Key Performance Indicator (KPI) is a metric used to measure the success of a particular aspect of a business. It is a quantifiable measure of an organization’s performance that is used to track progress towards its goals and objectives. KPIs are a critical component of performance management and help organizations evaluate their performance in a specific area of business, such as sales, marketing, customer satisfaction, or operations.
KPIs can be either financial or non-financial, and are selected based on their ability to accurately reflect the progress towards specific goals and objectives. Some examples of KPIs in various areas of business include:
- Sales: Revenue, number of new customers, average order value, conversion rate, etc.
- Marketing: Website traffic, leads generated, cost per lead, social media engagement, etc.
- Customer satisfaction: Net promoter score (NPS), customer retention rate, customer complaint resolution time, etc.
- Operations: Production efficiency, inventory turnover, on-time delivery rate, etc.
To effectively use KPIs, organizations must establish clear goals and objectives, determine the relevant KPIs for each area of business, set target values for each KPI, and regularly monitor and evaluate performance. KPIs are a powerful tool for continuous improvement, allowing organizations to identify areas for improvement, track progress over time, and make data-driven decisions to optimize performance.