KPI Definition

Key Performance Indicators and understanding the KPI definition
helps companies know if their business is doing well.

Performance indicators essentially show progress against objectives and help measure the overall improvements in various sensitive business departments.

A businesses KPI definition can be applied in multiple areas within an Enterprise. The key is to simply plug in Enterprise data sources and publish visual metrics that will highlight both results and potential areas of improvement, companywide.

A strategic KPI definition should be the primary management tool. Once the success parameters have been established, all the steering committee needs to do is watch the KPIs track the reach of these parameters. Most used KPIs are CFOs’ favourite’s actuals against the budget, sales performance per product line, profitability, salesforce efficiency, marketing ROI. If presented properly, KPIs convey what is working against what is weak, alert when particular teams exceed their objectives or quota and whether the committee has been allocating resources at the right spot.


A Good KPI Definition & KPI goals

A good KPI definition is that it acts as a compass, helping a company understand whether it’s taking the right path toward strategic goals, allocating the resources at the right spot. It implies that the KPI goals need to be well defined to start with, in order to measure the business progress. Then you plug in your actuals and watch the results progress companywide.

CFOs usually are the most sensitive to the subject with financial key performance indicators such as the profit margin, the target value, and the net profit. These indicators show the financial health of a business during a given period of time or over time.
Certain business also like to track the average order value. This is especially relevant to e-commerce enterprises that need to report on the weight of each purchased basket.

KPI goals can also serve to measure the success of a business operation such as supply chain management. In short, it can tell everything you need to know about your progress against any parameters that you have pre-defined.

Read more about KPI definitions with our other guides :


KPI dashboards

Enterprises’ department heads love KPI dashboards. They can use it to discuss critical matters during their steering committee, to manage their team by objective or even to track their own individual performance.Each team can make a good use of KPI dashboards (here are some good KPI examples).

The marketing teams we work with particularly like to measure their campaign performance in real time to have a chance to adjust their targeting or their keywords every time their campaign statistics get weak. They also like to monitor performance indicators such as conversion rates: what’s the point of a well-performing campaign if the traffic brought in does not turn into leads? That applies to Adwords campaigns as well as social media activities.

Plus the steering committee is always eager to identify possible budget cuts so the campaign reports should also convey the use for campaigns or any particular marketing activities.

For project managers, KPI means, for example, a task completion rate. Where does my project stand? Am I allocating resources at the right place and time so that my projects move forward? Other KPI examples in Project Management would be the Planned Value (Planned % of tasks left to complete) X (project budget) or the essential Project’s ROI as it reflects on its profitability and shows whether the benefits of the project exceed its cost.

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