KPI stands for “Key Performance Indicator” and refers to a measurable performance evaluation metric. KPIs show how successfully a company achieves its strategic and operational goals and provide an objective basis for assessing progress, identifying and counteracting risks at an early stage.
Features of KPIs
- MeasurabilityKPIs are based on concrete, comprehensible data and are clearly interpretable.
- RelevanceOnly metrics that are directly linked to corporate goals are considered relevant KPIs.
- Time reference: Each KPI is measured within a defined time period to make developments visible.
- AccessibilityTarget values should be realistic and at the same time demanding.
Importance to companies
KPIs support the management of companies by making vulnerabilities visible, achieving goals measurable and serving as orientation for teams and management.
Introduction procedure
- Clearly define business objectives (e.g. Increase in sales, customer loyalty, improvement in efficiency.
- Select suitable KPIs that correspond directly to the set goals.
- Set specific target values and time periods.
- Check KPIs regularly and adjust them as needed.
Examples
- Financial sector: net turnover, profit margin, liquidity, asset stock.
- Customer satisfactionRepurchase Rate, Net Promoter Score, Average Customer Rating.
- Marketing: Website traffic, conversion rate, social media reach.
- Productivity: Project completions per month, processing time per order, error rate.
KPIs are not static metrics: new technologies, market changes or internal restructuring can require new KPIs and make existing ones obsolete.