A Key Performance Indicator (KPI) is a measurable value that demonstrates how effectively a business is achieving key objectives. Organizations will often use KPIs at multiple levels to evaluate their success at reaching targets. High-level KPIs may focus on the overall performance of the business, while more granular KPIs may focus on processes such as sales, marketing, customer retention, or product profitability.
In short, KPIs are the most important business metrics for your business. The KPIs that a women’s boutique measures will likely look different than those of a city bike share. Its important to understand which numbers matter most to your business and industry. The benefits of KPIs are many, however, first and foremost KPIs are your way of establishing what your business needs to achieve, and then measuring whether you’re on track to achieve it. What get’s measured, get’s managed.
The value of KPIs increases greatly when monitored in a business intelligence solution, through AaaS. There isn’t a metric that operates independently. In other words, the KPIs you define and establish will overlap and influence each other. Displaying each KPI alongside each other helps you quickly see which goals are being met, which aren’t and the impact of one on another. From here you can start to play around with adjusting targets and parameters, in order to be more effective.
KPI Dashboard developed by EnodoBI
Take a look at the example shown above. This is an example of a KPI dashboard geared towards a cafe. On this dashboard there are six KPIs, broken out by the three business segments, Sales, Marketing, and Finance. The six KPIs are:
Total Transactions
New Customers
Total Units
Segment Gap
Year-to-date Revenue
Year-to-date Budget Variance
These KPIs provide leaders with a constant view of performance. In this example you can quickly identify which KPIs are performing optimally (those in green) and the KPIs which need attention (those in red).
KPIs are an essential tool for measuring the success of your business and making the adjustments required to make it successful.