Success Acronyms: KPIs

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Entrepreneurs are passionate people who love to learn how to improve their business. Success Acronyms makes great concepts and ideas easy to recall and apply. In this article, we’ll be looking at KPIs: What they are and how they can help us achieve our business success.

What’s KPI?

A Key Performance Indicator (KPI) is a measurable value that demonstrates how effectively a company is achieving key business objectives. Organizations use KPIs to evaluate their success at reaching targets.

 Key Performance Indicator (KPI) is a measurable value that demonstrates how effectively a company is achieving key business objectives. Organizations use KPIs to evaluate their success at reaching targets.

Selecting the right one will depend on your industry and which part of the business you are looking to track. Each department will use different KPI types to measure success based on specific business goals and targets. Find out what types of key performance indicators are relevant to your department, industry, or role:

Want to find out how your business is performing? Setting and analyzing performance indicators for your company is the best way to forecast and get on track with your business goals. Creating KPIs or Key Performance Indicators will help you measure your company’s success. The question is what to focus on? How you measure performance says a lot about your company’s objectives.

KPIs and your business strategy

Key Performance Indicators (KPIs) are the elements of your plan that express what you want to achieve by when. They are the quantifiable, outcome-based statements you’ll use to measure if you’re on track to meet your goals or objectives. Good plans use 5-7 KPIs to manage and track the progress of their plan.

Anatomy of a KPI

To understand KPIs better and get a better grasp of this Success Acronym, It’s essential we cut into its anatomy. The anatomy of a structured KPI includes:

  • A Measure – Every KPI must have a measure. The best KPIs have more expressive measures.
  • A Target – Every KPI needs to have a target that matches your measure and the time period of your goal. These are generally a numeric value you’re seeking to achieve.
  • A Data Source – Every KPI needs to have a clearly defined data source so there is no gray area in how each is being measured and tracked.
  • Reporting Frequency – Different KPIs may have different reporting needs, but a good rule to follow is to report on them at least monthly.

Examples of KPIs

Depending on your industry and the specific department you are interested in tracking, there are a number of KPI types your business will want to monitor. Each department will want to measure success based on specific goals and targets. Take a look at the departmental KPI examples below to learn more about the one you should be measuring

Examples of Sales KPIs

  • Number of New Contracts Signed Per Period
  • Dollar Value for New Contracts Signed Per Period
  • Number of Engaged Qualified Leads in Sales Funnel
  • Hours of Resources Spent on Sales Follow Up
  • Average Time for Conversion
  • Net Sales – Dollar or Percentage Growth

Examples of Financial KPIs

  • Growth in Revenue
  • Net Profit Margin
  • Gross Profit Margin
  • Operational Cash Flow
  • Current Accounts Receivables
  • Inventory Turnover
  • EBITDA

Examples of Customer KPIs

  • Number of Customers Retained
  • Percentage of Market Share
  • Net Promotor Score
  • Average Ticket/Support Resolution Time

Examples of Operational KPIs

  • Order Fulfillment Time
  • Time to Market
  • Employee Satisfaction Rating
  • Employee Churn Rate

Examples of Marketing KPIs

  • Monthly Website Traffic
  • Number of Qualified Leads
  • Conversion Rate for Call-To-Action Content
  • Keywords in Top 10 Search Engine Results
  • Blog Articles Published This Month
  • E-Books Published This Month

With the foundational knowledge of the KPI anatomy and a few example starting points, it’s important you build out these metrics to be detailed and have specific data sources so you can truly evaluate if you’re achieving your goals.

Remember, for every business determined to succeed, there has to be the 5-7 core metrics you’ll be living by for the next 12 months.

A combination of leading and lagging KPIs will paint a clear picture of your organization’s strategic performance and empower you to make agile decisions to impact the success of your team.

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