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kpi

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The document discusses Key Performance Indicators (KPIs), which are quantifiable measures used to evaluate factors that are crucial to the success of an organization. KPIs help measure performance against goals. The document outlines what makes a good KPI, such as being business-aligned, actionable, realistic and measurable. It also discusses how to develop KPIs using the SMART framework and provides examples of KPIs for different business functions like IT, marketing, customer service, sales and finance.

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KPIs
What is KPI? • KPI stands for key performance indicator, a quantifiable measure of performance over time for a specific objective. • KPIs provide targets for teams to shoot for, milestones to gauge progress, and insights that help people across the organization make better decisions. • From finance and HR to marketing and sales, key performance indicators help every area of the business move forward at the strategic level.
Comparison of Metrics v/s KPI • Metric is used for measurement of business activity • KPI measures performance against a goal. • Goals associated with KPIs are known as targets. • Web analytics dashboard display important information about website. • Also displays Key Performance indicators(KPI) of website against goals.
Characteristics of a good KPI • Business-aligned: KPIs should be aligned with your overall business strategy and outcomes. • Actionable: KPIs should be actionable. Once you’ve set your KPI, you need to outline the steps you’ll take to reach it and the metrics you’ll measure along the way. What good is a KPI if you have no way to meet it? If your goal is to increase inbound leads, you should have a plan in place to do that
Characteristics of a good KPI • Realistic: KPIs should be realistic. Good advice is to start small. Big, lofty KPIs—while they might look good on paper—aren’t doing you or your team any favors if they’re unrealistic from the get-go. • Measurable: KPIs should be measurable. When you set KPIs, ask yourself: What are you trying to achieve? What is the desired end result? What’s the timeline? Remember to add: How am I going to measure my KPIs?
Characteristics of a good KPI • Drillable: Users can drill down into details • Simple: KPIs should be simple, so that user can understand.
Measuring KPI-Using SMART FRamework SMART refers to the five requirements your KPIs need to be good. It’s an acronym for Specific, Measure, Attainable, Relevant, and Timeframe. • Is your objective specific? The KPI should have a clear and well-defined focus area. It should directly address a specific aspect of your operations, like sales, customer satisfaction, or website traffic. • Can you measure progress toward your goal? The KPI should be quantifiable using objective data, like percentages. • Is the goal realistically attainable? The KPI has to be a parameter that you know you can realistically strive for in a given timeframe. Don’t shoot for impossible numbers. • How relevant is the goal to your organization? The KPI should directly align with your business objectives and reflect an area that is critical to your success. • What is the timeframe for achieving this goal? Is it for the month, quarter, or year? Setting a timeframe for your KPI can help you do comparisons between periods, which allows you to track your performance and growth. • Evaluate Verify that goals meet the requirements of business. • Reevaluate Validate the sustainability and applicability of goals over time.
Types of KPIs • Strategic: These big-picture key performance indicators monitor organizational goals. Executives typically look to one or two strategic KPIs to find out how the organization is doing at any given time. Examples include return on investment, revenue and market share. • Operational: These KPIs typically measure performance in a shorter time frame, and are focused on organizational processes and efficiencies. Some examples include sales by region, average monthly transportation costs and cost per acquisition (CPA). • Functional Unit: Many key performance indicators are tied to specific functions, such finance or IT. While IT might track time to resolution or average uptime, finance KPIs track gross profit margin or return on assets. These functional KPIs can also be classified as strategic or operational. • Leading vs Lagging: While leading KPIs can help predict outcomes, lagging KPIs track what has already happened. Organizations use a mix of both to ensure they’re tracking what’s most important.
How to develop KPIs • The Balanced Scorecard Institute’s (BSI) Measure-Perform-Review-Adapt (MPRA) framework is a disciplined, practical, and tested approach for developing and implementing a KPI system. • It gives organizations a way to systematically articulate a shared vision of what you are trying to achieve, set practical goals, develop meaningful indicators that can be managed and used for decision-making, and establish long-term discipline around getting things done.
How to develop KPIs • Define how KPIs will be used: Talk to people who will be using the KPI report to find out what they want to achieve and how they’ll use them. This will help you define KPIs that are relevant and valuable to business users. • Tie them to strategic goals: If your KPIs don’t relate to what you’re trying to achieve in your business, you’re wasting time. While they may be related to a specific business function like HR or marketing, every key performance indicator should tie directly back to your overall business goals. • Write SMART KPIs: The most effective KPIs follow the proven SMART formula. Make sure they’re Specific, Measurable, Attainable, Realistic and Time-Bound. Some examples include “Grow sales by 5% per quarter” or “Increase Net Promoter Score 25% over the next three years.” • Keep them clear-cut: Everyone in the organization should understand your KPIs so they can act on them. This is why data literacy is so important. When people understand how to work with data, they can make decisions that will move the needle in the right direction. • Plan to iterate: As your business and customers change, you may need to revise your key performance indicators. Perhaps certain ones are no longer relevant, or you need to adjust based on performance. Be sure you have a plan in place to evaluate and make changes to key performance indicators when necessary. • Avoid KPI overload: Business intelligence has given organizations access to mounds of data and interactive data visualization, making it easy to measure anything and everything. Keep in mind that the key performance indicator definition refers to the most important targets. Steer clear of KPI overload by focusing on the most impactful measures.
Examples • Every business unit has unique key performance indicators that help them track progress. Many organizations use KPI dashboards to help them visualize, review and analyze their performance metrics all in one place. Here are a few KPI examples by department, including a dashboard view of each.
IT Key Performance Indicators • From support tickets to server downtime, IT key performance indicators can help keep teams accountable and alert them to any potential issues coming down the line. • KPIs for IT teams could include targets like the following: a)Total Support Tickets b)Open Support Tickets c)Ticket Resolution Time d)Security Related Downtime e)IT Costs vs Revenue f)Reopened Tickets
kpi
Marketing • Get a handle on marketing spend, conversion rates and other indicators of marketing success by clearly defining key performance indicators and aligning them with your organization’s strategic goals. • Here are a few marketing KPIs to get you started. a) Marketing Qualified Leads (MQLs) b) Sales Qualified Leads (SQLs) c) Conversion Rates (For Specific Goals) d) Social Program ROI (By Platform) e) Return on Ad Spend (ROAS)
kpi
Customer Service • Customer service leaders should track progress related to customers, employees and finances. In addition, key performance indicators should cover both short- and long-term targets, including support response times, customer satisfaction and others that help reach service objectives. a) First Contact Resolution Rate b) Average Response Time c) Most Active Support Agents d) Cost Per Conversation e) Customer effort score
kpi
Sales • Ensure your teams are meeting sales targets by tracking and regularly reviewing sales key performance indicators, including those for leads, opportunities, closed sales and volume. Here are some examples of KPIs for sales teams: a) New Inbound Leads b) New Qualified Opportunities c) Total Pipeline Value d) Sales Volume by Location e) Average Order Value
kpi
Finance • From expense and revenue to margin and cash management, finance managers have lots of choices when it comes to tracking financial progress. Here are a few examples to consider as you define your own key performance indicators. a) Gross Profit Margin (and %) b) Operating Profit Margin (and %) c) Net Profit Margin (and %) d) Operating Expense Ratio e) Working Capital Ratio
kpi
References • https://www.kpi.org/kpi-basics/kpi-development/ • https://www.qlik.com/us/kpi • https://www.klipfolio.com/resources/articles/what- is-a-key-performance-indicator • https://www.investopedia.com/terms/k/kpi.asp

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kpi

  • 2. What is KPI? • KPI stands for key performance indicator, a quantifiable measure of performance over time for a specific objective. • KPIs provide targets for teams to shoot for, milestones to gauge progress, and insights that help people across the organization make better decisions. • From finance and HR to marketing and sales, key performance indicators help every area of the business move forward at the strategic level.
  • 3. Comparison of Metrics v/s KPI • Metric is used for measurement of business activity • KPI measures performance against a goal. • Goals associated with KPIs are known as targets. • Web analytics dashboard display important information about website. • Also displays Key Performance indicators(KPI) of website against goals.
  • 4. Characteristics of a good KPI • Business-aligned: KPIs should be aligned with your overall business strategy and outcomes. • Actionable: KPIs should be actionable. Once you’ve set your KPI, you need to outline the steps you’ll take to reach it and the metrics you’ll measure along the way. What good is a KPI if you have no way to meet it? If your goal is to increase inbound leads, you should have a plan in place to do that
  • 5. Characteristics of a good KPI • Realistic: KPIs should be realistic. Good advice is to start small. Big, lofty KPIs—while they might look good on paper—aren’t doing you or your team any favors if they’re unrealistic from the get-go. • Measurable: KPIs should be measurable. When you set KPIs, ask yourself: What are you trying to achieve? What is the desired end result? What’s the timeline? Remember to add: How am I going to measure my KPIs?
  • 6. Characteristics of a good KPI • Drillable: Users can drill down into details • Simple: KPIs should be simple, so that user can understand.
  • 7. Measuring KPI-Using SMART FRamework SMART refers to the five requirements your KPIs need to be good. It’s an acronym for Specific, Measure, Attainable, Relevant, and Timeframe. • Is your objective specific? The KPI should have a clear and well-defined focus area. It should directly address a specific aspect of your operations, like sales, customer satisfaction, or website traffic. • Can you measure progress toward your goal? The KPI should be quantifiable using objective data, like percentages. • Is the goal realistically attainable? The KPI has to be a parameter that you know you can realistically strive for in a given timeframe. Don’t shoot for impossible numbers. • How relevant is the goal to your organization? The KPI should directly align with your business objectives and reflect an area that is critical to your success. • What is the timeframe for achieving this goal? Is it for the month, quarter, or year? Setting a timeframe for your KPI can help you do comparisons between periods, which allows you to track your performance and growth. • Evaluate Verify that goals meet the requirements of business. • Reevaluate Validate the sustainability and applicability of goals over time.
  • 8. Types of KPIs • Strategic: These big-picture key performance indicators monitor organizational goals. Executives typically look to one or two strategic KPIs to find out how the organization is doing at any given time. Examples include return on investment, revenue and market share. • Operational: These KPIs typically measure performance in a shorter time frame, and are focused on organizational processes and efficiencies. Some examples include sales by region, average monthly transportation costs and cost per acquisition (CPA). • Functional Unit: Many key performance indicators are tied to specific functions, such finance or IT. While IT might track time to resolution or average uptime, finance KPIs track gross profit margin or return on assets. These functional KPIs can also be classified as strategic or operational. • Leading vs Lagging: While leading KPIs can help predict outcomes, lagging KPIs track what has already happened. Organizations use a mix of both to ensure they’re tracking what’s most important.
  • 9. How to develop KPIs • The Balanced Scorecard Institute’s (BSI) Measure-Perform-Review-Adapt (MPRA) framework is a disciplined, practical, and tested approach for developing and implementing a KPI system. • It gives organizations a way to systematically articulate a shared vision of what you are trying to achieve, set practical goals, develop meaningful indicators that can be managed and used for decision-making, and establish long-term discipline around getting things done.
  • 10. How to develop KPIs • Define how KPIs will be used: Talk to people who will be using the KPI report to find out what they want to achieve and how they’ll use them. This will help you define KPIs that are relevant and valuable to business users. • Tie them to strategic goals: If your KPIs don’t relate to what you’re trying to achieve in your business, you’re wasting time. While they may be related to a specific business function like HR or marketing, every key performance indicator should tie directly back to your overall business goals. • Write SMART KPIs: The most effective KPIs follow the proven SMART formula. Make sure they’re Specific, Measurable, Attainable, Realistic and Time-Bound. Some examples include “Grow sales by 5% per quarter” or “Increase Net Promoter Score 25% over the next three years.” • Keep them clear-cut: Everyone in the organization should understand your KPIs so they can act on them. This is why data literacy is so important. When people understand how to work with data, they can make decisions that will move the needle in the right direction. • Plan to iterate: As your business and customers change, you may need to revise your key performance indicators. Perhaps certain ones are no longer relevant, or you need to adjust based on performance. Be sure you have a plan in place to evaluate and make changes to key performance indicators when necessary. • Avoid KPI overload: Business intelligence has given organizations access to mounds of data and interactive data visualization, making it easy to measure anything and everything. Keep in mind that the key performance indicator definition refers to the most important targets. Steer clear of KPI overload by focusing on the most impactful measures.
  • 11. Examples • Every business unit has unique key performance indicators that help them track progress. Many organizations use KPI dashboards to help them visualize, review and analyze their performance metrics all in one place. Here are a few KPI examples by department, including a dashboard view of each.
  • 12. IT Key Performance Indicators • From support tickets to server downtime, IT key performance indicators can help keep teams accountable and alert them to any potential issues coming down the line. • KPIs for IT teams could include targets like the following: a)Total Support Tickets b)Open Support Tickets c)Ticket Resolution Time d)Security Related Downtime e)IT Costs vs Revenue f)Reopened Tickets
  • 14. Marketing • Get a handle on marketing spend, conversion rates and other indicators of marketing success by clearly defining key performance indicators and aligning them with your organization’s strategic goals. • Here are a few marketing KPIs to get you started. a) Marketing Qualified Leads (MQLs) b) Sales Qualified Leads (SQLs) c) Conversion Rates (For Specific Goals) d) Social Program ROI (By Platform) e) Return on Ad Spend (ROAS)
  • 16. Customer Service • Customer service leaders should track progress related to customers, employees and finances. In addition, key performance indicators should cover both short- and long-term targets, including support response times, customer satisfaction and others that help reach service objectives. a) First Contact Resolution Rate b) Average Response Time c) Most Active Support Agents d) Cost Per Conversation e) Customer effort score
  • 18. Sales • Ensure your teams are meeting sales targets by tracking and regularly reviewing sales key performance indicators, including those for leads, opportunities, closed sales and volume. Here are some examples of KPIs for sales teams: a) New Inbound Leads b) New Qualified Opportunities c) Total Pipeline Value d) Sales Volume by Location e) Average Order Value
  • 20. Finance • From expense and revenue to margin and cash management, finance managers have lots of choices when it comes to tracking financial progress. Here are a few examples to consider as you define your own key performance indicators. a) Gross Profit Margin (and %) b) Operating Profit Margin (and %) c) Net Profit Margin (and %) d) Operating Expense Ratio e) Working Capital Ratio
  • 22. References • https://www.kpi.org/kpi-basics/kpi-development/ • https://www.qlik.com/us/kpi • https://www.klipfolio.com/resources/articles/what- is-a-key-performance-indicator • https://www.investopedia.com/terms/k/kpi.asp