you have defined your goals and scope, you need to select the KPIs that will best reflect your performance and enable you to compare it with others. KPIs are quantifiable indicators that show how well you are achieving your goals. They should be relevant to your industry, your market, and your customers. They should also be measurable, meaning that you can collect reliable and accurate data on them. Some examples of common KPIs are revenue, market share, customer retention, customer satisfaction, net promoter score, product quality, innovation rate, cost efficiency, and employee engagement.

3 Assess the availability and quality of data

The next step is to assess the availability and quality of the data you need to calculate your KPIs. You can use various sources of data, such as internal records, surveys, interviews, online platforms, industry reports, and third-party benchmarks. However, you need to make sure that the data is reliable, valid, consistent, and comparable. You also need to consider the frequency, timeliness, and granularity of the data. For example, do you need monthly, quarterly, or annual data? Do you need data at the company level, the department level, or the product level? Do you need data from the same time period, the same market segment, or the same customer group?

4 Prioritize your KPIs based on impact and feasibility

After you have identified and verified your KPIs, you need to prioritize them based on their impact and feasibility. Impact refers to how much the KPI affects your performance and how much room for improvement you have. Feasibility refers to how easy or difficult it is to collect and analyze the data and implement the changes. You can use a matrix or a scoring system to rank your KPIs according to these criteria. For example, you can assign a score from 1 to 5 for impact and feasibility, and then multiply them to get a priority score. The higher the score, the higher the priority.