Providing the right semantics along with fact data is one critical User Experience factor built into the layout design. Fact data i.e., Measures/Metrics are numeric and can describe anything unless the right semantic description is associated with it.
Overview
A ‘KPI’ is essentially a measure linked with the right semantics and context, which also depends on underlying fact types for representation and behavior. KPIs are typically represented as either a whole number or a ratio and this post delves into finer aspects of the latter.
A KPI that has to be represented as a ratio is typically done through percentages. Apart from ratios, there are several scenarios where a percentage-based notation is apt. Any reporting-related project will encounter a sizable share of KPIs in a percentage format.
Some examples of such KPIs are:
- Market share – How is my product (e.g., 32inch LED TV) performing against all competitors in large screen TV segment (e.g., 28/32/36-inch LED & HDTV)
- Sales Mix – How is my product (e.g., Color TV) performing against other products (e.g., Home Entertainment, Gaming)
- Profit Margin – What is the profit on a product i.e., the difference between cost and sales over sales.
- Growth – How is my performance compared to a different time period i.e. difference across time periods over an older time period.
- Variance – What is the difference between the current value against a benchmark
One important aspect of these types of KPIs to keep in mind is that they are normalized calculations against a denominator or one hundred. Percentages are the starting point and other types of KPIs are dependent on the base percentage metric.
Percentage:
This is the simplest and easiest to calculate. The resultant value will fall anywhere between zero and hundred and are usually represented as two-digit numbers along with the ‘%’ symbol. (e.g., 34.53%). Values below and above one hundred are possible in many scenarios and it is up to the KPI definition to set upper and lower boundary conditions.
Percentile:
This is a derived measure that comes into existence after the underlying data is normalized according to a bell curve. These KPIs can be represented both as a number and a percentage based on user requirements. The key item to remember is that, when a percentile is represented as a number, it does not equate to the corresponding percentage. For example, the 50th percentile is equal to 50%, whereas the 80th percentile could be 85% based on underlying data.
Percentage Points:
A special type of KPI, is heavily used in economics and finance and used to denote the difference between two percentage values. Calculating a percentage of percentages is logically incorrect and hence percentage points show the difference between two percentages in absolute value. If the baseline is 100 i.e., 4 is equivalent to 4% basis point uses a baseline of 1000 where 100 is equivalent to 1%. These are typically denoted with a suffix as deemed necessary e.g., 4p or 4pp or 4bp, etc.
Knowing when to use which notation for a KPI will greatly enhance the usability factor of a report or dashboard and drive successful BI adoption in an organization.