This toolkit answers the questions of what is a KPI, why use them and how do you balance them with your funders goals and targets? It also includes our top tips for setting and implementing your own organisational KPIs.
What is a KPI or Key Performance Indicator?
Simply enough, it's an acronym for a measurement of progress of particular importance to one’s success. You could happily substitute metric, target, measure, impact to broadly similar effect.
Why do it?
Setting KPIs helps define success and monitoring them enables an organisation to adapt its actions and behaviours on the way to that success. Despite some bad press, if used effectively, KPIs are a vital and welcome tool, enabling organisations to make their aspirations and rhetoric a reality, not just once, but reliably into the future.
You can read more about KPIs, and their wider use in the world of business, but here we are concerned with the practicalities of getting them into place and working well for cultural organisations. You can see an example of our work in this area with London organisations here.
KPIs are usually plotted against the whole business, using a performance management system like the balanced scorecard. So, for example, setting indicators for financial, HR and operational performance alongside those for visitors and participants. Getting the right information about audiences is perhaps the most challenging area of all, because there are so many ways of measuring success, and the information you need is not all held within your organisation.
This is what we tackle next:
It’s not (all) about the money: the triple bottom line
Performance management was developed by commercial business with the simple, ultimate goal of generating financial profit. Cultural organisations are trying to balance a more complex set of aims. However, like many other processes, we can usefully adapt it to meet our needs. Think then about a balance sheet for your organisation with 3 different areas of accountability:
- Financial: sustainability, margins which enable development
- Social: serving specified communities (location or interest)
- Cultural: achievements in creating particular kinds of quality experiences
How would you describe the triple bottom line your organisation? Your KPIs should reflect the right balance.
Funder KPIs are not your KPIs
Funding organisations also have audience KPIs but it’s important to note these are NOT the same as those of their funded clients. Arts Council England (ACE), for example, measures success in terms of the reach and fair distribution of its funding, so it has set KPIs for the % of the national population directly experiencing the work it funds, and the geographic distribution of that %. ACE needs your support in measurement, in the form of annual metrics about visitors and post-codes, which is why this is a funding requirement. This intelligence in turn helps them to make the case to central or local government for public support.
A KPI about the % of the national population an organisation serves, is unlikely to be practically useful to the organisation itself. Your KPIs are prioritised measurements linked directly to your own success, not to be confused with reporting to a funder. However, if you can collect the data needed for one alongside the other in complementary ways, so much the better, as long as you differentiate between the two.
Increasingly, funders expect the organisations that they support to be able to demonstrate the achievements for which they have been funded, and to show them in terms of growth and progress.
1. Gather the decision-makers to agree the process
KPIs are a management tool which much be owned by the whole management. Senior managers need to agree the process for setting monitoring, reacting to, and reviewing measurement. They also need to agree what resources are available.
Note: one of the commonest failures of performance management in the corporate world is failing to acknowledge the staff time required.
Example: At a dedicated meeting between Artistic, Executive, Marketing and Commercial Directors and Head of Front of House, we discussed the audience strategy for the next 2 years and nominated the MD to draft some KPIs to help us follow the route map. These were to be signed off at the next Senior Management Team meeting and included as a standing agenda item at SMT meetings on a quarterly basis. KPIs should also be reported at end of show de-briefs.
2. Turn your mission into audience objectives
How does your vision/ mission and strategic aims relate to audiences or visitors? This may already be explicit, but if not, you need to think through how these might relate to audience objectives. These also form the basis of an audience plan, but also the goals from which indicators can be developed from. There may be different goals for different types of audience, or segments.
Example: We are the leading contemporary visual arts venue in the region, dedicated to bringing the best international and UK work to local audiences. We are committed to producing, commissioning and presenting works of the highest standards, enabling unexpected collaboration between artists.
Our strategic objectives are to:
- Generate an accumulated surplus of XXX by XXXX
- Produce at least 20% of our own work in the next 2 years
- Develop XX% revenue through low-level donations
- Boost the international profile of XXX
Our key audience objectives are then to:
- Increase income through membership (annual target £XXX)
- Maximise income through the gift shop
3. Set KPI/s for each objective
Ask yourselves what success will look like or how will we know when we get there? What is the best indicator for that success? What level of detail will be the most useful?
Note: some experts suggest that PIs that focus on what you DO, not the results themselves are more effective. Eg percentage of box office calls answered, rather than number of booking made. For simplicity’s sake, you might search for a mix of meaningful results and actions.
4. Define a relevant timescale
How long will it take you achieve goals and what are the indicators along the way? Audience KPIs will look very different for long-term organisational goals, by season, or one-off project aims. Decide what period you are monitoring and how often data will be collected.
Note: KPI gurus say that frequently and regularly monitored KPIs (daily, weekly, monthly) are the most effective.
Compared to what? To add real meaning to progress it is useful to be able to compare results on other measures. With your own performance (trends over time), with benchmarks, or with general insight about audiences, or the population.
6. Data-collection and analysis
Once a set of indicators is drafted, you need to consider how the relevant data for measurement will be collected. The resources this takes – such as staff time, outsourcing, IT etc. need to be proportionate to the gain you anticipate.
Note: it can be a false economy to add these duties to overloaded staff without the relevant skills, especially in research design or analytics.
7. Process for communicating and decision making
Obviously the larger the organisation, the more filtered communication of KPIs needs to be. Ensuring a good match between KPIs and staff who have an interest in them is essential to getting buy-in. On the other hand, non-decision-making staff, like FOH, can find KPIS very motivating. Communicating results in compelling but relevant ways relevant is also crucial – so someone in finance might prefer a spreadsheet, while others might prefer fancy infographics.
Note: Dashboard technology has revolutionised the use of KPIs because they have made information so much more readily accessible. You can build your own – there’s freeware available – commission some one-off help, or use those embedded in tools like Audience Finder or Google Analytics. But don’t let the tail wag the dog – make sure it shows the info you NEED.
8. Taking action and reviewing
Ultimately this is the acid test of KPIs. Regular monitoring must lead to planned action in response to positive or negative variation. Pre-agreed forums for decision-making and nominating people with the responsibility to take action in advance are all strongly advised. Don't forget to review the KPIs themselves, adding new ones for specific projects, and stripping out what’s not working.
One you have a draft of potential KPIs, check to see if they pass this test:
- Clear: is it clear what you are measuring and why?
- Crucial: are your KPIs of organisational importance and likely to affect crucial decisions and actions?
- Collectable: can you actually get the data you need for measurement with a reasonable level of resource?
- Consistent: will you be able to track this KPI over time consistently to assess progress?
- Contextualised: will you be able to compare results, with other relevant organisations, with the population? Can you access this information?
- Communicable: are they easy to represent and understand – both metrics and their implications? Will your KPIs motivate or irritate relevant colleagues?
- Channelled: who will be responsible for taking action to address?
9. Less is more
The number and complexity of KPIs that can be usefully employed are relative to the size and capacity of the organisation. As a rule of thumb, though, less is more. There’s only so much information a department or organisation can maintain its focus on, that’s why getting to the crux is so important.
10. You don’t have to get it right first time
Experts suggest that it can take a long time to settle on a handful of meaningful KPIs so do experiment and drop things that aren’t working – though be sure to give them long enough to find out.
Potential audience indicators
We can group potential audience/visitor KPIs into 4 main groups: audience behaviours, audience attitudes, audience profile, audience management. The example table below is far from exhaustive, and remember, most organisations only need a small selection of these KPIs or others like them, and not all of them need be reported to everyone in the organisation.
There are numerous variations on each
|Box Office||Quantative Survey||Audience Finder Analysis||Other|
|Lapsed after 2 years||X||X|
|Recency / churn||X||X|
|Where else they go||X||X|
|Referrals (to and from)|
|Conversions (sales etc.)|
|(Proportion) devices used|
|Social media reach|
|Social media diversity|
|Social media velocity|
|Likelihood to recommend|
|Quality of creative exper.|
|Feedback on comms|
|Feedback on website|
|Feedback on facilities|
|Resources (all/ any)||X||X|
|Marketing/ Development, staff and performance||X||X|
|FOH staff and performance||X||X||X|
|Training and CPD|
|Interpretation (in venue, materials, online, events)|
|Customer-centric development of offer|
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