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What is the key performance indicator?

The term Key Performance Indicator (KPI) covers key figures with which the performance of corporate activities can be described and determined. In individual cases, it always depends on the company and its measures and objectives which KPIs need to be considered in order to measure success or failure. A key performance indicator is therefore a measurable value that shows how effectively a company achieves its most important business objectives
  • Quantifiable measure for assessing the success of an organization or an employee
  • Makes all processes in the organization controllable
  • Key performance indicator, with which the organization measures its performance over time
  • Method for measuring the effectiveness of an organization and its progress
  • Relates in business terms to performance, success, degree of fulfillment or utilization

What is the purpose of a key performance indicator?

Key Performance Indicators are used to check how successful certain activities are in organisations or companies. A key performance indicator is a measurable value that shows how effectively a company achieves its most important business objectives. Companies use these KPIs on several levels to evaluate their success in achieving goals. High-level performance indicators can relate to the overall performance of the organization, while low-level performance indicators can focus on processes in various departments such as sales, marketing, human resources, support, and others. In principle, all processes in the company can be monitored using such performance indicators. Management and controlling can then analyze the processes in the company in detail. Through consistent monitoring, measures and processes are then adjusted accordingly and optimized even further. Which key performance indicators are relevant? It is not possible to say this in a generalized way, because different KPIs are used to measure the performance(s) depending on the type of company or division. Marketing is naturally interested in completely different KPIs than, for example, sales or accounting is interested in completely different KPIs than logistics is. Which key performance indicator is the right one therefore always depends on what activities in the company are to be monitored

Measure success regularly with the key performance indicator

Depending on which business you run or whether it is an online shop or something else, for example, the relevant KPIs may also vary. There are a lot of KPIs measurable on the net and these can be easily determined with various analysis tools. Furthermore, KPIs can be determined in different ways. Only those who regularly monitor their results can see how effective the measures taken are. What is really relevant for metrics then always depends on the corresponding measure and its goal. For a blog, for example, in terms of traffic, metrics such as visitors, length of stay and returning users can be important. If it is about generating leads, the conversion rate of landing pages should be considered. So there are metrics for lead generation, sales metrics (such as for online sales), consumption metrics and sharing metrics. But also the traffic of the site and its SEO ranking are among the most important key performance indicators. In addition, the following KPIs are also important in marketing: unique visits, page views, number of new users, length of stay, newsletter subscriptions, bounce rate and social shares. KPIs are therefore used for the precise monitoring of measures. They can be used to evaluate very well which specific actions have been successful and where there is still potential for optimisation and cost savings. What makes a KPI effective? A KPI is usually only as valuable as the action it inspires. Too often, companies blindly use industry-recognized KPIs and then wonder why they dont reflect their own business and dont make positive changes. One of the most important but often overlooked aspects of KPIs is that they are also a form of communication. This is because they are a continuous iterative process that involves feedback from analysts, department heads and managers.

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