Logotipo horizontal de Diego C Martín colores invertidos, blanco y naranja para findo negro

What are KPIs? Complete guide with examples to measure performance in your company

Categorías:  Autor: Diego C Martin 
Oficinas muy modernas con mucha luz y grandes ventanas transparentes con personas trabajando en sus puestos

KPIs are necessary to measure an organization’s performance. They allow to measure the effectiveness and productivity of the actions through the appropriate indicators.

There are different categories of KPIs, such as knowing if they are internal or external, if they are quantitative or qualitative and if they measure a long-term or short-term action.

I show you different examples of KPIs in sales, finance, human resources, among other fields. Best practices for setting goals and the help provided by Business Intelligence or BI will also be shown.

What are KPIs?

KPIs or Key Performance Indicators are metrics that measure the effectiveness and productivity of a company. They are useful tools to determine if an organization is meeting its objective and to measure the performance of people, processes and products. In addition, KPIs can be customized for the specific needs of each organization.

In general, KPIs are a widely used tool in business management.

Types of KPIs

There are different KPI categories, each measuring different aspects of business performance. Here we leave the types of KPIs:

External vs internal KPIs

External KPIs are metrics that measure a company’s performance relative to the market and competition. Internal KPIs, on the other hand, measure the performance of internal processes and personnel.

Quantitative vs qualitative KPIs

Quantitative KPIs measure aspects measured in numbers, while qualitative KPIs measure more subjective aspects. Quantitative KPIs may be easier to measure, but qualitative KPIs can provide a deeper understanding of a company’s performance.

Short-term vs long-term KPIs

Short-term KPIs measure a company’s short-term performance, usually within a year or less. Long-term KPIs measure a company’s long-term performance, usually over three to five years.

Difference between KPI and Metric

Importantly, KPIs are in the metrics category, but not all metrics are KPIs. The main difference between these two measurement categories is that KPIs are critical metrics that help companies maintain optimal performance and meet their end goals.

On the other hand, metrics are a broader category of measurement that includes any type of measurement, whether important or not to the organization.

Examples of KPIs in different areas

KPIs can be used in different areas to measure and monitor a company’s performance. Here are some examples in the areas of sales and marketing, finance and human resources, as well as some additional types of KPIs.

Sales and marketing KPIs

For sales and marketing, KPIs are especially important for measuring the success of promotional strategies and campaigns. Some examples of KPIs that can be used here are:

  • Customer acquisition cost: This KPI measures the cost of getting a new customer for the company.
  • Customer Life: This KPI measures the duration or frequency of a customer’s purchases.
  • New customers: This KPI measures the number of new customers that are acquired during a given period of time.
  • Conversion rate: This KPI measures the percentage of visitors to a website or promotional campaign who eventually become customers.
  • Revenue per employee: This KPI measures the amount of revenue generated by a particular employee in a set period of time.

Examples of KPIs in finance

In financial management, KPIs allow the company to measure the success of its strategy and monitor its profitability. Some examples of financial KPIs are:

  • Net profit: This KPI measures the company’s net profit after taxes and other expenses.
  • Sales revenue: This KPI measures the revenue generated by the company, indicates the success in terms of the number of sales made established per period.
  • Company margin: This KPI measures the difference between the company’s income and expenses. This result is usually expressed as a percentage of total income or expenditure.
  • Sales KPIs: This KPI measures the volume of sales of the company, which allows to know if there are achievements in relation to the planned objectives and established in the sales strategy.

Human Resources KPIs

Human resource KPIs are used to measure the company’s human resource management performance. Some examples are:

  • Satisfaction indicators: This KPI measures the level of satisfaction that the company’s employees have.
  • Efficiency indicators: This KPI measures how efficiently employees fulfill their assigned tasks.
  • Productivity indicators: This KPI measures employee productivity in terms of quality and quantity of work produced.

Other types of KPIs

In addition to the KPIs mentioned above, there are other indicators that can be used to measure the performance of different areas of the company. Some of them are:

  • Customer satisfaction indicators: This KPI measures customer satisfaction with the service received.
  • Key Performance Indicators: This KPI measures the effectiveness of the processes and activities that are developed in the company.
  • Key performance indicators: This KPI measures the performance of the company in relation to its objectives and goals.

How to set the right KPIs

KPIs are a key tool to measure the performance and effectiveness of an organization, but to be really useful it is necessary to establish them properly.

Here are a few best practices for establishing the right KPIs:

Identify the defined strategic objectives

Before selecting KPIs, it is important to be clear about the company’s strategy and objectives should be set in line with that strategy. Objectives must be specific, measurable, achievable, relevant and timely.

There must be a clear and direct relationship between objectives and the measurement of KPIs. This ensures that the factors that are really important to the company are being measured.

Measure the right amount

It is important to measure the right number of KPIs, as measuring too many KPIs can be counterproductive. Too many KPIs can generate redundant information and dilute the team’s attention on truly strategic objectives.

It is advisable to select those KPIs that really add value and allow monitoring progress in line with the business strategy.

Collect relevant data

It is vital to have relevant and accurate data sources to ensure the correct measurement of KPIs. Sources should be accessible, relevant and updated frequently.

It’s also important to make sure the data is reliable and consistent to get proper analysis and make informed decisions.

Example KPIs that can be used

There are a variety of KPIs that can be used in different business areas. Some example KPIs from sales and marketing, finance and human resources were mentioned in the previous section.

It is important to select those KPIs that are relevant to the company’s strategy and objectives.

Platform that allows you to measure your KPIs in real time

It is advisable to have a platform that allows real-time measurement of KPIs, allowing you to get an up-to-date view of how you are progressing and make informed decisions.

There are many solutions on the market, so it is important to select the one that best suits your business needs.

Best practices for setting your goals

Setting the right goals and aligning them with KPIs requires some best practices. These practices include having SMART objectives (specific, measurable, achievable, relevant and timely), involving different stakeholders in the process and being agile in setting objectives and KPIs according to the needs of the company.

The help of Business Intelligence

Business Intelligence (BI) solutions can be of great help in establishing the right KPIs. These solutions enable the identification of patterns and trends in business data, helping to make informed decisions and establish the right KPIs.

How to improve decision making through KPIs

To improve decision-making through KPIs, it is essential to have a data-oriented business culture. Business leaders must rely on KPIs as a key tool for measuring progress, analyzing data, and making informed decisions.

The frequent review and analysis of KPIs also helps in improving decision-making, allowing strategic adjustments and changes in line with the evolution of the company.

  • Identify the defined strategic objectives
  • Measure the right amount
  • Collect relevant data
  • Example KPIs that can be used
  • Platform that allows you to measure your KPIs in real time
  • Best practices for setting your goals
  • The help of Business Intelligence
  • How to improve decision making through KPIs

Leave a Reply

Your email address will not be published. Required fields are marked *

Artículos de la misma categoría

linkedin facebook pinterest youtube rss twitter instagram facebook-blank rss-blank linkedin-blank pinterest youtube twitter instagram