An Introduction to KPIs
Key Performance Indicators, or KPIs are a way for businesses to track their progress towards their goals.
KPIs are measurements that reflect the critical success factors of an organization. They are a way to measure the pulse of your organization, and differ depending on industry, firm size, and organizational objectives.
KPIs must be quantifiable and aligned with your organizational objectives. Each department will have its own KPIs that assess and reassess its progress throughout the fiscal year.
Types of KPIs
There are many different types of KPIs. It is up to your leadership team to decide which metrics fit best for your organization. Some popular metrics include:
- Sales and Profits
- Marketing and PR
- Financial Metrics
- People Metrics
Within each category of KPIs, there are hundreds of metrics that you could use to track your business:
- Sales By Region: By analyzing your sales volume by region, you can better understand your customer and provide feedback for underperforming regions.
- Sales Growth: the pace at which your organization's sales revenue is growing guides many strategic decisions in your organization. It also measures the efficiency of your marketing campaigns and sales personnel.
Marketing and PR
- Social Media Engagement: Measuring and analyzing engagement on your social media platforms can help you establish working relationships with your prospects. Choose different engagement objectives for your different platforms, and stick to them!
- Keyword Performance: Continually reassess your SEO keywords to make sure that you are visible to your target. SEO is a very important part of e-commerce, and it is easy to get bogged down by keyword options. By analyzing your best keywords, you can direct your buys to the post profitable places.
- Cost Per Lead: Measure the effectiveness of marketing campaigns at generating leads for each dollar spent on that campaign. This can guide the goals and methods of future campaigns.
- Profit: Your profit is one of the most important performance indicators in the book. Never discount what it could signify for your organization.
- Cost of Goods Sold: Analyzing your COGS will ensue that your markups and product costs remain actionable. It also keeps profit margin top-of-mind for your team.
- Employee Satisfaction: Unlocking your employees’ satisfaction can be the difference between a running organization and a thriving organization. Daily, weekly, or monthly engagement pulses help to measure satisfaction, and, in turn, efficiency.
- Customer Satisfaction and Retention: You can use multiple performance indicators to measure CSR, including customer satisfaction scores and percentage of customers repeating a purchase. Either way, tracking customer satisfaction has implications on your sales, profits, and other key areas.
- Customer Acquisition Cost: Your customer acquisition costs has implications on your profit margins and the impact of your marketing campaigns. By analyzing CAC, you can evaluate the performance of several parts of your business.
KPI Best Practices
KPIs offer an organization freedom to decide what parts of their organizations offer the best pulse. Your KPIs are uniquely your own, but in order to ensure that you choose indicators that are effective, strong, and clear, follow the Six A’s:
Aligned - Make sure the KPIs your are choosing align with the strategic goals and objectives of your organization.
Attainable - The KPIs you choose to measure should have data that can be easily obtained.
Acute - KPIs should keep everyone on the same page and moving in the same direction
.Accurate - The data flowing into the KPI should be reliable and accurate.
Actionable - Does the KPI give you insight into the business that is actionable?
Alive - Your business is always growing and changing. Your KPIs should evolve as well.
Does your organization use KPIs to track its health? Do more with WorkGreat. We help you track your firm’s goals, and integrate with the metrics that you need to understand your progress.