The amount of data available to businesses is growing at such an exponential rate that many are simply overwhelmed.
Most of this data can be utilized in some way, be it to help make decisions or even judge the overall success of operations. One of the major ways to measure success is through the use of Key Performance Indicators (KPIs). But what exactly are they?
Below is an overview of KPIs for business.
The Key Performance Indicator (KPI) is a tool used to measure performance of a business or employees. Many businesses use this tool to look at either the overall performance and success of all or specific operations. To many, the terms performance and success are synonyms.
How do KPIs work?
Most modern versions of this tool come in the form of software applications that track specific data and criteria set by managers or owners. The software allows them to compare these criteria, commonly referred to as Score Cards, with the established goals and gauge overall performance or success.
This data, usually collected from spreadsheets, databases or even manual data entry, is displayed to the user in an easy to read format called a dashboard. The dashboard is typically a graph or similar visual display.
A common dashboard is the traffic light. Let’s say for example that a company is measuring the success of their latest marketing campaign. A green light indicates that the expected number of conversions is being met or exceeded, yellow means actual conversions are slightly below normal and red means actual are well below expected.
Benefits of KPIs
The biggest benefit of these tools is that they allow users to easily gauge the performance of a business. Beyond that you can set many KPIs with triggers that will alert you when the measurements are poor. This will allow the company to figure out ways to fix issues before they can cause bigger problems.
For many businesses, effective KPIs are tailored to the needs of the business. For the majority of businesses, KPIs need to be: Measurable, achievable, specific and result-oriented. The best way for a business to figure out the which will be the most effective is for the manager or owner to look at the aspects that are most important to a business.
This can be hard to figure out, especially for business owners who often think that everything related to their business is important. A business intelligence expert or IT partner can help define what really matters most and help to implement the tools needed.
If you are looking for a better way to measure the success or performance of your business, please contact us today.