Key Performance Indicators, KPIs: Guide and Examples

January 27, 2022 Zahra Ijaz

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Do you know that Key Performance Indicators, KPIs can help you to measure your company’s overall performance?
KPIs refer to a set of quantifiable measurements that you can use to gauge the performance of your company or brands. Moreover, they help to determine the strategic, financial, and operations achievements of your company within the same sector. Let’s learn more about it in detail.


Key Performance Indicators, KPIs: Importance and Types

Key Performance Indicators or KPIs are a quantifiable measure of performance over time of a specific objective.

Moreover, KPIs provide targets for teams to shoot for, determine milestones to gauge progress, and insights that help people across your organization to make better decisions.
Let’s discuss KPIs in detail.

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From finance and HR to marketing and sales, Key performance indicators can help in every area of your business to move forward at the strategic level.

KPIs vs. Metrics

While key performance indications and metrics are related, they are not the same.

KPIs are the key targets that you need to track to make the most impact on your strategic business outcomes.

Moreover, KPIs support your strategy and help your items to focus n what is important.

An example of a key performance indicator is “targeting new customers per month”.

On the other hand, metrics help you to measure the success of everyday business activities that support your KPIs.

While they affect your outcomes, they are, however, not the most critical measures.

Some examples are “monthly store visits” or “white paper downloads”.

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Importance of Key Performance Indicators, KPIs

Key performance indicators are an important way to make sure that your teams are supporting the overall goals of your organization or brand.

Some of the reasons why you need KPIs are:

Keep your Teams Aligned
Whether measuring the success of your project or employee performance, KPIs helps to keep your items moving in the same direction.

Make Adjustments
KPIs can help you to clearly see your success and failures so that you can take steps to do what is working for you and less of what is not.

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Provide a Health Check
With the help of KPIs, you can have a realistic view of the health of your organization, from risk factors to financial indicators.

Hold your Teams Accountable
It is important to make sure that everyone in your team provides value with key performance indicators.

Moreover, this will help your employees to track their progress and even help managers move things along.

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Key Performance Indicators, KPIs Types

One of the interesting things about KPIs is that there are different types of them.

While some of these can help you to measure monthly progress against a certain goal, others have a longer-term focus.

Moreover, the one thing all KPIs have in common is that they are all tied to strategic goals.

Let’s have an overview of the most common types of KPIs.

Theis key performance indicator helps you to monitor organizational goals.

Executives often look to one or two strategic KPIs to find out how the organization is doing at a certain time.

Examples include return on investment i.e. ROI, revenues, and market share.

Such KPIs can help to measure the performance in a short time frame and focus on organizations’ processes and efficiencies.

Some examples are sales by region, average monthly transportation costs, and cost per acquisition, CPA.


Functional Unit
Different key performance indicators are linked to a specific function like finance, or IT.

While your IT can track time to resolution or average uptime. finance KPIs can help to track gross profit margin or return on assets.

These functional KPIs can also be classified as strategic or operational.

Leading vs. Lagging
Regardless of the type of key performance indicator, you will define, you should know the difference between landing indicators and lagging indicators.

While leading KPIs can help you to predict outcomes, lagging KPIs track what has already happened.

You can use a mix of both to make sure you are tracking what is important.


Key Performance Indicators: Examples

There are different types of KPIs you can choose from, however, one wrong one can interfere with your overall goals.
If you are asking the same question “What KPIs can I use for my organization or brand?”, then you are not alone.
Let’s learn about different types of Key Performance Indicators, KPIs in the section below.

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In this section we will learn about the 4 categories of the Balanced Scorecard:

  • financial
  • customer
  • process
  • people

Make sure that you select a few from each category so that your strategy is well balanced across the organization.

Financial Metrics

These are as follows:
This goes without saying, however, it is important to note that it is one of the most important performance indicators.

Do not forget to analyze both gross and net profit margins to better understand how successful your organization is at generating high returns.

Measure the cost-effectiveness and find the best ways to reduce and manage your costs.

LOB revenue vs. Target
This one is the comparison between your actual revenue and your projections.

Moreover, charting and analyzing the differences can help you to identify how your department is performing.

Cost of Sold Goods
By telling all the production costs of the products, you can get a better idea of what your product markup should be.

Moreover, it can also give you an actual idea of profit margin.

With this information, you can determine how to outsell your competition.

Day Sales Outstanding, DSO
Take your accounts receivable and divide them by the number of total credit sales.

Then take that number and multiply it by the number of days in the time frame you are examining.

You will get the DSO, the lower the number the better your organization is doing.

Additionally, you can run his formula every month, quarter, or year to see the improvements.

Sales by Region
Though analyzing which regions are meeting the sales objectives, you can provide better feedback for underperforming regions.

LOB experenses vs. Budget
Compare your actual overhead with your forecasted budget.

Understanding where you find deviation can help to create a more effective departmental budget in the future.

Customer Metrics

These metrics include:

Customer Lifetime Value, CLV
Minimizing the cost is not the only way to optimize your customer acquisition.

CLV helps to look at the value your organization is getting from a long-term customer relationship.

Moreover, you can use this performance to narrow down which channel is helping you to gain the best customers.

Customer Acquisition Cost, CAC
Divide your total acquisition costs by the number of new customers in the time frame you’re examining.

CAC is one of the most important metrics as it helps to evaluate cost-effectiveness for your marketing campaigns.

Customer Satisfaction and Retention
YOu might think this one is simple, however, this is more for shareholder value than for the customers themselves.

Furthermore, you can use multiple performance indicators to measure CSR, including customer satisfaction scores and the percentage of customers repeating a purchase.

Net Promoter Score, NPS
To find this, you can send quarterly surveys to customers to see how likely they will recommend you to others.

Establish a baseline with your first survey and put measures in place that will help o grow quarter to quarter.

Number of Customers
Just like profit, this key performance indicator is important.

By determining the number of customers, you can further assess whether or not you are meeting the needs of your customers.

Process Metrics

These are:

Customer Support Tickets
Analysis of the number of new tickets, the number of resolved tickets, and the resolution time can help you to create the best customer service department in your industry.

Percentage of Product Defects
For this, take the number of defective units and divide it by the total number of units produced in the time frame you’re examining.

As a result, the number you will get will give you the percentage of defective products.

Moreover, the lower this number, the better.

LOB Efficiency Measure
You can measure efficiency differently in different industries.

For instance, you are working in a manufacturing industry.

You can measure the efficiency of your organization by analyzing how many units are being produced every hour and what percentage of time your plant was up and running.

understanding it

People Metrics

These are:

Employee Turnover Rate, ETR
Take the number of employees who have departed the company and divide it by the average number of employees.

In case of high ETR, you need to spend some time examining your workplace culture, employment packages, and work environment.

Percentage of Response to Open Positions
When you have a high percentage of qualifying applications applying for open job positions, you know you are doing a good job maximizing exposure to the right job seekers.

Moreover, this will lead to an increase in interviewees.

Employee Satisfaction
happy employees with work hard.

Measure your employee satisfaction through surveys and other metrics is vital to your departmental and organizational health.

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Developing Key Performance Indicators

With a huge amount of data, you might find yourself measuring everything or at least certain indicators that are easiest to measure.

However, you need to make sure you are only measuring the key performance indicators that will help you to reach your business goals.

The strategic focus is one of the most important aspects of the KPI definition.

Some of the best practices are:

1# Deine how will you use KPIs
Make sure to talk to the people who will be using the KPI report to find out what they intend to achieve and how they will use it.

Moreover, this will help you to define relevant KPIs and the ones valuable to business users.

2# Tie them to Strategic Goals
In case your KPIs do not relate to what you are trying to achieve, you are wasting your time.

While you may need to relate them to a specific business function like HR or marketing, every key performance indicator should tie directly back to overall goals.

The most effective KPI is the SMART formula.

Make sure they are Specific, Measurable, Attainable, Realistic, And Time-Bound.


Keep them Clear-Cut
Make sure that everyone should understand your KPIs.

Moreover, make data literary an important part of your organization.

This is because when people understand how to work with data, they can make decisions that will help them to move in the right direction.

Plan to Iterate
As your business and customers change, you will need to revise your KPIs.

Maybe some of these are not relevant anymore, or you need to adjust according to the performance.

Be sure to have a plan in place to evaluate and make changes to key performance indicators.

Avoid KPI overload
Because of the increase in business intelligence, there is a huge amount of data and interactive data visualizations.

Furthermore, this can make it easy to measure anything and everything.

However, make sure to use KPIs that refer to the most important targets.

KPIs and SEO

Your goals and KPIs are one of the most important parts of SEO strategy, yet you might overlook them.

Without KPIs, you will be unable to effectively track the progress of your campaign and make sure that your efforts are paying off.

Or determine if you are on the right track towards success or not.

SEO takes time to deliver results, and returns, however, by settings KPIs, you can be in a better position to show the impact that your strategy is having.

Moreover, they can also help you to manage expectations with other stakeholders.
Furthermore, SEO KPIs should form the basis of your strategy and act as a way to measure and report on success and progression.

But you will need to know what you should be measuring.

Furthermore, SEO KPIs are:

ROI, Conversions, organic visibility, organic sessions, branded vs. non-branded traffic, keyword rankings, and backlinks.

Moreover, organic CTR, bounce rate, average time on page, coverage issues, and pagespeed are other SEO KPIs.

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3 Steps to a Stronger KPI Strategy

If your key performance indicators are not showing the results you expect, then you need to adjust your strategy.

The following 3 things can help to make sure that everyone in your organization knows what your KPIs mean and how to use them.

Moreover, these will help them to make data-driven decisions that will affect your business.

1# Select KPIs that matter the most: Make sure that you are measuring what is important.

You should include a balance of leading and lagging indicators.

Lagging indicators will help you to understand results over a period of time while leading indicators will help you to predict what might happen depending on the data.

Thus, allowing you to make adjustments to improve the outcomes.

inprocess vs. output

2# Create a KPR-Driven culture: KPIs do not mean much if people do not understand what they’re and how they can use them.

Therefore, it is important to increase data literacy so that everyone works towards strategic targets.

Make sure to educate your employees, assign them relevant KPIs and use a best-in-class BI platform to keep everyone making decisions.

3# Iterate: Keep your key performance indicators current by revising them.

Moreover, they should depend on the market, customer, and organizational changes.

Meet regularly to review them, take a closer look at the performance if you need to make certain adjustments.

And publish any changes to make sure that your teams are up-to-date.

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Final Thoughts

KPIs offer an effective way to measure and track the performance of your company on a number of metrics.
Moreover, by understanding what KPIs are and how you can implement them, you can optimize your business for long-term success.

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