What KPIs are and why they are important in business

What KPIs are and why they are important in business

What are KPIs and why are they important in business

KPIs are an important tool for monitoring and analyzing business progress. They help in shaping strategy and making timely adjustments. A company without clear goals and methods of evaluation risks turning into a chaotic, unmanageable process. Employees performing their duties without a clear purpose can produce unstable and unsatisfactory results.

KPIs measure performance at the level of an individual employee, a department, or an entire business process, tracking the achievement of goals. These metrics set specific deadlines and benchmarks, serving as a guiding light for all levels of employees.

Businesses use KPIs to digitize goals, analyze successes and failures, optimize workflows, evaluate results, and plan. They also play a key role in motivation systems.

KPI Types

There are a variety of key performance indicators (KPIs) covering a wide range of aspects of a business. Each of these indicators is designed to measure performance in a specific area of the company. Let’s take a look at the main types of KPIs and their importance to different facets of the business:

Financial metrics:

  • Sales volume.
  • Net profit.
  • ROI (return on investment).
  • Working capital.
  • Market share.

Financial KPIs help evaluate a company’s financial strength, profitability, and investment performance.

Process Metrics:

  • Production efficiency.
  • Speed of order processing.
  • Level of innovation.
  • Quality of products or services.
  • Compliance with deadlines.

Process KPIs help measure the effectiveness of operations and improve workflows.

Customer feedback:

  • Customer satisfaction levels.
  • Frequency of repeat purchases.
  • NPS (Net Promoter Score).
  • Time to process customer inquiries.
  • Feedback and ratings.

Customer KPIs allow you to assess how well the company is meeting customer expectations and how satisfied customers are with their experience.

The choice of specific KPIs depends on the company’s area of activity and its strategic goals. For example, for a retail business, metrics related to customer experience may be key, while process and resource efficiency may be important for a manufacturing company.

For example, a retailer may want to focus on metrics related to customer experience, while a manufacturing company may want to focus on process and resource efficiency.

Tools for measuring KPIs

In today’s business world, there is a vast arsenal of tools and platforms designed to effectively measure key performance indicators (KPIs). The variety of these tools allows companies to choose the ones that best fit their needs. Here are some of the common tools for measuring KPIs:

Analytical systems:

  • Google Analytics.
  • Adobe Analytics.
  • Microsoft Power BI.

Analytics provides detailed data on user behavior, marketing campaign effectiveness, and other key metrics.

Specialized programs:

  • Tableau.
  • Klipfolio.
  • Domo.
  • Tableau.

Specialized programs allow you to create customized reports, visualizations, and dashboards for deeper KPI analysis.

CRM systems:

  • Salesforce.
  • HubSpot CRM.
  • Zoho CRM.

CRM systems help you track customer interactions, measure sales performance, and improve customer service.

Project management programs:

  • Jira.
  • Asana.
  • Trello.

The use of project management software helps measure process KPIs such as task deadlines and team effectiveness.

The choice of specific tools depends on the company’s goals, budget, and business process characteristics. Effective use of KPI measurement tools provides the accurate and timely data needed to analyze and make strategic decisions.

While using KPI measurement tools effectively, they provide the data needed to analyze and make strategic decisions.

How to make KPIs more effective

For a KPI to be effective, it must be flexible and adaptive to changes in the market and conditions. It is important to review KPIs regularly, maintain team partnerships, and prepare to expand if performance increases. Implementing the system may require expertise and a budget to maintain the process.

When implementing KPIs, it is important to consider employee loyalty by tying KPI calculations to timesheets and days worked. This helps to avoid negative consequences for employees, such as losing part of their salary due to sickness or vacation.

KPIs should also incentivize teamwork by setting personal and separate metrics. This ensures that employees who achieve their individual goals are motivated to help their colleagues achieve commonly separated goals and earn an additional bonus.

KPIs should also encourage teamwork.


KPIs are a valuable tool for companies in various fields to digitize business goals and analyze the results achieved. The choice of KPIs depends on the specific area of business and the specifics of each department or employee. It is important to implement KPIs step-by-step, starting with defining goals, creating a KPI matrix, linking them to the motivation system, and explaining the implementation goals to employees. At each stage and during the process of the KPI system, it is necessary to analyze, collect feedback, and correct those KPIs that are not working. Visualizing KPIs with software and CRM such as dashboards and reports makes them easier to track and analyze. Ready-made templates for KPI calculations also help calculate metrics faster and more efficiently, saving time in preparing them.

In general, a properly implemented and managed KPI system can significantly improve a company’s performance, help achieve business goals, and improve employee motivation. This makes KPIs not just an evaluation tool, but an important part of strategic planning and development of any business.

Alex Lead Panda

Alex is our traffic arbitrage editor, and his work is pure magic. He combines a deep understanding of online advertising with excellent editorial skills. Alex knows how to optimize content and make it easy to understand. His talent is not only in working with text, but also in understanding the needs of the target audience. And he does it all with ease and attention to detail, creating high quality content for all our readers.
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