You must have heard the word “KPI” mentioned a lot in meetings. KPI can help scale your company and boost your business growth.

KPI stands for Key Performance Indicator. It is an indicator used to review a team’s performance. The question is, how to pick the correct KPIs for your business?

In this article, we will explore the definition of KPI, which one should you put a lot of focus on, and how to focus on the indicators that are most important for your business.

What is KPI?

It is an acronym for Key Performance Indicator. It serves the purpose to measure performance or progress towards a goal over a period of time. KPI helps keep everyone’s eyes on the primary goals of the business.

Regardless of a KPI being a one-off thing or extended over a long period of time, it serves the purpose of keeping the team on track while keeping track of their progress and improve their results.

KPIs are used by businesses to determine whether their primary objectives are being met. These KPIs often monitor the organization’s general wellbeing and performance.

KPIs are used by departments to demonstrate the value of their work to the company. These performance indicators support teams as they try to achieve predetermined results and address obstacles in their way.

Additionally, staff members use KPIs to comprehend how their own contributions affect project, team, and company goals.

Aside from that, KPIs also aids in keeping track of the effectiveness of projects, process, campaigns and strategic changes.

A KPI is helpful for cross-departmental collaboration as well because it makes it easy to know at a glance what other teams are working toward. KPIs let businesses know if their assumptions are correct and whether what they are doing is effective.

It is important to remember that KPIs should be a measure to your essential indicators.

Your social media staff, for instance, can have a lot of data points that can be used as KPIs. However, they should limit their selection to those that support the larger company objectives. Consider brand awareness. The social media KPI metrics to track in this situation are likely to include follower count, post reach, and impressions.

In light of this, having KPIs requires you to concentrate on just a few crucial metrics that will have the biggest impact on your company.

Why are KPIs so important?

In 2020, people have used up and cumulated a consumed amount of 64.2 zettabytes. Statista estimates that by 2025, that amount would increase to 181 zettabytes.

One zettabyte is about one billion terabytes. Now imagine how much 181 zettabytes is. This shows that the business will be processing a lot more information than before.

It can be overwhelming as you process the constantly expanding volume of data. One sales manager might track over 140 metrics in a month, for instance, according to this post on sales metrics. These are important metrics that can boost a salesperson’s performance. However, when you factor in weekly measurements, it’s not surprising that 80% of workers experience information overload.

The focus of your work is narrowed when you choose a KPI for your company or team. Your team can come together around what matters most through this. Teams may be pushed to work harder, produce more, and make necessary changes when they are called for.

A KPI is not only a numerical value. It’s a message that reveals to your team right away whether you are making progress toward the objectives you have established together. Key performance measures can be useful for:

• Keep the big picture in mind
• Transform vague concepts into manageable goals
• Reduce data overload

Having a strong KPIs can save your company time, provide important insights, direct management, and maintain your company on a long-term growth path. Therefore, it is important to have the correct KPIs for your business.

Let’s take an example where your marketing team is choosing a KPI for its growth objectives. A blog’s ability to rank well in search engine results makes the quantity of #1 keyword rankings appear like a promising KPI.

But what if the top search terms on your blog have nothing to do with the objectives of your company? What if those keywords only generate insufficient traffic or unqualified leads? A better KPI in this case is certainly organic traffic.

To pick the right KPI will require extra effort on research, therefore let’s discuss about the types of KPIs.

Types of Key Performance Indicators

There are a wide range of performance indicators, the majority can be divided into two groups:

Quantitative KPIs

A quantitative KPI makes use of data to calculate advancement toward a target. Quantitative KPIs predominate, such as the quantity of closed sales, support tickets, or annual revenue.

Qualitative KPIs

A qualitative KPI monitors information that is not numerical, such as consumer feedback or employee engagement. Although it is possible to extract quantitative information from qualitative research, this KPI focuses on non-numerical information.

For instance, a business that just launched a new product online. Following the launch of the product listing, they’ll monitor quantitative measures such as:

• Goods sales
• Discarded carts
• Views of product pages

The business would also observe qualitative information like customer surveys and product reviews. The team may use this information to understand how customers are using the product and how to keep making improvements.

The majority of businesses track performance using many KPIs and may combine them to achieve a specific objective.

Aside from that, there are other ways employed by businesses to focus on their objectives.

Other KPIs

Leading KPIs: This quantifiable information aids a company in assessing possible reactions to a change. Leading indicators, for instance, can assist a SaaS company in projecting future performance when it plans to introduce a new feature.

Lagging KPIs: These evaluate outcomes following a change to see if it lives up to expectations. These are also known as production indicators on occasion. For instance, following the aforementioned SaaS company launch, lagging indications will display the actual results of the release.

These two KPIs can help teams make early corrections. Over time, this can help the company save time, effort, and money.

Input KPIs: This keeps track of the assets a company requires for a campaign, project, or procedure.

Process KPIs: This KPI identify possible changes and monitor how good a new process is working. The time it takes to close a support request is an example of a typical process KPI.

Practical KPIs: It monitors the present internal business processes and their effects on various areas of the corporation.

Directional KPIs: They assess the overall performance of the business. They might concentrate on company-wide trends or contrasts with rivals.

Actionable KPIs: Such metrics keep tabs on how well a business commits to and executes internal business reforms. Examples include KPIs that monitor employee satisfaction, culture changes, or DEI activities. These frequently gauge development over a predetermined amount of time.

KPIs vs Metrics

A KPI can become a metric but it does not work the other way around.

This is because KPIs monitor advancement toward a particular objective. KPIs are important performance indicators.

When making a KPI, the team commits to a particular metric and how achieving that objective might result in business success. It also helps to simplify the scope of information that stakeholders need to know.

This does not imply that metrics have no significance. There are numerous metrics will have to be monitored as your team develops and tackles particular problems. These indicators can then assist your team in achieving your KPIs.

Examples of KPI Metrics

For example, the team is making a blog to generate more leads for the sales team. These are the KPIs:

• Traffic
• New user
• Leads

There are other metrics to monitor:

• Engagement time
• Bounce rate
• Views per user
• Backlinks
• Domain authority

Your team will benefit from these analytics as they work to resolve issues, select appropriate blog posts, and implement changes that enhance the user experience.

For the staff who works on the blog, metrics are crucial to improving it. However, measurements frequently provide too much information for all stakeholders. In this case, additional measures are required for your blog team to reach its KPIs.

OKR vs. KPI

Although Objectives and Key Results (OKR) and KPIs are used interchangeably, they differ in the aspect of intention.

KPIs or health metrics shows how the company is doing to hit the set target. OKR are broad goals for your company, along with the important outcomes that will indicate achievement of those goals

Say a company has the objective to become one of the top 10 service providers in 2022. The key results could possibly be:

• Gain 2000 new customer by the Q2
• Generate 4000 leads monthly
• Boost annual membership by 35%

KPIs are best for scalability, whereas OKRs are intended for rapid expansion. They are more aspirational and encourage teams to go beyond their comfort zones.

But remember, your OKR’s important results may come from KPIs, but it’s usually not the other way around.

As in the aforementioned scenario, your marketing team might have a KPI of 4000 leads. The “Top 10” aim, on the other hand, refers to a wider vision and has a more flexible schedule, therefore it’s doubtful that any department would identify it as their KPI.

How to Determine KPIs

1. Pick KPIs that are in relation to your business target
2. Keep in mind the company’s current growth stage
3. Find out performance indicators of lagging and leading
4. Concentrate on few key metrics

Determining which metrics to track comes first before measuring KPIs. After that is done, set your goal. This goal is made based on a combination of a couple of factors.

Having a person managing the KPI would be smart as they can be the go-to person when there is issue. Then, you need to know when you need to reach these targets. Most importantly having a clear target will boost your team’s motivation and to make sure that everyone is moving towards the same direction.

Here are some steps to simplify the process:

• Pick KPIs that are in relation to your business target

KPIs are measurable metrics or data points used to assess how well your business is doing in comparison to a target. Identify your business goal and improvement areas. These will help you in coming up with the right KPIs.

• Keep in mind the company’s current growth stage

It differs depending on the stage of your company. Startup usually focus on data related business model where as bigger companies focuses on metrics such as cost per acquisition.

Here are a few examples:

• Find out performance indicators of lagging and leading

The main distinction between lagging and leading indicators is the ability to compare past performance with current performance.

Lagging indicators track the results of events that have already occurred such as the total sales of last month.

Leading indicators assess your future chances of succeeding in a goal. An example would be sales rep activity.

Usually, businesses only focus on lagging indicators as they are easier to measure. However, you cannot push aside the importance of leading indicators as they are the driver behind the business.

• Concentrate on few key metrics

Keeping track with too many KPIs will make you lose sight of what is important. Aim to have about 2 to 4 KPIs per target.

KPI Examples

The KPIs you select will depend on your organization’s business model and the sector in which you operate.

These are some examples of industry-standard KPIs:

Marketing KPIs

This can help you observe how much the marketing efforts works.

This video shows how to set KPIs for social media:

Here are some of the top marketing KPIs:

• Return on Investment (ROI)
• Lifetime Value of a Customer (LTV)
• Customer Acquisition Cost (CAC)
• Conversion Rate

Here are more resources for KPI ideas:

• Marketing KPIs
• Business blogging metrics
• SEO KPIs
• Email marketing metrics
• Marketing KPIs for CEOs
• Content marketing metrics

Sales KPIs

Since sales is a data-driven activity, choosing the right KPIs is crucial. KPIs for sales can track the effort of a person, a team, a department, or an entire business. Additionally, they can support sales teams as they adapt to shifting priorities and goals.

Some common sales KPIs:

• Rise in monthly sales
• Per-rep monthly calls (or emails)
• Ratio of opportunities to deals
• Average price paid

Here are some resources for more KPI ideas:

• Field sales leader KPIs
• Sales metrics guide
• Inside sales metrics
• Sales and marketing KPIs

Service KPIs

Consumer assistance KPIs may monitor how well support staff are performing. They aid service managers in comprehending, evaluating, and improving the client experience.

These are some service KPIs idea:

• Resolved ticket numbers
• Customer satisfaction score (CSAT)
• Initial response time
• Net promoter score (NPS)

Here are some resources for more KPI ideas:

• Customer service KPIs
• Customer experience metrics
• Customer success metrics
• Call centre metrics

Website KPIs

A website KPI can link the effectiveness of your website to goals for marketing, sales, and customer service. Businesses can use website data to discover how to join disparate departments and close gaps in the customer experience. For e-commerce websites, this kind of KPI is extremely helpful.

There are some website KPIs:

• Traffic
• Traffic sources
• Number of sessions
• Number of transactions

Check out this post for suggestions for website engagement metrics.

How To Measure KPIs

1. Find the correct tools or software to measure the KPIs
2. Cut down your KPIs final list
3. Make a standardized reports and time
4. Visualizations on the dashboard
5. Share KPIs reports with other teams
6. Determine the frequency of reporting to stakeholders
7. Make new goals and KPIs based on the results

Depending on your KPIs, your tech stack, and the way your team operates, measuring a KPI might be straightforward or challenging. Let’s see what would be the best way to measure your KPIs.

• Find the correct tools or software to measure the KPIs

Here are some aspects that you might want to look for in the software.

• Integrations

On average, companies use more than 200 apps according to Productiv. You will require a software that can connect to a number of tools so that I can produce an accurate data.

• Dashboards

Dashboards make it easier to visualize insights. Visualization helps in making complex information simpler.

• Custom and standard reports

Find a KPI software that does standard and custom reporting. Some KPIs requires supporting metrics to clarify the story of the data.

Check this if you are looking for data tracking software.

• Cut down your KPIs final list

Ensure that there is a clear separation of KPIs from metrices. Then, recheck weather your KPIs appear to be having progress towards the target.

You might find that some software are easier to observe than others. For instance, if your revenue and marketing systems are integrated, measuring client lifetime value by marketing channel is simple. What if these two systems differ from one another? Perhaps your marketing software indicates that your blog generates the majority of your leads. The majority of your leads originate from landing pages, according to data from your customer platform.

Such issue requires a lot of manual work and creates a KPI that is questionable. Choose a KPI that can measure accurately until you can unify your systems.

• Make a standardized reports and time

You need to have a consistent reporting schedule and format if you want the stakeholders to invest in the KPIs. You also need a standard report which has the similar structure. You might wish to alter your standard reports based on your sector and KPIs. This might assist you in ensuring that your reports clearly display the most pertinent data.

• Visualizations on the dashboard

Visual dashboard makes it easier for stakeholders to understand the KPIs. When making your dashboard create audience-specific dashboards and keep it simple. Pick the best chart for the information that you will be presenting.

• Share KPIs reports with other teams

Making sure everyone is on the same page about the structure and schedule is important. Therefore, communicate about the KPIs report with the team.

• Determine the frequency of reporting to stakeholders

You would not want to be reporting too frequently and too rarely. Begin with regular reports then slowly increase the time between each report later.

• Make new goals and KPIs based on the results

Review the KPIs at least once a year. Put the data in a way that makes it easy to compare useful KPIs and indicators which are not helping. Then, plan and do research on what you would like to change.

• Use Your KPIs to Fuel Growth

KPIs assist you in monitoring your development and scaling gradually to expand in whatever method is important to your business.

A strategic edge can be yours and your company’s with the use of effective KPI design and tracking. They can aid in your goal-oriented prioritization, concentration, and process scalability.