To properly evaluate your business
performance, you need to know what KPI is.
These are used at different stages and levels
to evaluate your organization's development as well as success.
So, it is important to define your KPIs and
monitor them if you want to reduce risk, motivate your team and manage your
By tracking KPIs you can guess whether your
strategy is working or whether other metrics will be relevant to the track.
But if you still don't know what KPI is, don't
worry, because in this article we will answer all your questions about this
What is KPI?
Although we haven't covered what KPI is yet,
you already have an idea of what we're talking about, but you still don't know
what KPI means.
KPI is the acronym for Key Performance
Indicator, an expression originally from the English language that translated
would be very close to “Key Performance Indicator”.
So, we can say that KPI is the key signal that
is used to evaluate the performance and success of an organization, business,
meeting, etc ...
In order to define KPIs, actual data such as
metrics, indexing, and any objective or qualitative data are relevant for any
For example, suppose you have an eCommerce
site and your goal is to increase sales by 40% by June.
KPIs are the steps you take to determine if
you have achieved this result
But, be careful not to confuse KPI with
KPI vs Metric vs Objective
Don't worry if the concept of KPI is not very
clear to you. Because we will separate KPI and metric so that you can
understand the difference between them.Check out:
Objective: The objective you are
trying to achieve, an example, is to increase sales.
KPI: Measure how many purchases
have been made to understand if you are achieving the expected results.
Metrics: A specific process that
is used to track is a format, number, or value. An example of a metric is
"Monthly Visits to Your Website" or "Percentage of Visitors
Visiting Your Ecommerce"
Thus, it is important to note that KPI is an
indicator made from metrics, but it is always related to the conversion
Metrics fetch KPI results when fetching data.
A metric is just a piece of measurement that
does not represent a specific or concrete purpose.
On the other hand, KPI has a goal. If this is
very important for a given data segment, then any metric can be converted to
What are the advantages of defining
You already know what KPI is, but do you
already know the advantages of using them in your strategies? Check out some of
Keep your team more focused: If
your team knows what the goals are, where they need to go, and how to reach
them, they are more efficient. They will contribute to the performance of the
whole team, as well as align it with the goals of the company.
Prevent setbacks: You continue to
monitor continuously through KPIs and thus you are able to identify risk
factors within your organization without loss or damage.
Allows you to make adjustments:
With KPIs, you can see where your strategies are flawed or where your
strategies are succeeding so it's easier to adjust them.
Keep your teams accountable:
Choosing the right KPI keeps your team tracking their progress, so they feel
more responsible for the progress of projects.
Improves decision-making: You make
decisions based on current data, making it less risky.
How to define KPIs for your business
There are no rules for defining KPIs, but as
already mentioned, KPIs must have a goal which is the most important step in
defining your KPIs ...
These are easy for you to define when you
already have the data and the right tools to perform this action.
Before defining a KPI for any action or strategy,
you need to have some relevant data and metrics. So that you can make a comparison, without
this data it is impossible to know if you have improved your performance or
That’s why CRM tools collect and integrate
data so your team can stay updated by purchasing preferences from your
customers ’personal information.
When defining your KPIs, you can use the data
obtained to compare the future.
The objective must be defined because from
there you will define the KPI for monitoring your results.
Analyze your business and ask this question to
help you set goals: What are the desired results?
What do you want to do with your company?
Increasing sales may be the answer to this question, with the answer to this
question you find a goal.
But keep in mind that the goal must be
consistent with the current situation of your organization.
If you want to succeed in the affiliate
business, you need more than luck. What do you expect to achieve with these
Thus, you need to evaluate and if the goal can
be achieved, it is easier for you to identify it.
Once you’ve determined where you want to go,
it’s time to create strategies to achieve these results.
Make the plan simple and purposeful, no more
than a page.
This plan must include:
How the progress of the strategy
will be measured.
How you or the responsible team
will influence the outcome.
Determine who is responsible or
which team is responsible for achieving the goals.
By analyzing this plan you can have a brief idea
of what your most relevant data and metrics will be and you can define your
You can create a list of all the data needed
to reach your goal.
One way to do this is to compare the data you
already have with data that seems relevant to your performance monitoring.
Search for additional information in the
database to supplement the missing information.
After listing all of this information, simply
determine which data and metrics you think are most relevant to monitoring your
performance in your strategy.
And be sure to determine a good frequency to
evaluate your KPIs.
Keep your KPIs under constant review to help
you and your team make the best decisions.
If a KPI does not prove to be effective, you
should cancel it.
Thus, review the metrics they are criticizing
and make sure that the metrics you have are not important to your performance.
How do you know if a KPI is
You know what a KPI is and how to define it,
but you know how to set an effective KPI.
Defining KPI is not always an easy task and we
have noticed that when KPI travels for a specific purpose, some organizations
do not understand the importance of its structure based on the organization’s
data and goals.
The best way to do this is to determine if KPI
is best suited for your purpose, so it is important to define effective KPI.
For this, these KPIs must:
A good KPI is easy to identify and easy to
claim a simple decision without the need to add additional questions.
Returning to the eCommerce example, "How
many new buyers do we currently have?"
In our example, the selected KPI is the number
of new buyers, it is easy to understand and does not require additional
It is important that the KPIs are understood
by the whole team, as they combine purpose with effort as a result of one type
So, as much as possible, prioritize the
convenience of this communication by choosing KPI as a conclusion.
An effective KPI must show that it has
One way to ensure this relevance is to relate
KPI to the company's strategic goals and objectives or to a specific team.
It’s also important for your team to
understand what these goals are and above all, they will achieve them, so understanding
KPIs is much easier.
Relevance increases your chances of getting
KPIs should indicate whether you or your team
are managing the strategy properly.
Achieve goals that discourage your employees
from using KPIs for unattainable goals.
You should be aware of your team’s motives and
KPI. He must be a partner in achieving your goals.
So, monitoring KPIs is the best way to develop
More common goals should be easy to measure
and avoid, such as: "Increase sales"
It must be based on a clear objective that
produces both qualitative and quantitative measures.
Like KPI we used as an example at the
beginning of this article: "Increase sales by 40% by July".
And as already mentioned, this should be based
on the data available on a specific time scale through the data you already
Monitor the most representative KPIs
for your business
These are some of the KPIs that you can
include in your KPI dashboard so you can take advantage of their use.
FameNet allows you to create a visualization and
effective analysis of your KPIs that will help you make decisions.
You can use KPIs and learn more about which
ones need to be monitored depending on your industry. You can contact us and
chat with our experts.