First, companies define their goals – aligned to their mission and vision. Then, it's time to draw clear objectives with measurable steps to achieve these goals.
Now, how can we monitor activities to know if we are on the right track to fulfill our goals?
That's when key performance indicators (KPIs) come in handy.
And what does it have to do with UX Design? Over this article, we'll explain what KPIs are, which types are there, and how they can help you improve user experience. Let's dig in!
What are KPIs and why is it so important?
KPIs are tools that measure performance and track progress towards a goal or objective in a quantifiable way.
They provide insights that help people across the company make better decisions. From finance to sales, key performance indicators help every business area move forward at the strategic level.
Besides that, KPIs help keep team members focused on meeting pre-set goals and objectives.
Like Peter Drucker said: "What gets measured gets done."
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Main characteristics of KPIs
The foundation for creating effective KPIs is collecting data that reflects your business objectives.
Based on reliable data, you can define KPIs with the following characteristics:
- Quantitative: you can express KPIs in numbers.
- Practical: KPIs integrate well with existing company processes.
- Actionable: you can easily put KPIs into use.
KPIs benefits
Whether they are tied to strategic goals or team-specific objectives, the benefits of KPIs are great for teams' performance alone and even greater for companies' success.
Hence, the main benefits of key performance indicators are:
- track changes and support decision-making;
- keep team members focused on the company's priorities;
- clarify success.
Track changes and support decision-making
When we make decisions, it's good to establish a way of measuring their success or failure. This way, you can regularly check results, review targets, review progress and readjust whenever necessary.
Monitoring KPIs will paint a clear picture of all changes taken along a project, campaign, or investment and its respective effects.
Therefore, they are indispensable to visualize the effectiveness of a strategy. Bad results should serve as a starting point to investigate what is going wrong and what to do differently.
Notice that KPIs are as important for ongoing actions as upcoming ones since they can support future decision-making based on past performance.
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Keeping team members focused on company priorities
Companies' routines are usually filled with activities and tasks. Yet, not all of these activities contribute directly to achieving your targets.
Therefore, KPIs can provide a sense of urgency to tasks that are indispensable for the company's growth or the success of a project.
In this sense, knowing what to do first is the key to team effectiveness amidst so many activities.
Clarifying success
The success of some projects or strategic goals might be challenging to measure, especially when descriptions are more open-ended, such as becoming the biggest company in the X industry.
For this goal, it's hard to quantify what it means to be the biggest. Is it by the number of clients? By revenue and profitability? Or by technological innovations?
Developing and implementing key indicators makes it possible to define what success is for the company and how to measure your progress towards the strategic goals.
This way, you can define KPIs that will monitor data about revenue and number of clients in a given time frame, providing information and insights that will serve as analysis to identify success or failure in meeting your goals.
Main types of KPIs
Key performance indicators will vary according to each department or business.
However, we can classify KPIs into four commonly known groups:
- Lagging KPI;
- Leading KPI;
- Strategic KPI;
- Operational KPI.
Lagging KPI
Laggings KPIs are indicators where you can only see the results of a change after an extended period of time.
This "delay" can happen for a number of reasons, from slow processes to highly volatile data.
Accordingly, Lagging indicators measure what has already passed, they're useful to confirm long-term trends, but they do not predict them.
As an example, we can cite a KPI that measures how many customers have purchased from your online store more than once.
Since it could take weeks or months for the same customer to purchase again, results might take longer to be seen.
Leading KPI
Leading KPIs – unlike Lagging KPIs, show results immediately, and they are essential to foresee trends.
However, Leading KPIs results are less accurate than Lagging KPIs.
An example of this can be the number of daily subscriptions to a newsletter.
Strategic KPI
They measure and analyze strategic objectives. Strategic KPIs monitor long-term progress towards long-term goals.
Strategic KPIs change slower because they need a longer period to collect results.
Consequently, you will only be tracking them monthly, quarterly, or even annually.
The growth in revenue or percentage of market share are examples of Strategic KPIs.
Operational KPI
Operational KPIs show your progress in real-time. They measure day-to-day changes so you can monitor and evaluate the efficiency of operations.
Because they are constantly changing, it's good to place them on your team dashboard, where members can track them frequently and switch them according to their current priorities.
The current ticket volume is an example of operation KPI; it sums up the number of outstanding customer support tickets your team currently has.
Within each of these four categories mentioned above, you can have tangible and intangible KPIs.
Tangible indicators are easy to quantify, such as average order value and gross profit margin. On the other hand, Intangible KPIs quantify qualitative data, like Customer Satisfaction (CSAT) – used to measure short-term customer loyalty, or Net Promoter Score (NPS) – used to evaluate long-term customer loyalty and happiness.
The importance of KPIs in UX Design
We've seen so far that KPIs show results that are important to business, not only strategically but in its daily operations.
And they are incredibly helpful to UX Design.
We have listed below how UX teams can benefit by setting KPIs.
1) KPIs improve team communication
As seen, KPIs are tools that monitor progress according to teams' and companies' goals and objectives.
By showing how well and effective processes are flowing, KPIs help to establish assertive communication between UX teams and other teams, stakeholders, and C-level executives.
And this happens because KPIs measure success, clearly presenting which actions are working and which ones need to change or improve.
Besides, they are based on numbers. Numbers are a universal language, better understood and easier to grasp than any other technical term from a specific field.
2) KPIs identify problems rapidly
KPIs translate the results from actions into numbers. These results can be positive or negative.
If results are negative, KPIs will rapidly identify problems, allowing teams to move quickly from diagnosing to resolving an incident.
Imagine that your UX team has modified the registration step in an app. If the KPIs related to this change show a significant drop in user registrations, you can tell that this upgrade didn't have the expected results.
UX departments should use KPIs strategically to verify the changes in user behavior that may be linked to the interface or the experience.
3) The connection between experience and company goals
KPI is a tool that can connect your business goals to actions that improve user experience.
Business interests are different from the user's interests; learn how to distinguish them. A good product should provide a good user experience that serves company goals.
When products aren't satisfying, users look elsewhere – your competition.
Knowing how to connect UX KPIs to business KPIs is the secret to demonstrating how usability impacts a company's results.
4) KPIs can motivate and boost morale
Besides their impact on businesses, KPIs are great for motivating and uplifting teams.
Think about how gratifying it is to observe indicators rising after a change you've made on the interface that improved usability.
It's common knowledge that research and evidence should back up every decision in UX departments, but the final proof that you did something right is through KPIs evolution.
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Types of UX KPIs
In UX, we can set KPIs into two categories: Behavioral and Attitudinal.
Behavioral
Behavioral KPIs are those that monitor user actions and interactions through the interface.
See below a few examples of behavioral KPIs.
Task Success Rate
This metric reflects how effectively users are able to complete a particular task. For example, we can measure the success rate if the task has a clearly defined purpose, such as completing a registration form.
The objective is to understand if the task inside the interface is simple or complex to be executed by users.
It's a useful statistic because it can tell you how the rate changes over time – when users gain more experience with the interface. This will give you an overview of the system's learnability.
Time-on-task
This metric measures the amount of time the user takes to complete a task successfully. The average time on a task is usually communicated as the final UX KPI.
According to studies, users want to be done with tasks as quickly as possible. So the shorter the processing time, the better the user experience.
User Error Rate
Measures how many entry mistakes users make on a given task. The user error rate can help to determine how clear and user-friendly your interface is.
In fact, usability is the source of errors, so a high error rate means that you have serious usability problems. Don't forget to be very specific as to what actions are perceived as errors.
The error rate is generally calculated in two ways; it will depend on the number of error opportunities in a given task or on what exactly you want to measure.
- Error occurrence rate: if the task has one error opportunity or many error opportunities, but you would like to track only one of them. This is calculated by dividing the total number of errors that occurred for all users by the number of error opportunities for all users.
- Error Rate: to detect multiple errors – if there are multiple error opportunities per task. To calculate the error rate, divide the number of errors by the total number of attempts.
Search vs. Navigation
The navigation of a website, app, or software should be intuitive enough so that users can easily and quickly reach their destination. When that's not possible, and they get lost, they turn to the search bar.
Most likely, the less the search feature is used, the better.
The Search vs. Navigation ratio can be found by dividing the number of tasks accomplished via navigator or search by the number of completed tasks.
Attitudinal
Attitudinal KPIs are indicators of intangible results. They represent how users feel, what they say before, during, or after using a product.
This metric helps identify how users perceive brands and products.
Below are some examples of attitudinal KPIs.
System Usability Scale
This KPI boils down to a small questionnaire to identify how the user rates the usability of your interface.
It consists of 10 statements that users need to rate on a five-point scale from strongly agree to strongly disagree.
Net Promoter Score
The Net Promoter Score is a methodology created by Fred Reichheld that measures general satisfaction and loyalty to your product or service.
It's a one-question survey that most of us probably have seen before: "From a scale of zero to ten, how likely are you to recommend our product/service to others?"
Users selecting a rate of 6 or below are called detractors; 7–8 are called passive, while the 9's and 10's are loyal enthusiasts who would recommend your product, these are called promoters.
To calculate NPS subtract the percentage of detractor responses from the percentage of promoter responses.
Customer Satisfaction
The CSAT is the most popular metric to measure customer satisfaction; we see it every day. It simply consists of asking your users/customers to rate their satisfaction with your product or service. The average of all customer responses will be your score.
The rating scale can vary from regular numbers to stars, smiley faces, tiny unicorns, etc. On Google reviews, for example, we rate companies by stars.
Since CSAT triggers an emotional response, scores can be highly influenced by the mood of the moment.
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KPIs alone are not enough
Throughout this article, we've shown how KPIs are essential for UX teams and businesses in general.
However, KPIs are not enough if you don't combine them with other tools.
Take, for instance, the task success rate; we might come across thriving results. But the fact that users complete a task doesn't necessarily mean that they had a good experience through it.
Thus, you must use a range of indicators and correlate them to comprehend the context and overview the process as a whole. Looking only one way can make us neglect the other.
So use KPIs because they do matter and create a KPI-driven culture by increasing data literacy. Remember to regularly review and adjust your key performance indicators as your audience, market, and business go through changes.
