A Key Performance Indicator (KPI) is a quantifiable measure meant to evaluate the performance of an organization or employees overtime for meeting a specific objective. Organizations deploy KPIs frequently to measure their progress and success in achieving key business objectives. There can be customer KPIs to monitor the new customers' flow or financial KPIs to monitor profit or revenue targets, etc. Some examples of KPIs include growing revenue by 10% per quarter, improving Net Promoter Score (NPS), bringing down customer acquisition costs, etc.
Key Performance Indicators (KPIs) are important for the success of any business. When an organization sets up the right KPIs, it is in a better position to achieve its business objectives. In this article, we will have a comprehensive look at what is a KPI, why it matters, and how to develop KPIs.
A Key Performance Indicator (KPI) is a quantifiable measure meant to evaluate the performance of an organization or employees overtime for meeting a specific objective. Organizations deploy KPIs frequently to measure their progress and success in achieving key business objectives. There can be customer KPIs to monitor the new customers' flow or financial KPIs to monitor profit or revenue targets, etc.
A low-level KPI usually targets the departmental-level processes, such as HR, sales, marketing, etc. While a high-level KPI typically targets the overall business processes. Some examples of KPIs include growing revenue by 10% per quarter, improving Net Promoter Score (NPS), bringing down customer acquisition costs, etc.
KPIs do matter because they are an effective way to ensure that business operations are headed in the right way to achieve the key business objectives or goals. Following are some of the main reasons that reflect why KPIs matter:
A good KPI:
KPIs should be customized based on your organization targeted goals and performance objectives. KPI involves the word “key”, which means you have to only measure key indicators crucial to reaching the goals. Below are some important practices to follow for developing effective KPIs:
In a nutshell, KPIs stand as a vital tool to measure the progress of a business and forecast the success towards achieving the key business objectives. Therefore, make KPIs a regular part of your business operational activities, but do not overload KPIs as well.