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In today’s ultra competitive business ecosystem, only the strong survive. In order to keep your team on top of their game, you need to cultivate a data-driven culture by sharing the right performance indicators and business metrics with your team.
A Key Performance Indicator is a measurable value that demonstrates how effectively a company is achieving key business objectives. Organizations use KPIs at multiple levels to evaluate their success at reaching targets. High-level KPIs may focus on the overall performance of the enterprise, while low-level KPIs may focus on processes in departments such as sales, marketing or a call center.
Table of Contents
Introduction to KPIs
How do define your organization’s KPIs
Best practices for picking the right KPIs
for your business
The most important KPIs
Introduction to KPIs
In today’s ultra competitive business ecosystem, only the
strong survive. In order to keep your team on top of their
game, you need to cultivate a data-driven culture by sharing
the right performance indicators and business metrics with
A Key Performance Indicator is a measurable value
that demonstrates how effectively a company is
achieving key business objectives.
Introduction to Key Performance Indicators
Organizations use KPIs at multiple levels to evaluate their
success at reaching targets. High-level KPIs may focus on
the overall performance of the enterprise, while low-level
KPIs may focus on processes in departments such as sales,
marketing or a call center.
Types of KPIs
Depending on your industry and the specific department
you are interested in tracking, there are a number of KPI
types your business will want to monitor. Each department
will want to measure success based on specific goals and
What makes a KPI effective?
A KPI is only as valuable as the action it inspires. Too often,
organizations blindly adopt industry-recognized KPIs and
then wonder why that KPI doesn’t reflect their own busi-
ness and fails to affect any positive change.
One of the most important, but often overlooked, aspects
of KPIs is that they are a form of communication. As such,
they abide by the same rules and best-practices as any oth-
er form of communication. Succinct, clear and relevant in-
formation is much more likely to be absorbed and acted
Being SMART about your KPIs
One way to evaluate the relevance of a KPI is to use the
smart criteria. The letters are typically taken to stand for
specific, measurable, attainable, relevant, time-bound.
In other words:
• Is your objective Specific?
• Can you Measure progress towards that goal?
• Is the goal realistically Attainable?
• How Relevant is the goal to your organization?
• What is the Time-frame for achieving this goal?
KPI Example 1
If you work in the highway division of a transportation
authority, a key performance indicator could be to track
the average driver’s speed from July to November, as many
accidents happened during this time the previous year.
In this case, it would be helpful to know that from July to
November the average driver cruises at 60 km/h—which
is 10 km/h higher than the posted speed limit of 50 km/h,
and 6 km/h higher than they typically drive during all other
KPI Example 2
Let’s say you are the owner of a local pub. In establishing
average pints per patron per visit (ppv) as a key performance
indicator, you may notice that last month you averaged 1.1
ppv (compared to the local pub average of 1.4 ppv and last
month’s average of 1.3 ppv).
In this sense, establishing measures, metrics and KPIs can
help open the door to questions about your business
performance that you may have missed otherwise.
How to define your organization’s KPIs
It’s a question asked by leaders at maturing startups and at
established companies alike: How do we define our organiza-
Defining your organization’s key performance indicators
ultimately comes down to a two-step process:
1. Determine your organization’s most important objectives
2. Choose KPIs that are fixed, capable of forecasting, and
that avoid common mistakes.
Avoiding the most common mistakes
Here at Klipfolio, we’ve been thinking deeply about KPIs
for over a decade. After many iterations, here’s the simple
definition we’ve come to find most valuable:
A key performance indicator is a measurable value that
demonstrates how effectively a company is achieving key
To us, a KPI must remain fixed yet be able to forecast.
By fixed we mean there’s a continuity and reliability among
the measured outcomes. This means that an outcome at
one point in time can reliably be compared to an outcome
at another time.
For example, if in January and February you found that 1
out of every 100 people who started a trial of your prod-
uct became a customer, this would be a fixed statistic from
which you might want to build a key performance indicator.
Finding what can forecast
There’s no need to go full-on artificial intelligence here, but
KPIs must, at some level, help you forecast a result.
Let’s say it seems the time between trial-to-customer
becomes significantly shorter when you reach a certain
Net Promoter Score. Seeing this correlation may allow you
to forecast: increased customer success = decreased time
Depending on what organizational objectives you’ve
decided on, building a KPI around this forecast may be
worth your time.
Common KPI mistakes
Even elite organizations struggle to avoid these mistakes.
They can occur at various points of a company’s develop-
ment—including when new team leaders are hired, when
new objectives are established, and/or when old KPIs are
held onto even as an industry undergoes rapid change.
The most common KPI mistakes are:
• Reliance on intuition. This can arise from the
• Blindly adopting commonly-held best practices rather
than creating your own.
• Bias toward the most recent information learned.
• Confusing lagging indicators (the easy-to-measure out-
put) with leading indicators (the difficult-to-measure
Once you’ve defined your organization’s KPIs, you’ll then
be tasked with the responsibility of determining which
activities (and all departments must be included on this)
will best drive towards those KPIs.
From there, you’ll need to regularly assess your objectives,
KPIs and activities. They are all likely to change as you
gather new insights into the market and/or your product,
which means assessments can and should be done both at
the company and departmental levels.
Measuring and monitoring business performance is criti-
cal, but focusing on the wrong metrics can be detrimental.
Best practices for picking the right KPIs for
Data and metrics are everywhere. Measuring and moni-
toring business performance is critical, but focusing on the
wrong metrics can be detrimental (as time and money are
spent measuring, monitoring and trying to optimize
metrics that don’t matter much). The same can be said
about poorly structured KPIs and KPIs that are too difficult
and costly to obtain and/or monitor on a regular basis.
So what makes business performance indicators key and
how should a business owner, executive or manager
Here are six strategies to help you separate effective,
value-creating KPIs from detrimental, value-diminishing
Pick KPIs that are aligned with your strategic business objectives
Business “performance” is relative, and ultimately
measured against an organization’s mission and
goals. KPIs must be grounded by these goals.
Make sure the KPIs you pick are attainable
What data points do I need to measure this KPI?
There’s no point selecting a KPI for your business if the
data behind the KPI can’t be obtained and surfaced to
stakeholders, or if doing so would be overly costly.
Be acute in your choice of KPIs
KPIs should keep everyone on the same page and
moving in the same direction, and they should be
specific enough to inform specific actions.
Pick accurate KPIs
Does the KPI include all relevant information?
How accurate is the KPI in reflecting and predicting
Select KPIs that are actionable
Can the events grounding the KPI be controlled by
Is the KPI structured and presented in such a way,
and to the right people, to incite action?
Pick KPIs that are alive
Do these reasons still hold true?
Has your business or the context within which it
operates changed? Can your KPIs be refined to suit
The Most Important KPIs
The most important thing to remember when looking at
a KPI is not what it means for your position, but what it
means for the company as a whole.
Yes, there are KPIs specific to marketing, development and
support, to name a few, but pick KPIs that are aligned with
your strategic business objectives. Because everything you
do has these targets and goals in mind, adding them to your
dashboard only makes decision making, reporting and effi-
ciency, that much easier.
Sales Growth metric measures the pace at which your or-
ganization’s sales revenue is increasing or decreasing. This
is a key metric for any organization to monitor since it’s an
essential part of growth projections and is instrumental in
strategic decision-making. Monitor this metric over multiple
time periods to gain a clear indication of growth trends and
normalize your values. This will help you account for month-
ly or quarterly spikes in revenue.
The Purchase Funnel KPI analyzes your customer acquisition
process to help you understand how potential customers
discover your product or brand and, more importantly, how
they eventually become a loyal customer. This KPI is typically
broken down into five stages: awareness, interest, consider-
ation, preference, and purchase. From a measurement point
of view, this may map to a variety of sales and marketing
channels from social media and web visits to mailing lists
and sales contacts. The strength of the funnel is the ability to
zero in on your strengths and weakness.
The Product Performance KPI ranks product sales based on
revenue performance to inform your sales team which prod-
ucts are selling well. At the same time, you should rank the
poorest performing products to determine which products
are failing to resonate with your customers.
When monitoring this KPI, it’s important to consider the spe-
cific contexts surrounding each product. For instance, is a
certain product receiving a boost due to a viral marketing
campaign? Or, are you experiencing a slump because your
competition is offering a similar product at a lower price?
The Sales Target KPI measures current sales (either dollar
value or number of wins) and compares that value to a target
or past performance. The key to this KPI is setting an appro-
priate sales target. This requires a deft touch, as a goal that
is set too high will be viewed as unachievable and will drain
morale; on the other hand, a goal that is set too low will fail
to motivate your team to go that extra mile. One of the most
common ways to develop this KPI is to compare current per-
formance to the previous period, for example, showing new
wins this month compared to wins last month.
The Return on Marketing Investment KPI measures how
much revenue a marketing campaign is generating com-
pared to the cost of running that campaign. Effective
marketers are driven to connect their time, energy and
advertising spend with results that contribute to company
growth. This KPI answers the question, are we recouping
the time and money we spent developing and executing our
Goal Completion Rate
The Goal Completion Rate (GCR) metric measures the
number of people that complete a specific marketing goal,
such as signing up for a trial or subscribing to a mailing list.
GCR should be paired with sales KPIs such as your lead to
win rate to provide an indicator as to the quality of leads
your marketing efforts are attracting.
Average Lead Score
Lead Scoring is the process of measuring the quality of mar-
keting and sales leads based on predetermined criteria and
targets. These criteria and targets can range from
demographics to buyer behaviour and user activity, and
they are typically determined by evaluating the characteris-
tics of a current customer base.
So now what?
Once you have established benchmarks and targets for
measuring KPIs, you’ll want to establish processes for mon-
itoring this and other KPIs. Dashboards can be critical in
this regard. KPI tracking can be done using dashboard soft-
ware, giving your entire organization insights into your cur-
KPI software enables businesses to create, manage and
analyze data from KPIs. The software allows organisations
to enter their data into one specially designed system, or
connect external services for faster and more accurate
data collection. This type of software allows businesses to
visualize and comprehend data from a number of KPIs that
represent different areas of a business, all in one place.
KPI reports and dashboards
To be useful, KPIs need to be monitored and reported on;
if they change in real-time, they should be monitored in
real-time. Dashboards are the perfect tool for your KPI
reports as they can be used to visually depict the perfor-
mance of an enterprise, a specific department, or a key
Have a look at some of our live dashboards to demon-
strate how you can present key performance indicators to
Digital Marketing Dashboard
Monthly Sales Performance Davshboard
Executive Reporting Dashboard
Support Tickets Dashboard
Want more metrics?
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