Key performance indicators (KPI) are factors used to make judgments about the current performance of an organization. Organizations across all industries use key performance indicators for evaluation and strategic planning. Indicators are typically reported on a monthly or quarterly basis, providing consistent monitoring. Key performance indicators can be industry- or organization-specific, but there are some indicators that are common to all or most organizations.
According to The Foundation for Performance Measurement, profitability is considered a key performance metric. Profitability is defined as net financial gain. Organizations with consistent increases in profit are successful, while decline in profit indicates diminished performance and signals that changes are necessary if the organization is to survive.
Customer satisfaction is the measure of how well an organization meets or exceeds a customer’s expectations. Customer satisfaction is directly linked with loyalty, recommendation and repeat business. Decline in customer satisfaction can impact profitability and market share. Surveys are typically used to assess customer satisfaction.
Customer retention involves all factors initiated by an organization to maintain its customer base. Loyal customers spend more, recommend and refer new customers. Decline in customer retention rates indicates issues with customer service, satisfaction or products and services.
Gordon Training International states that employee productivity directly impacts many aspects of organizations, including efficiency, sales and profitability. Employee productivity can be measured in a number of ways, such as number of hours worked, absentee rate, production and sales volume. Marketing Motivators suggests that a decline in employee productivity can indicate lack of employee satisfaction or motivation.
- chart image by Kit Wai Chan from Fotolia.com