What is KPI?

KPI stands for Key Performance Indicator.

KPI in business is metrics or a combination and comparison of metrics to measure if a company is achieving its key business objectives. They can be financial or non-financial. Some common KPIs used in business include revenue growth, profitability, customer satisfaction, employee retention, etc.

KPI metrics are the measures that provide statistical evidence for the progress you make towards your goals and objectives over a period of time.

KPI report is a business report that captures the performance of individuals, teams, departments or the organization as a whole. It includes various data points and indicators, such as targets, actual values achieved, and percentages.

KPI reporting is the process of combining, consolidating and interpreting the data that is used to track and measure the performance of business organizations, and documenting actionable insights for disseminating with key stakeholders so as to plan for the future and take key business decisions.

Marketing KPIs help you measure and track the performance of your marketing campaigns and their progress towards specific goals, such as increasing organic traffic. By tracking them, you can identify the aspects of marketing campaigns that are performing well and the ones that need improvement. With these insights, you can make necessary changes and adjustments to improve your overall results. Conversion rates, Cost Per Lead, Customer Lifetime Value, etc. are some of the marketing KPIs that you can track.

Social media metrics such as likes, comments, number of followers, retweets, and number of video views seem significant, but have no perceivable impact on your business and do not indicate progress or performance. So, these superficial social media metrics are most likely vanity metrics.

Current ratio, Debt to equity ratio, Net profit, Gross margin, etc., are some examples of KPIs.

You can measure KPIs by:

• Entering data in spreadsheets where you can compare and combine various data points to build insights, visualize them as charts and measure them.
• Use dedicated software, which automates the constant tracking and measuring of KPIs and uses AI to come up with comprehensive insights.
• Creating KPI dashboards using spreadsheets or aforementioned software to customize tracking a set of specific, relevant KPIs and derive insights.
• Using KPI tracking templates that are available online.
• Hiring consultants who can do it for you.

KPIs in sales are used to track and assess the performance of sales teams and executives. By providing sales-related insights, they enable data-driven decision making to improve sales strategy and close more deals. Some of the important sales KPIs include revenue, number of deals, conversion rate, average deal size, win rate, cycle time, etc.

KPI metrics are the measures that provide statistical evidence for the progress you make towards your goals and objectives over a period of time.

Key Performance Indicators in project management measure how effectively the objectives of a project are met. KPIs used in project management include project completion rate, scope creep, budget overruns, etc.

KPI management is the process of setting up systems and processes to track and assess KPIs regularly for taking action towards improving performance wherever necessary. KPI management needs to be done by forging collaborations amongst various departments in an organization, and also between managers and employees. KPI management is part of a broader performance management system and should never be used in isolation.

Retail KPIs help retail businesses track their business-critical performance parameters such as sales, customer satisfaction, employee productivity , operational efficiency, etc.

Manufacturing KPIs help you measure the efficiency and performance of a manufacturing business. Some of the manufacturing KPIs include production output, product quality, production efficiency, manufacturing cost, production output, etc.

A good KPI is SMART – Specific, Measurable, Achievable, Relevant and Time bound, and is linked to the objectives of the organization

Key Performance Indicators (KPIs) are the means to measure the performance of various aspects of a business, individual or a team. Objectives and Key Results (OKRs) is a goal-setting framework that helps to set organization-level objectives and align employees at all levels to those overall objectives.

KPIs are usually linked to strategic goals, and can be a combination of metrics; they help measure the progress of individuals, organizations or business processes towards specific goals. Metrics, on the other hand, are simple, standalone data points or units of measurements that are not necessarily aligned to any strategic goal.

Key Performance Indicators (KPIs) help measure progress towards specific goals. Key Risk Indicators (KRIs) help identify potential risks and monitor them, so that any possible impact of those risks on the achievement of those goals can be averted or mitigated. KPIs are usually quantifiable parameters, while KRIs may not necessarily be quantifiable. Unlike KPIs that are more focused towards what happens within the organization, KRIs are often focused towards external factors. KPIs usually measure current performance, while KRIs take past performance into account to identify trends or patterns.

Key Performance Indicators (KPIs) are quantitative parameters that measure progress of individuals, teams, departments and organizations towards their respective goals. Key Responsibility Areas (KRAs) are the qualitative factors or key areas of focus that require top level performance by employees to achieve an objective. They determine the roles, responsibilities and daily activities of an employee, giving him/her a sense of direction. In short, if employees effectively fulfill their responsibilities identified by means of KRA, they can efficiently achieve the desired results.

KPIs mentioned in a job description state the expectations and deliverables from the particular role. They underline what the employee needs to deliver in order to be successful in the role. The KPIs mentioned in the job description are specific to the role and the nature of work that the position entails.

KPIs help organizations keep track of performance in all key areas of focus and make sure that progress is made at individual, team and organization levels towards the organizational goals. They give the leaders of the organization relevant, business-critical insights, which help them make timely, data-driven decisions that can be detrimental to the success of the organization.

KPIs can be categorized into Strategic KPIs, Operational KPIs and Functional KPIs. Strategic KPIs are organization-wide KPIs that are set and tracked at the top level by the management, over a long period of time. Operational KPIs capture a short-term picture of the performance of various business processes. Functional KPIs are KPIs that measure performance parameters specific to a department and its functions.

You can do KPI analysis by

• Gathering all of the relevant data from various sources, such as reviews, surveys, financial reports, customer feedback, etc.
• Entering them in a spreadsheet or a KPI management software.
• Comparing and combining relevant metrics to measure KPIs.
• Visualizing the numbers through charts and graphs.
• Customizing relevant KPIs in the KPI dashboard for tracking regularly.
• Analyzing them and identifying any trends or patterns.
• Generating a report that outlines the findings and collates relevant data points, metrics, charts and supportive documents.
• Presenting the report to management for feedback and approval.