A Key Performance Indicator, or KPI, is a numerical measurement that indicates if your team or organization is meeting its objectives. Teams and leaders utilize key performance indicators to analyze the measurable measure of performance of business processes and employees, and it has proven to be a highly effective strategy. Monitoring metrics enable you to evaluate your company’s performance and make data-driven decisions to accelerate growth.
This article will answer all of your questions and more about what a key performance indicator (KPI) is and how to use it effectively. We also have a long list of key performance indicators KPIs examples from you can choose the one that suits your business.
What are Key Performance Indicators (KPIs)?
Key performance indicators (KPIs) are sometimes known as performance metrics, performance ratios, or business indicators.
Here are some examples of KPIs:
- Net Profit Margin – Is used to calculate the proportion of profit generated by a company in relation to its total sales.
- Monthly Recurring Revenue (MRR) — One of the most significant KPIs in any subscription business, measuring the predictable and recurring revenue components.
- Sales Growth – Is used to assess your sales team’s ability to raise revenue over a set period of time.
Read Also: MRR: What Is MRR (Monthly Recurring Revenue)?
Types of KPIs
You can track multiple Key Performance Indicators based on your organization’s goals and objectives. Choosing the correct KPIs from the start is critical for obtaining actionable and useful information about your company’s success.
Because each company department has various tasks and goals, each department measures different KPIs.
KPIs are classified into five types:
- Business Key Performance Indicators
- Financial Key Performance Indicators
- KPIs for sales
- Marketing Key Performance Indicators
- KPIs for Project Management
#1. Business Key Performance Indicators
Company KPIs aid in measuring the fulfillment of long-term business objectives. Companies can move between critical business operations and identify areas of poor growth by measuring business indicators.
#2. Financial Key Performance Indicators
Financial key performance indicators (KPIs) are typically tracked by an organization’s leadership and the financial department. The metrics show how well a company is doing in terms of revenue and profit generation.
#3. KPIs for sales
Sales KPIs are quantitative metrics used by the sales team to track progress toward key objectives and targets. Sales metrics aid in keeping track of month-to-month performance and achieving long-term sales growth.
A Sales Dashboard can be used to track sales KPIs.
#4. Marketing Key Performance Indicators
Marketing KPIs assist marketing teams in tracking their progress across all marketing platforms. A brief look at marketing stats reveals how well the marketing team is doing in terms of generating new leads.
#5. KPIs for Project Management
Project managers utilize key performance indicators (KPIs) to track project progress and target achievement. Project metrics are used by organizations to identify successful projects and satisfy critical deadlines.
KPIs at the High and Low levels
High-level KPIs indicate the overall performance of the company. Annual Growth, Annual Recurring Revenue (ARR), and Relative Market Share are examples of high-level KPIs.
Individuals have little influence on these performance measures because they are the outcome of collaboration across numerous departments.
Low-level KPIs provide information on the performance of specific departments or individuals. Low-level business indicators are more actionable because they are linked to people’s day-to-day work.
How should KPIs be used?
KPIs can be used to track the success of your firm across all departments. Add your metrics to a KPI dashboard to get a quick overview of each critical goal.
A key performance indicator KPI dashboard is a real-time reporting tool that collects, groups, organizes, and visualizes key metrics for a company. You can create multiple KPI dashboards to monitor the progress of each department’s goals.
The ability to provide real-time information about a company’s performance is the most valuable feature of modern business dashboards. As a result, business leaders and teams can make informed, goal-oriented decisions based on actual data rather than gut instinct.
A real-time comprehensive business dashboard aids in the detection of problem areas and the resolution of critical issues.
Before creating a KPI dashboard, everyone should answer the following five questions:
- What are the desired business outcomes (goals)?
- How can action be taken to improve KPI values?
- Do we have all of the necessary data to monitor the KPIs?
- Who will read the KPI report and what information do they need to know (which KPIs and indicators should be included)?
- How should certain KPIs be visualized (graphs, metrics, diagrams, etc.)?
How do you pick the right KPIs?
You must first define your business goals in order to select the appropriate KPIs. Each KPI you monitor should be measurable and linked to the achievement of specific objectives. It is preferable to concentrate on a few key metrics rather than many irrelevant ones.
Only keep an eye on the Key Performance Indicators that are important to your company. Ensure that all of your business metrics meet the SMART criteria:
SMART KPIs are as follows:
- Specific
- Measurable
- Attainable
- Relevant
- Time-Bound
Understand that Key Performance Indicators differ depending on the industry, stage of growth, and project phase. Only follow industry standards if they align with your goals and objectives. Also, keep in mind that the metrics you use will evolve as your firm grows and scales.
Examples of Key Performance Indicators (KPIs)
It is easier to run a successful business when you employ KPIs that provide a graphical representation of where you stand. You will gain insight into past trends, present progress, and problem areas, and you will be able to use this information to maintain long-term growth.
We’ll look at Four different types of business KPIs in this collection of key performance indicator examples:
- Sales
- Financial
- Project Management
- Marketing
Use the examples below to choose the best KPIs for your company and team.
Note: Only track the KPIs that are relevant to YOUR company and business objectives. You’ll probably only need 20 of the KPIs in this list.
Examples of Sales Key Performance Indicators (KPIs)
- Monthly sales growth
- Number of qualified leads
- Monthly new leads/prospects
- Number of New Contracts Signed Per Period
- Monthly sales/new customers
- Dollar Value for New Contracts Signed Per Period
- Hours of Resources Spent on Sales Follow Up
- Net Sales – Dollar or Percentage Growth
- Resources spent on one non-paying client
- Resources spent on one paying client
- Customer lifetime value/customer profitability
- Lead-to-sale conversion rate
- Cost per lead by each channel
- Cost of a new client by each channel
- Hourly, daily, weekly, monthly, quarterly, and annual sales
- Average conversion time
- Lead-to-close rate: all channels
- Customer turnover rate
- Number of monthly sales demos
- Customer engagement level
- Number of abandoned shopping carts
- Shopping cart abandonment rate
- Number of monthly quotes/orders
- Average purchase value
- Average order value
- Sales per representative
- Sales by lead source
- Inbound calls handled per representative
- Outbound calls handled per representative
- Average annual sales volume per customer
- Average monthly sales volume per customer
- Relative market share
- Product/service usage every day
- Value of returned goods and warranties
- Asset turnover ratio (sales to assets)
- Percentage of total sales from existing customers
- Sales reps per $100k in revenue
- Monthly sales quota attainment
- Sales quota attainment by the sales representative
- Number of client accounts per account manager
- Days sales outstanding
- Number of Customers Retained
- Percentage of Market Share
- Average Ticket/Support Resolution Time
Examples of Financial Key Performance Indicators (KPIs)
- Growth in Revenue
- Gross Profit Margin
- Inventory Turnover
- EBITDA
- Operating cash flow (OCF)
- Current ratio
- Accounts receivable turnover
- Net profit margin
- Working capital
- Current accounts receivable
- Current accounts payable
- Accounts payable turnover
- Quick ratio / Acid test
- Accounts payable process cost
- Accounts receivable turnover
- Budget variance
- Budget creation cycle time
- Line items in the budget
- Number of budget iterations
- Payroll headcount ratio
- Vendor expenses
- Payment error rate
- Internal audit cycle time
- Finance error report
- Debt to equity ratio
- Return on equity
- Cost of managing business
- Resource utilization
- Total cost of the finance function
Examples of Project Management Key Performance Indicators (KPIs)
- Planned value (PV)
- Actual cost (AC)
- Earned value (EV)
- Cost variance (CV) (planned budget vs. actual budget)
- Schedule variance (SV)
- Schedule performance index (SPI)
- Cost performance index (CPI)
- Planned hours of work vs. actual situation
- Overdue project tasks / crossed deadlines
- Percentage of overdue project tasks
- Missed milestones
- Percentage of projects completed on time
- Percentage of cancelled projects
- Return on investment (ROI)
- Number of budget iterations
- Percentage of tasks completed
- Project resource utilization
- Cost of managing processes
- Percentage of projects on budget
Examples of Marketing Key Performance Indicators (KPIs)
- Monthly new leads/prospects
- Qualified leads per month
- Marketing qualified leads (MQL)
- Sales-accepted leads (SAL)
- Sales qualified leads (SQL)
- Cost per lead generated
- Net promoter score
- Cost per conversion
- Cost per conversion by channel
- Average time of conversion
- Retention rate
- Attrition rate
- Monthly website traffic
- Traffic from organic search
- Returning vs. new visitors
- Visits per channel
- Average time on page
- Click-through rate on web pages
- Pages per visit
- Conversion rate for call-to-action content
- Inbound links to website
- Traffic from organic search
- New leads from organic search
- New leads from organic search
- Number of unique keywords that drive traffic
- Keywords in top 10 SERP
- Rank increase of target keywords
- Conversion rate per keyword
- Page authority
- Google PageRank
- Volume of traffic from video content
- Leads & conversions from paid advertising
- Number of monthly PPC campaigns
- Cost per acquisition (CPA) & cost per conversion (CPC)
- Click-through rate on PPC advertising
- Traffic from social media
- Number of leads from social media
- Number of conversions from social media
- Conversion rate for social media leads
- Managed audience size
- Engagement rate
- Social media mentions
- Social media ROI
- Content quality on blog
- Number of monthly blog visits
- Blog articles published this month
- E-books published this month
- Infographics published this month
- ROI per content type
- Web traffic from PR campaigns
- Number of clippings
- Calls from PR campaigns
- Media impressions from PR campaigns
- PR ROI
Summary
A KPI (Key Performance Indicator) is a quantitative statistic that indicates whether or not a team or organization is meeting its goals (benchmarks).
Business KPIs, finance KPIs, sales KPIs, marketing KPIs, and project management KPIs are the five basic categories of Key Performance Indicators.
- KPIs are typically tracked using a real-time reporting tool — the KPI dashboard.
- Each key performance indicator KPI you track should be SMART, which stands for Specific, Measurable, Attainable, Relevant, and Time-Bound.
- Only monitor metrics that are pertinent to your organization’s and business goals.
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