What is the key to data?

A KPI, or key performance indicator, is a measurable value that determines how effectively a company is achieving its key objectives. KPIs are used at different levels to gauge the success of an organization in hitting its targets.

How To Measure KPIs

Before you can measure your KPIs, you'll need to determine which metrics to track. This will greatly depend on your goals and your team.

Once you narrow that down, set your targets. They're usually based on a combination of factors, including historical performance and industry standards.

You'll also have to answer the who, when, and why. Who is responsible for this KPI? Identify the person on your team who is managing this KPI, so they can be the go-to when addressing roadblocks that may affect performance. They will also be responsible for reporting on progress.

As for the "when," you'll need to know the timeline to reach these targets. Many businesses set them on a monthly or quarterly basis, but your timeline can be shorter or longer depending on your team.

Lastly: the why. It's the most important thing to keep in mind when measuring your KPIs. Having your goals clearly identified can help motivate your team and make sure everyone is aligned on the direction you're going in.

Types of Key Performance Indicators

KPIs can be set on a team basis. Sales' KPIs will be completely different from HR's KPIs. Beyond those differences, there are also variations in the types of indicators you can measure.

Here are a few of the most common types of KPIs:

• A quantitative KPI relies on numbers to gauge progress. E.g., "Sales team to generate 100 sales-qualified leads every month."
• A qualitative KPI looks at opinion- or feeling-based data. E.g., "Brand sentiment."
• A leading KPI can predict future performance. E.g., "Website traffic." More traffic can mean more conversions, more leads, and more revenue.
• A lagging KPI describes a past result. E.g., "Turnover rate."
• An input KPI measures the assets, time, and resources needed to complete a certain action or project. E.g., "Employee count, budget."
• A process KPI assesses efficiency and productivity within the business. E.g., "Average sales call time."

KPI Examples

Your organization's business model and the industry in which you operate will influence the KPIs you choose.

For example, a B2B software-as-a-service (SaaS) company might choose to focus on customer acquisition and churn, whereas a brick-and-mortar retail company might focus on sales per square foot or average customer spend.

Here are a few examples of some industry-standard KPIs:

While you will most certainly want to consider industry standard KPIs, it is more important that you choose the KPIs that are relevant to your specific company and the goals you are working toward.

How To Determine KPIs

Choose KPIs directly related to your business goals.

KPIs are quantifiable measurements or data points used to gauge your company's performance relative to a goal. For instance, a KPI could be related to your goal of increasing sales, improving the return on investment of your marketing efforts, or improving customer service.

What are your company goals? Have you identified any major areas for improvement or optimization? What are the biggest priorities for your management team?

Answering these questions will bring you one step closer to identifying the right KPIs for your brand.

Focus on a few key metrics, rather than a slew of data.

As you begin to identify KPIs for your business, less is worth more. Rather than choosing dozens of metrics to measure and report on you should focus on just a few key ones.

If you track too many KPIs, you might become overwhelmed with the data and lose focus.

As you can imagine, every company, industry, and business model is different so it is difficult to pinpoint an exact number for the amount of KPIs you should have. However, a good number to aim for is somewhere between two to four KPIs per goal.Enough to get a good sense of where you stand but not too many where there's no priority.

Consider your company's stage of growth.

Depending on the stage of your company – startup vs. enterprise – certain metrics will be more important than others.

Early-stage companies typically focus on data related to business model validation while more established organizations focus on metrics like cost per acquisition and customer lifetime value.

Here are a few examples of potential key performance indicators for companies in various stages of growth:

Want to know more? Have a look at the full article here.