KPIs — Key Performance Indicators — measure performance and value by demonstrating how effectively you’re achieving key business objectives. These strategic measures evaluate success and consist of both actions and tools that monitor the progress toward reaching critical targets on the way to meeting high-level goals.
A good KPI should act as a compass, helping individuals and teams understand whether they are taking the right path toward a company’s strategic goals. Effective KPIs are actionable, crucial to achieving your goals and easily communicated throughout the organization. They must be well-defined, quantifiable and applicable to your department or line of business. They can be individual tasks or span across departments and even industries.
High-level KPIs might focus on the overall performance of a company, while low-level KPIs could assess processes within departments. KPIs are evaluated over a specific period of time, and are compared against past performance metrics or acceptable norms. With the right KPIs in place, you can set appropriate goals, develop strategies to evaluate progress and create a record of business performance.
Developing KPIs
The pursuit of goals depends on the focused, consistent delivery of results, and KPIs serve as the guideposts to get you where you want to be. When developing KPIs, you can start by creating a list of values that best demonstrate progress toward key business objectives and asking these questions:
- Is your objective specific?
- Can you measure progress towards that goal?
- Is the goal realistically attainable?
- How relevant is the goal to your organization?
- What is the timeframe for achieving this goal?
- How and when will you evaluate short-term progress?
- How and when will you reevaluate longer-term progress
Determining Which KPIs To Use
The best KPIs for your company might not be the same ones for another organization. KPIs should match your strategy, not just your industry, but you should have both departmental and overarching KPIs. Here are some to consider:
Financial KPIs
- Average Annual Expenses to Serve One Customer
- Cash Flow from Financing Activities
- Cost of Goods Sold
- Cost Per Hire
- Day Sales Outstanding
- EBITDA (Earnings Before Interest, Taxes, Depreciation, & Amortization)
- Innovation Spending
- Line of Business Expenses vs. Budget
- Line of Business Efficiency Measure
- Line of Business Revenue vs. Target
- Percentage of Product Defects
- Profit
- Ratio of Customer Lifetime Value to Customer Acquisition Cost
- Sales by Region
Customer KPIs
- Contact Volume by Channel
- Customer Acquisition Cost
- Customer Churn Rate
- Customer Lifetime Value
- Customer Retention
- Customer Satisfaction
- Customer Support Tickets
- Net Promoter Score
- Number of Customers
Employee KPIs
- Absenteeism Rate
- Benefits Satisfaction
- Employee Satisfaction
- Employee Turnover Rate
- Internal Promotions Vs. External Hires
- Knowledge Achieved with Training
- Percentage of Response to Open Position
- Retirement Rate
- Salary Competitiveness Ratio
Marketing KPIs
- Average Lead Score
- Average Time on Page
- Brand Awareness
- Bounce Rate
- Click Through Rate
- Content Downloads
- Cost Per Lead
- Funnel Conversion Rate
- Inbound Marketing ROI
- Landing Page Conversion Rates
- Lead-to-Customer Ratio
- Newsletter Signup Conversion Rate
- Number of New Vs. Repeat Site Visits
- Number of Reads on Company Blog
- Organic Traffic from SEO
- Sales Revenue from Inbound Marketing
- SEO Visibility and Keyword Ranking
- Social Media Traffic and Conversion Rates)
- Top Viewed Posts
- Traffic-to-Lead Ratio
- Unique Visitors
_____________________________________________
