Key performance indicators (KPIs) are performance metrics that are most important to a company's goals and objectives. They are the most significant measures for evaluating and analyzing a company's growth.
The key point to remember about KPIs is that they vary from firm to firm, are subjective, and are dependent on the particular goals of each firm. The acronym KPI and the term metrics are frequently used interchangeably, however, it is worth noting that while all KPIs are metrics, not all metrics are KPIs.
KPIs are divided into three categories
Financial KPIs - These KPIs are focused on elements such as profitability, costs, and sales, among others. Gross profit margin and return on sales are two such examples of profitability.
Customer Experience KPIs - These KPIs measure how happy the customers are with the service and the product. Net promoter score, customer retention rate, customer lifetime value, and client acquisition cost are examples of customer metrics.
Employee KPIs - These are in charge of keeping tracking the quality of employees and other secondary staff of the company. For Instance: Employee attrition and engagement, as well as the pay competitiveness ratio.
Unanimously, there are five very important KPIs that are commonly measured in every institution. They are:
KPIs will assist the organization in determining how well it is performing in terms of the targets and goals it has set for itself, as well as how far away it is from achieving them. For instance, sales officials have target revenue to generate every quarter. Achieving that ensures a smooth running of the organization.
Measuring your customer satisfaction levels and retention rate, you can understand what is working for your brand. This will foster the right practices in your organization and ensure less churn in the pipeline. This is will also allow you to gain insights to prepare better for any changes to come.
KPIs, allow higher management to supervise easily. It is hard to monitor and micro-manage people. Instead, establishing KPIs and achieving them make the process easier. It also allows managers to learn about their employees to facilitate training materials and practices accordingly.