Key Performance Indicators (KPIs) are measurable values that demonstrate how effectively an organization is achieving its objectives and, consequently, evaluate its overall success.
They should be identified during the development of the quality policy, and the selection of the right KPIs should depend on the industry in which the organization operates and which part of the business it wants to actively monitor. Their primary utility is to monitor the level of implementation of the organization's objectives, in order to correct the course if necessary.
It is important that the key indicators are specific to the organization and directly linked to the strategic objectives, vision, and mission of an organization, and that they take into account the requirements of internal and external customers.
The purpose of having a constantly updated collection of KPIs is to provide management with important information so that they can make the right decisions and direct the course of action if, for example, there is a risk that an objective will not be achieved.
Companies may decide to use a balanced scorecard for their indicators to consider financial aspects (such as economic growth), customer-related aspects (customer loyalty), and provide a balance between long-term and short-term objectives, financial and non-financial measurements, and lagging indicators that measure a result retrospectively, and leading indicators that indicate future performance and are therefore able to influence change without merely recording what has happened.
Indicators can be of different types depending on the area they need to monitor. Here are some examples that are by no means exhaustive.
Marketing Sector Indicators
- Brand awareness;
- Customer engagement;
- Marketing spend per customer;
- Customer retention rate;
- Customer acquisition cost;
- Customer lifetime value;
- Return on marketing investment (ROMI);
- Customer engagement rate;
- Lead conversion rate;
- Social media "likes";
- Growth of social media followers;
- Number of interactions with customers;
- Number of website visits from social media;
- Etc.
Sales Sector Indicators
- Monthly sales rate;
- Profit margin trend;
- Sales closed as projected in the offer;
- Total sales value;
- Monthly customer contacts by each sales representative;
- Total sales figure for each representative;
- Percentage of successful sales by type of contact
- Etc.
Supply Chain Sector Indicators
- Deliveries according to agreed timelines;
- Stock turnover rate;
- Inventory turnover rate;
- Shipping costs per total material shipped;
- Supplier orders fulfilled within the expected timelines
- Etc.