Introduction to Key Performance Indicators
A Key Performance Indicator (KPI) is either a metric or calculated metric that demonstrates how effectively a company is achieving key business objectives. KPIs are used to evaluate their effectiveness at achieving goals.
Selecting the right KPIs will depend on your industry and which part of the business being measured. Each area will use different KPI's to measure success based on specific business goals.
Once you have identified the goals you'd like to track, you will want to track these KPIs in a real-time reporting tool. KPI tracking can be done using analytics tools, dashboards or data visualization software, giving your entire company visibility into your current performance.
Types of KPI's
KPI Best Practices
Having the ability and clarity to measure your company is crucial, but focusing on the wrong key performance indicators or vanity metrics can be troublesome. Having clear and well structured KPIs that align with business goals and objectives is important for growing your company.
So what makes business performance indicators “key” and how should business leaders, executives and managers choose them? There are 5 key factors when creating your KPIs:
- Aligned - Make sure the KPIs your are choosing align with the strategic goals and objectives of your company or product goals.
- Feasible - The KPIs you choose to measure should have data that can be easily obtained without hassle and manual processes.
- Integrity - The data powering the KPI(s) should be reliable and accurate.
- Actionable - The KPI should give you actionable insights to steer the course of the company.
- Current - The reality is your business will change and need different KPIs over time. Your KPIs should evolve as needed.