Smart Business Growth Through KPIs
A key performance indicator (KPI) is a metric used to measure factors pivotal to the success of an organization. KPIs for every business may be different, but they are the most important metrics that indicate the future performance and health of an organization. Often the collection of KPIs are automated and visualized in the form of a dashboard distributed to key stakeholders. KPIs are normally tracked over time to observe trends and compare with an organization’s plan for anticipated performance.
Are KPIs different from Metrics?
It is critical for all business owners to understand the difference between a measure, a metric, and a KPI. Just because you can measure something doesn’t make it a metric. And even though you may have identified a metric, that doesn’t automatically make it a KPI. Simply put, KPIs derive from metrics—which are created out of measurements.
Because KPIs promote long-term strategic goals, it is imperative to keep these measurements consistent over time. Although a company may change its goals, the measurement should remain constant. For this reason, they become strategic to the company’s plan and vision.
KPIs Vary with Different Industries
The KPIs that a company or organization measures will vary depending on the type of business and industry, its customers, and its employees. Below are some example KPIs across different industries that are commonly used.
- Customer engagement
- Customer complaints
- Market share
- Customer Acquisition Cost
- Customer Lifetime Value
- Employee satisfaction
- P/E Ratio
- Return on Equity
- Customer Churn
- Return on investment (ROI)
Key Benefits of Setting KPIs
- They provide an easy way to monitor the progress of employees, especially in relation to strategic goals
- They keep the right people within an organization informed of how their department performs
- They track the impact of initiatives, which gives the company valuable insight into which initiative they should be pursuing
- They highlight weaknesses within an organization
- They bridge the gap between vision and reality
- They give companies a competitive advantage
Here at Zubak & Associates, we embrace innovation in all forms and apply it safely and in a user-friendly, profitable way. If you wish to review your companies KPIs to ensure you are accurately tracking the right metrics CONTACT US. To see more blog posts, click here BLOG PAGE. You can also visit our MEASUREMENT AND KPI PAGE.
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