Key Performance Indicator
The abbreviation KPI stands for “key performance indicator”.
What is a Key Performance Indicator?
A Key Performance Indicator is a performance indicator that evaluates the success of an organization or a specific activity (products, projects, programs, etc.) of an organization.
Success often results from the regular achievement of certain operational goals – for example, 100% customer satisfaction, defect-free production or the generation of contacts. Identifying these important operational goals can, therefore, be a useful tool for increasing an organization’s success.
Categories of frequently used KPIs
Many KPIs can be classified into one of the following categories:
- Quantitative indicators: These can be represented by a number.
- Qualitative indicators: these indicators cannot be represented by a number.
- Indicators: you can predict the outcome of a process
- Subsequent indicators: They stand for success or failure after a project or process has been completed.
- Input indicators: You measure the number of resources needed to generate a final result.
- Indicators of progress: They show the efficiency and productivity of projects and processes.
- Output indicators: They reflect the production quantity of the processor activity.
- Financial indicators: They represent the financial health of an organization.
- Indicators pointing in the right direction: They show whether an organization is developing in the right direction.
Below you will find some examples of KPIs for Marketing and Sales.
Acquiring new customers
The number of new customers acquired in a given period is a key performance indicator for many companies.
Demographic analysis of potential customers
Demographic data of potential customers who are interested in working with a company can be used as a key performance indicator in combination with data on acceptance and rejection.
Status of existing customers
For example, how many existing customers will need the company’s service in the near future.
What is the rate at which existing customers are lost? How many new customers must be generated per month to keep sales stable?
Any revenue or revenue generated by a segment of all existing customers.
Irrecoverable receivables from segments of existing customers
This Key Performance Indicator can be used to identify customer segments that are unprofitable or risky.
Profitability of customers based on demographic data and customer segments
With this Key Performance Indicator, you can discover customer profiles with high profitability.
Average order value
An important key performance indicator, especially for online shops.
Termination rate in the ordering process
Also an important key performance indicator for online shops.
An important Key Performance Indicator for website operators who generate revenue through advertising
Percentage of returning visitors
A key performance indicator that reflects the usefulness and thus the long-term success of a website.
Other areas where KPI is used:
In addition to marketing and sales, KPI is also used in the following areas:
- Production of goods – the general efficiency of the production equipment is a frequent key performance indicator of manufacturers.
- Consulting firms and agencies – the profitability of projects, the success rate of projects and the amount of time an employee spends on cash-generating activities are often used as key performance indicators by consulting firms and agencies.
- System Operators (Internet Service Providers, Web Hosters, etc.) – Accessibility, average repair time, average repair time and average uptime between failures are common KPIs of system operators.
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