A business which does not define, monitor, and learn from Key Performance Indicators (KPI’s) is for all intents and purposes flying blind. KPI’s provide a tangible means for organizations, departments, and managers to understand how they are performing against current goals, set future goals, and measure success. Generally speaking, KPI’s are consumed in a snapshot, dashboard setting meant to provide a quick yet comprehensive look at business performance (Mosca, 2019).

Various departments may focus on select KPI’s relevant to their roles, but many are useful at any organizational level. Following is a review of how some KPI’s can be used.

Target Measurement

While KPI’s themselves are not, strictly speaking, business goals (though I would argue this, and perhaps win), they do provide insight to if and how goals are being met. In every instance this is relevant to a business. For example, consider a marketing department’s goal of an ad campaign in which the acceptable cost per click (CPC) is set at $3.00. This figure has been evaluated as the maximum amount the company can spend, given historic conversion rates - another KPI - and still make money on a sale. 

A week into the campaign, however, the digital marketer notices CPC is running at $4.00. By discovering this information early, the marketer can adjust the audience targeting parameters or call to action, for example, in an effort to bring CPC down to acceptable levels. Thus by understanding the KPI in question, the marketing department has the opportunity in real time to avoid a company-wide loss.

Improved Company-wide Knowledge

Numbers are a universal language of sorts, and by identifying KPI’s and sharing information about them and how departments are performing relative to goals, leadership will have fast access to pertinent information (Louise, 2016).

Consider an eCommerce business. A valuable KPI might be landing page views, particularly when combined with another KPI, conversion rates. Having an understanding of this, and sharing this information, can help an operations manager understand what products are selling well and which are underperforming. This knowledge can in turn improve her ability to make production decisions in response to consumer demand.

Understanding Your Customers

To succeed for any length of time a business must understand who it’s customers are and what products and services are important to them. There are many KPI’s which offer insight on this subject; two that might stand out are social engagement and number of returning site visitors (DeMers, 2020).

Social engagement can help a company understand how and what its customers think; often it seems people willingly offer opinions on social channels which can provide great insight. Such information can be particularly valuable as a means to narrow more generic market research and provide clues on how, when, and where to target an audience.

Likewise, a returning website visitor is an indicator a person has found value previously. It also can identify a customer’s specific product interests, buying habits, and spending tolerance. All of this information can be used to measure how well the company is presenting its products from a marketing standpoint, how well the IT department is doing to provide a good user experience, and how relevant the company’s products are to its target audience.

Summarizing the Benefits of KPI’s

KPI’s may differ among departments and organizations, but should have a few things in common. They should be easy to grasp, quantitative, conducive to action, and practical (Lake, 2019). Ultimately they can clearly illustrate whether a company is meeting its goals, and identify both areas of strength and those which need improvement. 

A company well-informed with regard to clearly stated KPI’s likely will have significant advantages over one unaware or otherwise not paying attention.