How well is your business performing? Key Performance Indicators help you answer that question. A KPI is a quantifiable measure of performance over time for a specific objective. KPIs provide targets to shoot for, milestones to gauge progress, and insights to help you make better decisions.
A few things to keep in mind as you establish your KPI’s
- Directly tied to your objective. There are many things you can measure in your business, but KPIs are a unique subset which can be directly tied to an end result. What types of things should you consider to be KPI’s? For each business it’s different depending on what you are trying to accomplish including but not limited to: increased sales, reduced turnover, improved efficiency, and reduced errors.
- Easily and exactly measurable. If it’s hard to collect the data, you probably won’t do it on a regular basis. If the metric is vague, it’s too easy to fool yourself into thinking you are close to your goal when you aren’t.
- Action oriented. Each metric should have a specific set of actions you will take to improve performance. It’s hard to reach a goal if you don’t know how to get there.
- Don’t have too many metrics. It is easy to get overloaded and track too many key performance indicators at once. Ideally the right number of metrics is 5 – 7.
- Swap our KPI’s. As your business changes, your KPI’s may need to as well.
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