Key Performance Indicators help you monitor business performance. Use sophisticated computer applications or simple spreadsheets to measure financial and other business metrics. Aligning performance measurement to achievement of strategic goals ensures that all activities contribute to producing results desired by company executives. Typically, each department defines its own KPIs to measure and monitor business performance. Each organization (such as customer support, sales or finance) also checks its performance with industry standards.
Establish the KPIs you want to track. Each organization typically defines no more than six performance measures to help it monitor its operations. For example, a customer support organization usually tracks the number of support cases occurring daily, how long each case takes to resolve, how many calls to the customer it takes to solve a problem, how frequently a specific problem reoccurs and customer satisfaction. These indicators provide insight on how well the business functions. Rather than create a high-level view of a single data point, such as the number of phone calls handled by each customer service representative, monitoring KPIs allows managers to see overall trends and act quickly to resolve systemic problems.
Segment your data by specific criteria. For example, show product sales by region, country and customer to determine if there are opportunities to generate more sales. Create marketing campaigns to target areas not currently served by your product or service.
View dynamic data, if possible, to make real-time decisions. For example, website analytical tools such as Omniture, Google Analytics, Web Trends or Alexa allow you to monitor website traffic such as page views or to search key words used in order to make decisions about how you construct your website.
Examine and filter KPI results over different time periods to determine seasonal trends. For example, identifying when online shopping transactions increase such as before holidays allows retailers to prepare and stock items the most effectively.
Share KPI data among departments so each organization can plan effectively. For example, product sales increases could lead to additional support needs. By monitoring KPIs across your company, you can ensure that you don’t make decisions for one department that adversely or unexpectedly affect another.
Compare KPI data for your company with similar companies in your industry. Use data such as sales, customer satisfaction or operational costs to see how you rate against the competition.
- “Measuring Performance : Using the New Metrics to Deploy Strategy and Improve Performance”; Bob Frost; 2000
- KPI Library: What is KPI Library
Tara Duggan is a Project Management Professional (PMP) specializing in knowledge management and instructional design. For over 25 years she has developed quality training materials for a variety of products and services supporting such companies as Digital Equipment Corporation, Compaq and HP. Her freelance work is published on various websites.