As your organisation grows, you’ll likely find yourself in the position to be tracking your key performance indicators (KPIs) and how they affect your business. KPIs are more than just numbers – with them, you can better understand the health and performance of your business and make adjustments to reach your strategic goals.
If you haven’t thought about which KPIs you should be tracking or which are best for your business, you’ve come to the right place. This article covers the top key performance indicators every company should use, plus we share some actionable KPI examples to measure success.
KPI stands for key performance indicator, a quantifiable measure that indicates how well a company is achieving its goals or key business objectives. Businesses use KPIs to evaluate how successful the team is at reaching their targets.
You can have high-level KPIs that measure the performance of the business overall or low-level KPIs that focus on specific processes in specific teams like sales, HR and customer service. These performance indicators can measure customer satisfaction, revenue, the performance of ad campaigns and much more.
Key performance indicators help every part of a business move forward strategically and provide insights to help everyone make better decisions.
The KPIs you choose to measure will impact your organisation’s performance. As a business owner, it’s wise to track 5 to 7 KPIs while implementing your strategy and working toward company goals. Below are some top-level smart KPI examples that every organisation should use to measure success.
Your customer satisfaction rate is one of the most important KPIs to measure. After all, your business wouldn’t exist without customers. This KPI reveals crucial data on how satisfied a customer is with your product, service, or the business in general. Customer satisfaction KPIs show you the quality of a customer’s relationship with your business and areas where you could improve.
Customer Satisfaction Score (CSAT) – measures how satisfied a customer is with a specific interaction, like a service call or product purchase, or with your company overall.
Customer Effort Score (CES) – measures how easy or difficult it is for customers to do business with you. CES measures loyalty better than CSAT, so if you solve problems for customers fast and with minimal effort, you’re building loyalty.
Net Promoter Score (NPS) – measures customer loyalty by asking customers how likely they would be to recommend the product, service or business to others.
Customer Service Satisfaction (CCS) – measures customers’ satisfaction level with your post-sales service. You can calculate this with surveys after their interaction with you.
As a business, you need to deliver your products and services as advertised. Your business processes should be as effective and efficient as possible and deliver the same quality your customers know and love.
Process Effectiveness – the relationship between the actual process results and expected results. This metric considers the time, cost, and quality of the actual process vs. expectations.
Process Efficiency – the relationship between the results attained and the resources consumed in a process. Simply put, it’s how much expense or input went into a designated amount of output.
Process Compliance – focuses on both internal and external compliance. Internally, you should monitor the percentage of nonconformances. Externally, monitoring process compliance will help track your organisation’s compliance with government regulations.
Throughput Time – represents the total time it takes to run a process from the beginning, through each step to the finished product or service delivered to the customer’s hands.
To be a sustainable and growing company, you need to deliver turnover growth and healthy profit. For this reason, it is vital to measure financial metrics.
Gross Profit Margin – a profitability ratio that measures the percentage of revenue left after subtracting the cost of goods sold. Put another way, it measures how profitable an item is without considering overhead costs.
Net Profit Margin – a profitability ratio that measures the revenue left after subtracting all business costs. It is a general profitability measure for the business, considering the cost of goods sold plus all related expenses.
Current Ratio – a liquidity ratio to reveal whether the business can pay its short-term obligations with its current liabilities and assets.
Inventory Turnover – an efficiency ratio to measure how many times a company has sold its entire inventory during an accounting period.
Although some companies rely more on artificial intelligence and big data robots, employees are still the most important part of any business. Organisations won’t thrive if their employees aren’t satisfied. An employee satisfaction KPI is generally an index of two or more metrics combined that paint the full picture of overall employee engagement and happiness.
Employee Net Promoter Score (NPS) – measures the likelihood of employees on your team recommending a job at your company to someone else on a scale of 1-10. A high employee NPS will reduce employee turnover rates and labour costs.
Absenteeism – employee engagement and satisfaction will suffer if you have employees consistently absent. This has a wider effect on the team who have to take on the extra work. This inevitably leads to bad employee satisfaction for everyone.
Productivity/Profitability – if employees are not engaged or satisfied at work, they could cause production to be slowed or sales to go down. This is an important employee KPI to track to boost profit and reduce attrition.
Below are a few other key performance indicators examples specific to certain disciplines.
KPIs are essential for any organisation that wants to track its business performance. There are many key performance indicators, but you need to decide which ones are best for your company and its goals.
For each KPI, your metric should be a detailed, measurable value that is related to particular business outcomes or objectives. It should have specific data sources to track if you are achieving your goals.
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