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Posted by on September 27, 2019

If you have ever attended an executive meeting, strategic session, or performance review of any business, you have probably heard the term “KPI” mentioned several times. But if we do an analysis and ask each person to explain what a KPI really is, they will probably have many different definitions.

Its term is often misunderstood and misused!

Companies that really know how to use them correctly are very few, which turns out to be a big mistake. Because KPIs, when used correctly, can make a big difference to the success of a business. If your business has a similar problem, don’t worry, as in this article we will clarify why KPIs are so important, and how to use them correctly. If you run your SEO agency, you should understand KPIs for agencies.

For ease of reading this article, it has been divided into some parts:

– But after all, what exactly is KPI?
– Understand how to set a KPI correctly
– What are the results of adopting business KPIs?

But after all, what exactly is KPI?

Key Performance Indicators (Key Performance Indicators) are a great way to quantify companies’ performance against their organizational goals. And these key performance indicators are business metrics used by top executives and entrepreneurs to track factors that can be considered crucial to the success of an organization. That is, they are used to measure progress toward meeting strategic goals and performance goals.

However, KPIs differ from organization to organization based on their priorities. In this case, if you consider the key performance indicators that are used by a large company, your share price will most likely be considered. For a startup, it may be the number of new customers that arrive each quarter, for example.

Different sets of KPIs are tailored by competitors in an industry to execute their individual business strategies and organizational behavior. However, it is important to note that KPIs, when closely followed by different people within the same organization, may vary depending on their roles. We can take the case of a CEO, for example, who may consider profitability as the most important performance measure for a company. In the meantime, the vice president of sales could give higher priority and understand that the ratio of sales to losses is the most important KPI.

And different business units and departments, moreover, are typically measured against their own KPIs, which ultimately results in a great combination of performance indicators across the organization.

Understand how to set a KPI correctly

First, we must make it clear that defining key indicators, as we can see earlier, can be a tricky business. In addition to varying depending on their roles, each KPI must be related to a specific business outcome and performance measure. And what often leads them to be confused with business metrics. Even though they are often used for this purpose, KPIs need to be defined according to objectives considered critical or essential to the business.

Therefore, to choose which one to use it is necessary to understand which objective and goal of the strategic planning one wishes to achieve. Because this being properly structured and executed, your company will be closer to achieving its vision and accomplishing the strategic mission.

Posted in: Business

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