Performance metrics are evolving. It’s time for financial leaders to do the same says a February 14 article by Alka Tandan published in CFO. “Emerging KPIs have the power to drive success for employees, customers, and investors, but only if we creatively operationalize them across our organizations. As financial leaders, we need to look beyond simply tracking metrics and amassing data — we need to lean in, and turn our KPIs into true strategic assets. Here are four ways to get started.

1. Find Your North Star. In the digital era, there’s no shortage of data. The trick is figuring out which metrics truly matter to your business, then using those “North Star” metrics effectively to drive your company forward. Many software companies, for instance, are moving away from tracking churn using their Gross Renewal Rate (GRR) and focusing instead on their Net Retention Rate (NRR). The difference is simple but profound: where GRR measures attrition, NRR considers the potential for cross-selling to existing customers. As a much-cited Bain report found, that’s a great way to maximize value over time — not least because it’s so much more efficient to cultivate existing customers than to acquire new ones. 

2. Keep Digging Deeper. After identifying your North Star metrics, it’s time to look under the hood. “At Gainsight, we pay close attention to NRR, but we also hold weekly meetings in which we dig into customer health scores, including adoption rates, engagement scores, net promoter scores, and related metrics. That reveals not just churn, but also downscaling risks (such as reduced usage in specific areas) that might not be apparent in topline NRR data.”
We also make a point of reviewing our metrics on a rolling basis, adds Tandan, “to ensure we’re still using the right KPIs for our evolving business. Often, North Star metrics remain unchanged, but underlying metrics are reconsidered or targets are revised to reflect new strategic goals.”

3. Create a Culture of Ownership. Turning data into action depends on building a culture of ownership. “Consider using weekly business reviews in which executives and others from across the organization gather to share progress around their assigned KPIs.” Tandan has found that “this process helps ensure both accountability and collective buy-in: everyone commits to their piece of the puzzle, and we collaboratively problem-solve if one team’s KPIs start to drift.” 
It’s also important to communicate North Star metrics across the company. For example, every employee could get a customized one-page strategic plan. That way, every team member understands how KPIs impact their work and how their work drives KPIs.   

4. Keep Everyone Connected. Performance data shouldn’t be sequestered in financial spreadsheets. Data is only useful when it translates into intelligent action, “so, as CFOs, our role is to create conduits that allow data to flow from frontline teams to analysts to executives and decision-makers, and back again in order to provide visibility, accountability and guidance every step of the way.”

All financial leaders create reports that get passed upward, helping executives, directors, and investors to gauge performance. But, says Tandan, “it’s important to close the loop and push KPI-driven insights back out to middle managers and frontline workers too.”

To streamline that process, Tandan notes, “we use data dashboards to keep directors and other key stakeholders in the loop and to give decision-makers across the company real-time access to the metrics they need. We also listen to our investors: the insights they get from their portfolio companies — which have KPIs of their own, of course — can help us to spot trends early, overcome blind spots, and stay ahead in today’s volatile environment.”

As financial leaders, we have a mandate to manage the KPIs to help our companies succeed. But we also have a mandate to ensure those metrics are used strategically at every level of our organization, from the boardroom to the frontline.

As we align our businesses around emerging KPIs, concludes Tandan, “it’s important to ensure we’re tracking the right metrics. But it’s also crucial that we bring our entire team, from board members and executives to sales agents and customer success managers, along for the ride and leverage each stakeholder’s insights to elevate our use of these new KPIs.” 
For much more, have a look at 4 Ways to Turn Your KPIs Into Strategic Assets (cfo.com).