What are Key Performance Indicators (KPI)?
Key Performance Indicators (KPI) are measurements used to track the progress of a project or business. They can be used to compare different businesses or to see how one company's performance compares with its own past performance.
KPIs are measured by looking at the ratio of inputs and outputs, which can be expressed in several ways. The most common approach is to express the KPI as a percentage: the percentage of revenue generated from a specific source, for example, or the percentage change in revenue from year to year.
The purpose of KPIs is twofold: first, to identify areas where more effort needs to be put into improving production; second, for managers who want an objective way of measuring their employees' productivity and performance without bias towards any individual employee's work ethic or skill level.
Why Are KPI Important?
KPI are an essential part of any business. They are used to measure and monitor the performance of a business, department, or individual. They can be used to report on the success or failure of an organization's programs and initiatives, and they can also be used as a management tool to help improve performance over time.
KPI are important because they tell you how your company is doing. They help you understand your business and make decisions based on the information you gather. KPI helps managers understand what is going on in their departments, and it also helps them track progress toward goals.
How Do I Use KPI in My Business?
KPI can be used for many different things, such as setting goals, measuring progress, and making decisions about how to improve your business, but they are most commonly used to evaluate the financial performance of a company. Let us look at an example:
If you want to use KPI as a way to measure sales growth, you will need to first define what constitutes a sale. You could use an order form as an example — if someone fills out all the information on the form and clicks "submit", then that counts as a sale.
You would then need to determine what percentage of people who fill out forms actually complete orders after clicking submit. This will give you an idea of how many people are buying from you after visiting your website or storefront.
With this information in hand, we can now set up some KPI. We will have one indicator for every metric we track so that we can see how well our efforts are paying off over time (or not).
