KPIs, why monitor performance?
Posted: Thu Dec 26, 2024 3:47 am
Do you know what successful strategies have in common? They are all based on models that constantly monitor the performance of all business actions. It is this monitoring that allows us to understand and determine which strategies are working and which could be improved. This is the best way to analyze results and this is where the famous concept of KPIs comes in.
What are KPIs, after all?
In English, "Key Performance Indicator" literally means "key performance indicators". Much more than a concept, it is a management tool used to analyze the most important indicators of a business or company.
One thing is certain: a sound analysis needs to be based on numbers. And indonesia whatsapp number database is the main objective of KPIs: to analyze results based on numbers.
This metric can be used by various departments within the company, from financial managers to monitor performance and establish goals to be achieved, to the marketing or sales department to identify sales opportunities and new customers, as well as the Human Resources department or the logistics area.
KPIs are, at their core, a way of measuring whether an action or set of initiatives is responding to the company's objectives.
What characteristics should KPIs have?
They must provide specific, objective insights and evidence of progress toward achieving the goals set.
They must be measurable to help understand the results and, consequently, make the best decisions.
They must monitor efficiency, effectiveness, quality and productivity.
They should be qualitative or quantitative to measure aspects such as project performance or staff performance.
Why – and how – to monitor performance?
As it is a tool that allows you to monitor the results of everything that adds value to the business, it is possible, with this monitoring, to know which strategies are working and which actions can be improved.
We live in an era where the flow of information is immense and constant. There are several types of KPIs, aimed at various business areas, that can be measured. The most important thing is that the key indicator is relevant to achieving the objectives.
A KPI can be a number or a percentage. It all depends on what is important to be measured for the specific objectives of each organization. This is the basic premise for choosing any KPI and its consequent impact on the business.
How to choose a good KPI?
A good KPI is one that shows how strategies are bringing results and business opportunities to the organization. A KPI must be relevant to its objective. Let's see: if the objective is to increase online sales, developing discount campaigns for customers in physical stores will not achieve this objective. To have more visitors to the blog, monitoring the acquisition cost per lead is not interesting. In this case, it would be important to measure the number of visits to the online store, the number of potential customers who do not complete the purchase or the percentage of abandonments by purchase stage.
KPIs are intrinsically linked to objectives for a very simple reason: they are what measure the performance of each of the objectives.
To make this choice easier, here are some important characteristics of a good KPI:
Importance for business
By defining KPIs, you are reinforcing the outlined strategy and ensuring that the objectives set will be met. The KPI shows whether the strategy is creating results and whether the goals are being met.
Relevance
Choose KPIs that are truly relevant to the objectives defined for the business.
Help in decision making
When well defined, KPIs are an excellent indicator that gives you information and data to help you make smarter decisions.
Periodicity
Choose KPIs that can be measured periodically. This makes it easier to take action in good time to achieve the goals set for each financial year.
What type of KPI should you use?
There are a multitude of indicators that can be important for each strategy, but many of them only make sense if they are supported by data or day-to-day testing.
Therefore, different types of indicators can be used according to the interests of the organization and the departments in question. Let's look at some examples:
KPIs for the Sales area
Monthly sales : These can be considered indicators to measure sales volume performance. For example: "Increase sales by X% compared to the previous quarter”.
Average price per sale (Month) : In this case, it can be considered a KPI that identifies the average value of each sale per customer to avoid situations in which the customer acquisition cost is higher than the purchase value.
What are KPIs, after all?
In English, "Key Performance Indicator" literally means "key performance indicators". Much more than a concept, it is a management tool used to analyze the most important indicators of a business or company.
One thing is certain: a sound analysis needs to be based on numbers. And indonesia whatsapp number database is the main objective of KPIs: to analyze results based on numbers.
This metric can be used by various departments within the company, from financial managers to monitor performance and establish goals to be achieved, to the marketing or sales department to identify sales opportunities and new customers, as well as the Human Resources department or the logistics area.
KPIs are, at their core, a way of measuring whether an action or set of initiatives is responding to the company's objectives.
What characteristics should KPIs have?
They must provide specific, objective insights and evidence of progress toward achieving the goals set.
They must be measurable to help understand the results and, consequently, make the best decisions.
They must monitor efficiency, effectiveness, quality and productivity.
They should be qualitative or quantitative to measure aspects such as project performance or staff performance.
Why – and how – to monitor performance?
As it is a tool that allows you to monitor the results of everything that adds value to the business, it is possible, with this monitoring, to know which strategies are working and which actions can be improved.
We live in an era where the flow of information is immense and constant. There are several types of KPIs, aimed at various business areas, that can be measured. The most important thing is that the key indicator is relevant to achieving the objectives.
A KPI can be a number or a percentage. It all depends on what is important to be measured for the specific objectives of each organization. This is the basic premise for choosing any KPI and its consequent impact on the business.
How to choose a good KPI?
A good KPI is one that shows how strategies are bringing results and business opportunities to the organization. A KPI must be relevant to its objective. Let's see: if the objective is to increase online sales, developing discount campaigns for customers in physical stores will not achieve this objective. To have more visitors to the blog, monitoring the acquisition cost per lead is not interesting. In this case, it would be important to measure the number of visits to the online store, the number of potential customers who do not complete the purchase or the percentage of abandonments by purchase stage.
KPIs are intrinsically linked to objectives for a very simple reason: they are what measure the performance of each of the objectives.
To make this choice easier, here are some important characteristics of a good KPI:
Importance for business
By defining KPIs, you are reinforcing the outlined strategy and ensuring that the objectives set will be met. The KPI shows whether the strategy is creating results and whether the goals are being met.
Relevance
Choose KPIs that are truly relevant to the objectives defined for the business.
Help in decision making
When well defined, KPIs are an excellent indicator that gives you information and data to help you make smarter decisions.
Periodicity
Choose KPIs that can be measured periodically. This makes it easier to take action in good time to achieve the goals set for each financial year.
What type of KPI should you use?
There are a multitude of indicators that can be important for each strategy, but many of them only make sense if they are supported by data or day-to-day testing.
Therefore, different types of indicators can be used according to the interests of the organization and the departments in question. Let's look at some examples:
KPIs for the Sales area
Monthly sales : These can be considered indicators to measure sales volume performance. For example: "Increase sales by X% compared to the previous quarter”.
Average price per sale (Month) : In this case, it can be considered a KPI that identifies the average value of each sale per customer to avoid situations in which the customer acquisition cost is higher than the purchase value.