As its name suggests, digital transformation is in a state of flux. Business leaders are increasingly acknowledging the importance of implementing a strategy for making digital tools and ideas the core of business operations, but that doesn't mean transformation is happening everywhere you turn.

There are many factors to consider when transforming a business from traditional to digital. You have to hire the right people by identifying the personnel gaps on your current staff. You have to look internally to identify the operational processes that are inefficient.

And, most importantly, you have to be realistic about what your organization is capable of. A Google-sized change isn't always necessary to effectively transform.

So long as you're committed to improving the experiences of your employees and your customers through digitally-centric strategies and tactics, you're doing it right. But there's also the matter of measuring the success and impact of your new initiatives.

Traditional key performance indicators (KPIs) do a good job of giving revenue-based feedback, though that's not the whole story with digital transformation. Yes, by improving your experiences you'll see an uptick in revenue. Without a manageable and trackable infrastructure, however, you won't be able to prioritize the new most important milestones for your team.

Before setting digital transformation KPIs, there are a few organizational things you will want to have in place.

1. Organizational alignment comes first

Digital transformation should set you up for the long-term by giving you a scalable, streamlined approach to business growth. And as such, it starts on the inside, building the internal systems that support even the outward-facing initiatives. With that in mind, having a baseline of what's working and what's not in your organization will provide you a good jumping off point.

Are processes clear, well documented and accessible to everyone? Are all those processes easily repeatable and scalable, and supported by the right technology?

Is there a system in place for hiring the right people, documenting and sharing customer data across different departments, making suggestions for process improvement and acting on it, and getting leadership's approval of major initiatives in an efficient manner? If any of these elements are off, your path to transformation may lead to expensive dead-ends.

Furthermore, does everyone understand the "why" behind the digital transformation? There has a to be a deeper purpose driving the transformation and it must serve every initiative, particularly if you are to succeed in getting your team to rally behind it and drive in the same direction. Visibility into the right KPIs will make it clear whether your team is bought in and understands the direction.

Keep in mind, digital transformation doesn't happen overnight and building a solid foundation will set your organization up for long-term success. A systems of checks and balances that are frequently analyzed will allow you to course correct early on if needed, and it will breath agility into the organization.

2. Understand your organization's goals

The KPI playbook is different for every organization because goals are different for every organization. KPIs and goals should support and align with the "why" or deeper purpose mentioned above.

That said, there are four basic measurement pillars every organization should consider:

  • improvement of operational efficiency 
  • improvement of the internal or external customer experience
  • improvement of your level of agility
  • improvement of business risk management

With those in mind, figure out which align closest with your long-term plans and develop KPIs around them. If you place customer experience at the top of the list, then metrics based on feedback and retention will be most valuable.

3. Keep your expectations realistic

When you see successful digital transformation in your industry, there's a temptation to want to speed up your own process to reach that level of success. Like with any new undertaking of this scale, however, you simply can't expect perfection.

Instead of looking at the finish line, think of KPIs as measurements with a sense of flow. There are plenty of smaller benchmarks within each of your identified KPIs that will help you avoid barriers and roadblocks as much as possible.

Keep in mind, in digitally transforming your company, you're likely pulling several levers at any given time, from up-leveling messaging, to revising your online presence, creating software, implementing automation, building chatbots, etc. Given these realities, some KPIs to consider, could be:

  • Employee engagement or eNPS (employee Net Promoter Score)
  • Customer engagement or NPS (Net Promote Score)
  • Usage metrics of web assets (sites) or new digital products/software (mobile apps, web apps, portals, handhelds, etc.)
  • Time and cost savings
  • Leads
  • Revenue
  • Growth percentage
  • Market share
  • Retention rates
  • Up times

By setting benchmarks, you'll also be adapting to a key framework of transformation in general -- the ability to quickly assess whether a goal is too unrealistic and adjust your process accordingly. If you don't have baselines of your current NPS or customer engagement, for example, setting improvement goals will be little more than a guessing game.

Digital transformation is an exciting yet oftentimes confounding revolution in business. By knowing what you want to measure and comparing it to where you stand today, you'll lay out a clear as possible map to navigate the many challenges that this new era of technology and innovation poses.