KPIs are the key performance indicators of a business. They are monitored regularly to ensure that your business performance targets are achieved and maintained.
KPIs can involve strategic measures, operational measures, employee performance, financial ratios, to name a few. When you want to quantify the data in your company, measure it with a KPI. They are used to compare results, evaluate business performance, and track changes to improve your business outcomes.
KPIs are important because they help align the business to achieve strategic goals such as profit, growth, performance, sales levels. Numbers don’t lie, and if you can quantify your key measurements, they provide objective feedback on business performance.
Monitor the KPIs, and if there is an area in your business that is not performing well or having trouble, it is through observing the KPI that you can identify weak spots. When you can monitor your KPIs on a dashboard that offers a visual, it can help with interpreting data.
Mainly due to data analytics, there is an overload of data available. To make data helpful, KPIs help you organize and use the data and offer meaningful feedback on the business area that you want to measure.
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You don’t need to monitor every KPI, and the KPIs that you choose to watch will change over time. Your important KPIs are going to align with the goals of your business. When you use the KPIs that help you monitor your goals, it will help measure business performance.
The types of KPIs that are important to monitor in your business include:
1. Financial KPIs
A financial KPI measures the value of a business’s financial results and performance. Every company should be monitoring financial KPIs such as profit margins. Profit is an essential part of business and businesses need profit to grow and scale.
2. Sales KPIs
Just as essential as profit, companies need sales to survive in business. Sales metrics should be monitored, from sales quotas to new lead generation. Average cost per lead, number of onboarding calls, customer acquisition costs are a few of popular sales KPIs to monitor.
3. Marketing KPIs
Marketing analytics allows you to track and report your valuable marketing KPIs for individual marketing campaigns. Social media conversion rates, landing page conversions, advertising, marketing distribution, customer lifetime value are all useful KPIs to consider tracking within your business. Marketing KPIs must be monitored to see what marketing efforts resonate with your audience and what doesn’t. Receiving that feedback allows for swift changes to achieve results.
4. Operational KPIs
Used to measure the operational efficiency of the business, these KPIs help business owners monitor how effective the daily operations of a company are. When you watch your operating expenses, you can plug money leaks quickly, so they don’t become a significant drain on your profitability.
5. Product KPIs
Knowing the damage, waste, and return rates when you are a product-based business is vital information. Product-based companies typically have smaller profit margins, and it is imperative to monitor product KPIs and use that feedback to increase profitability.
The bottom line is that you can use the KPIs that monitor your business-specific goals. When you start using KPIs to watch for trends, you will see your goals reached at a much quicker pace. Using dashboards that monitor your most important KPIs allows you to maintain competitiveness in your industry. If you are not using KPI tracking systems in your business, you may be leaving opportunities and money on the table.