Most professionals know that key performance indicators (KPIs) are important. However, when it comes to understanding what they mean, why they're important, and how to get the most out of them, it's a little murkier. In the next few minutes you will understand the precise meaning and why you should use them .
As a bonus, you will also know the different types of key performance indicators (KPIs) . You can then think about how you can use them in your business. Indeed, you can create and apply KPIs to any strategy. You'll discover a tool that can help you achieve your goals , even if your team grows or changes strategy.
What is a KPI?
The acronym KPI stands for “key performance indicator” . It is a metric that helps evaluate the performance of projects, individuals, departments or companies based on strategic goals and objectives. KPIs allow you to see if they are progressing and therefore if the company is on the right track .
For example, if you work in social media, you might establish KPIs for retweets or number of followers gained per week. In this case, these metrics are crucial for your teams because they determine whether they achieve their goals or not.
Magileads omnichannel prospecting platform , you will be entitled, at any time, to KPIs and reporting on your customer journeys. You will be able to easily analyze the performance of your campaigns and adjust your customer acquisition strategy.
Why should you use KPIs?
To empower employees
KPIs are useful because they empower employees by tracking their progress and that of their team . For example, making the number of monthly sales per person a KPI, a sales team can easily understand each person's contribution to the department's success based on whether or not they met their goals.
Allow managers to adapt
Once managers have KPIs in place, it is easier to adjust the strategy if the team or individuals are not meeting their goals. This isn't necessarily about firing low performers, but rather providing training and guidance to those who are struggling.
Making sure everyone is on the same page
It is likely that individuals perceive success differently . For example, if an IT professional and an accountant work together on a project, they will likely measure success differently. Key performance indicators (KPIs) set a common standard and goals for all employees, helping to clarify expectations and priorities from the start.
Evaluate the health of a business
KPIs help businesses objectively assess organizational performance. Financial metrics, for example, show profitability , while employee retention rates can indicate the strength of company culture .
What are the different types of key performance indicators?
There are different ways to classify KPIs: high level and low level, short term and long term . Before creating one for your business, you must first know the different categories.
Operational
These KPIs measure an organization's processes and efficiency These metrics indicate how things are going on a day-to-day basis. Naturally, they are often measured over a shorter period of time than other KPIs.
Strategic
Strategic KPIs focus on longer-term, larger-scale goals within an organization. A strategic metric might be something like revenue growth . When a CFO looks at this metric, they get an idea of how the company is performing.
Leading or lagging indicator
A delayed KPI measures past achievements, like the annual sales of the previous year. A leading indicator is a prediction of what is likely to happen in the future, such as there customer satisfaction. Many organizations benefit from using a mix of lagging and leading KPIs.
Qualitative or quantitative
There are many quantitative key performance indicators. They can be measured easily and assigned a number, such as number of qualified leads from a platform. A qualitative indicator is less quantifiable, such as employee satisfaction.
