Build Your Business With KPIs

Use KPIs to drive your store's performance.

When you run a server, you’re actually running a small business, and in some cases quite a large one. As a business owner, you oversee everything from the implementation of technology, to player satisfaction, to financial growth, and especially in the early days, keeping a handle on all that can feel overwhelming. It’s easy to let things slip, and one way of maintaining control is through the use of KPIs, or key performance indicators.

Although they might sound a bit like jargon, KPIs are relatively straightforward, and once you understand what they are and what they can do, putting them to work for your server is a useful way of ensuring you’re growing your business and managing it to the best of your abilities. The first step towards using KPIs is deciding which you’re going to use.

Drivers & outcomes

There are two kinds of indicators you’ll use to measure performance:

Drivers, also called leading indicators

These let you predict how you’re performing before final results come in. They also help you make changes rapidly to achieve your longer term goals, without waiting for the cycle of monthly or quarterly outcomes.

Examples of drivers include:

  • Number of visitors to your store
  • Monthly growth in visits 
  • Percentage of visitors who make a purchase
  • Average basket size
Outcomes, also called lagging indicators

Outcomes are the hard results that will typically be tied to productivity and profitability. The reason they’re called ‘lagging’ is that they’re only usually available at the end of each measurement period, whether that’s monthly, quarterly or annually.

Examples of outcomes include:

  • Revenue
  • Profit
  • Costs
  • Percentage of repeat purchasers

When you’re starting out, it may be best to hold off on setting up leading indicators until you get a feel for your market and how it performs. Every server is different, because every group of people is, and getting to know how your particularly store performs is advisable before attempting to impose targets on yourself. Run your store for a few months. See who uses it, how frequently, and how much they spend. See what your audience’s favourite products are and when they tend to buy them.

That will enable a better initial understanding than leaping straight in with arbitrary targets, and also enable you to experiment a little to get a feel for what your players want. You can also ask them, although observing behaviour is often a more reliable way of deriving that information. All these things will help to gain a clearer view of what players on your server like, and also what you can expect of them. With a few months’ sales and traffic statistics in hand, you can then start to assess where you are and where it might be realistic to want to be in the future. 

Choosing metrics

A good metric for your server is one that’s:

  • Quantifiable - you can give it a number, and use that number to compare with past performance
  • Controllable - you can have an impact on this metric from within your business 
  • Ongoing - singular events don’t make for useful KPIs. The best ones exist on a continuum so you can see how you’re doing after making meaningful changes
  • Timed - you need to keep checking in, whether it’s weekly, monthly or quarterly. Revisiting each measure is the only way to make it useful

Finding numbers you can reliably measure, and that you have some influence over gives you a set of levers in your business that you can use to improve its performance over time. It will also help you spot areas that may need extra help, or that will lead to problems as you expand. Next up is to set your objectives based on those metrics. This simple template will help you to do that consistently across your KPIs.

Objective - What’s this KPI trying to achieve?

Metric - What are you measuring with it?

Calculation - What formula is used to derive the data, and from which sources?

Period/date - When should this measurement be repeated?

If each of your KPIs has a clear objective, a consistent source and formula, and a regular date on which data is collated, you’re well on your way to harnessing these powerful tools for your store.

Make KPIs a habit

Keeping up with your indicators on a regular basis is the best way to keep them working hard for you. When they’re going in the right direction, you know that your strategy and model is working as it should. If they’re not, and you’re confident that you’re measuring the right factors, it’s time to take a step back and work out what might be going wrong. Try a different tack - see what other servers are doing.

Regular ongoing checks on the integrity of your business will continually improve it, and help you avoid pitfalls, often before they become a problem. It’s a good habit to get into, and we’d recommend KPIs to anyone with a PlayerLands store.