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KPIs are quantitative measures, a strategic tool for managing companies, especially when it comes to structuring and evaluating performance and results.
Any business that is unable to control its own performance will hardly achieve success or healthy growth levels.
After all, without measuring the effects of strategies, how can one know if the decisions they made are serving to achieve their set objectives?
KPIs, or Key Performance Indicators, enable understanding of the current scenario and guide decisions based on concrete data.
In addition to providing a view of goal progress, they favor emergent ideas that increase the whole company’s efficiency.
Because they are so important, we came up with this comprehensive article so that you understand what KPIs are and how to implement them in your business.
What do KPIs mean?
KPIs are metrics used to measure company performance.
In general, they are quantitative values used to effectively analyze the results of internal processes, projects, or business initiatives.
In other words, they are a strategic aspect that helps in performance monitoring and management and the success of set goals.
These indicators reflect the maxim that what is not measured is not understood. And consequently, it cannot be improved.
Thus, by establishing KPIs, all departments benefit since the tool translates complex measures so that they are quickly understood.
How to classify KPIs?
The main objective when adopting KPIs is to obtain data on the company’s performance with reference to the strategies adopted.
In this sense, it is important that regardless of what is measured, it is linked to the objectives proposed in the business strategies.
It is worth mentioning that although a metric can become a KPI, they are not the same thing. Always keep in mind that KPIs are essential key indicators for the objectives set and essential for the progress of the business.
Metrics, on the other hand, are something to be quantified. In this sense, a metric, if important for the strategies and helping in decision-making, may become a KPI.
There are countless analysis possibilities that a company can perform. Therefore, KPIs deal with those that are fundamental, the keys to the business.
Thus, some category suggestions are:
Strategic
These are directly related to the objectives set in planning. They offer a comparison between the actual scenario and what was stipulated previously.
Basically, they prove whether the expectations set were or will be met.
Tactical
These indicators will provide an understanding of whether the company is close to achieving its larger objectives. In this case, the goals set are one level below the strategic ones.
Quality
They can measure everything from process efficiency to customer service. Among the main indicators are defect rates, product durability, or customer complaint percentages.
These indicators should be associated with issues such as increased revenue and customer loyalty.
Sales
This indicator is fundamental to understanding the consumer and whether the efforts applied have contributed to sales team success.
In this sense, it can be composed of lead conversion rate, average ticket, cost of acquisition per customer, number of new customers, among others.
Marketing
They are directly associated and complementary to sales indicators.
Some examples of indicators are based on campaign conversion rate, click-through rate and site bounce rate, social media followers, and cost per click.
Logistics
Regarding logistical issues, indicators can identify opportunities and monitor supply chain progress.
Examples of indicators include inventory turnover, storage cost, loss rate, average delivery time, among others;
Productivity
Evaluates yield and efficiency of the company’s internal processes. They measure the amount of resources used to generate a product or service.
There are numerous analyses that can be applied, such as idle time, quality level, productive capacity rate, average cycle time, productivity per employee, cost per hour worked, among others.
Financial
They take into account different indicators such as cash flow, liquidity, profitability, and indebtedness. Understanding financial operations leads to better development in all areas.
Some examples of indicators are: average ticket, return on invested capital, turnover of working capital, EBITDA, and more;
Implementing KPIs in your company
The best way to measure your company’s results is to create indicators based on your reality. To do this, just:
- Set your objectives: delimit what results the company wants to achieve. KPIs are key indicators and must be associated and directly linked to the organization’s objectives;
- Choose relevant indicators: each key indicator needs to be strategic, and its analysis directly related to objectives, decisions, and goals set. List everything that may be relevant or impactful to the business. Focus on indicators that will represent significant progress that demonstrate real growth. The data needs to be quantifiable for control and measurement;
- Rely on appropriate tools: it is of no use to create insightful indicators if the collection, analysis, and visualization of data are not facilitated. Integrated Management Platforms are excellent for this type of control. Especially when it comes to Fusion Platform, which has a control center to check data and indicators in real-time, with complete reports that facilitate understanding and decision-making;
- Base your decision on KPIs: whenever you need to implement strategic changes to improve performance, consider KPI analyses. Having the correct indicators assists in future planning and will be the key to business success.
- Constantly evaluate and monitor KPIs: a company is a living organism, where changes occur and new goals are set. Therefore, establish periodicity levels to analyze the results and keep the team aligned with the established objectives. Additionally, by observing which indicators were not achieved, there will be data to understand what generated this unsatisfactory result.
As you can see, KPIs are a tool that helps understand the paths taken by the company.
In this way, it allows the correction of issues that prevent the achievement of specific goals.
How to manage your company’s KPIs
One of the most important aspects of using KPIs is their management. That is, using indicators as tools to achieve the established objectives.
Managing KPIs consists of ensuring that the indicators remain aligned with what the organization expects. There is no doubt that this monitoring will be fundamental to identify trends, patterns, and possible threats to processes and results.
The use of a management system or an end-to-end platform enables the automatic collection, analysis, and visualization of data.
Thus, it is possible to properly monitor the indicators, allowing not only to check numbers but to understand the causes of KPI performance.
Using Fusion Platform, you understand how the use of these indicators is beneficial for the entire company. Especially regarding decision-making and actions.
With BPMS features, Fusion provides visibility, control, and data analysis related to the organization’s processes.
It also has the Central Analytics, where it is possible to gather all information about internal activity performance.
Thus, besides monitoring usage, the company can find ways to improve resource usage, implementing continuous improvement, maximizing results.
Furthermore, all necessary changes or additions of new Key Performance Indicators are easy to implement.
Another point is the components of each process or project, which can access the information by reviewing performance in relation to the set objectives and suggest improvements.
This ease allows the creation and analysis of reports rich in information and monitoring panels. Fusion allows access to data at any time, day, or location.
Have all the benefits and make more coherent decisions with the management of your KPIs. Transform your company and achieve better results. Try Fusion Platform.
