“Hey, good job on that project. We knew you’d deliver.” Who doesn’t love a little work praise, right? But just HOW good was that job? Deliver what, exactly? Is “good” the company’s desired level of performance?
That’s where Key Performance Indicators (KPIs) come in. KPIs are measures of performance over time for specific corporate objectives. We love them because they transform vague assumptions into specific, measurable data that empowers companies to gauge the performance and health of their business and, when needed, guide them to make important adjustments in the ways they are choosing to achieve their strategic goals.
Types of KPIs
First, it’s important to understand that KPIs are “indicators”, meaning they measure what has already happened. Therefore, each KPI should be assessed in terms of target values so that it is possible to determine whether expectations have been met. While they are not “prognosticators” of future developments, sometimes predictive analysis may be performed based on a KPI. Understanding this, KPIs can be either quantitative or qualitative.
Quantitative KPIs are objective and fact-based. They are measured by numbers. A couple of examples are percentage of Sales Growth or number of return client project requests.
Qualitative KPIs are subjective, based on someone’s feelings or opinions. A workplace satisfaction survey, gathering employee opinions about the effectiveness of a workplace is an example.
The actual types of measures used as KPIs can vary greatly based on the type of organization and what aspect of that organization is being evaluated. For instance, the KPIs can be chosen to measure the overall progress of the organization, or they can be focused on measuring the success of a specific project or product.
The following are just a few examples of metric categories that can be used as KPIs:
Financial metrics:
- Profit margins, cost effectiveness, sales by region, return on equity, etc.
Customer metrics:
- Customer acquisition cost, customer satisfaction and retention, etc.
Personnel Metrics:
- Employee turnover rate, employee satisfaction, etc.
Professional Services metrics
- Utilization rate, project profitability, project success rate, etc.
Digital Marketing metrics
- Return visitors, brand awareness, click through rate, response rate, etc.
Supply Chain metrics
- Order tracking, rate of return, inventory accuracy, etc.
Call Center metrics
- Active and waiting calls, blockage, call volume, average talk time, etc.
KPI use is a powerful knowledge-based tool that keeps companies focused on growth and improvement.
SPARK THOUGHT has years of experience using KPIs for clients across many industries. Let us help you make the best use of this profitable business tool to help your company achieve your business needs by:
- Selecting the appropriate metrics to track success
- Performing a strategic analysis to define what goals or processes should be evaluated
- Comparing the results with end goals and interpreting their meaning
- Conducting periodic reviews to assess the effectiveness of chosen KPIs
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