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KPIs: understand the importance of key performance indicators

Do you know what KPIs are and what they are for? After 5W2H, PDCA, ERP, IPO and many other acronyms in the corporate business environment, the KPI is the acronym of the time.

Key Performance Indicators are highly relevant metrics for measuring the performance of a strategy and management processes. Through the analysis of KPIs, the manager is able, in a simple way, to understand what is working and what is not, and make the necessary changes to achieve the objectives established by the board.

A Content Trends survey revealed that 78.1% of the companies that analyze these indicators are successful.

Monitoring performance indicators is still, today, the best way to know if your results follow your business strategy and if your company is having the desired return with the actions and with the investment being made in it.

What is the difference between KPI and Metric?

Many people don’t know, but there is a big difference between KPIs and metrics. Differentiation occurs because the metric is just something to be measured. KPIs are the most important metrics and indicators for the profitability of your business.

The most relevant thing here is to understand what are the most important metrics analyzed in the company’s decision making. This should be the basic premise for choosing any KPI and for raising a metric to the status of a key indicator.

And what are the most common KPIs and how to measure them?

The key indicators can be diverse. Everything will depend on what you want to measure and what your goal is when analyzing the data. KPIs can be for the business as a whole, it can be for a digital marketing strategy, it can be for analyzing your company’s productivity, quality or capacity. There are several models and applications for KPIs.

For most companies, they follow the pattern:

  • Quality indicators: help to better understand any error, deviation or non-conformity in the process of producing or selling a product or service;
  • Productivity indicators: productivity indicators are more related to production capacity and the hour/ employee or hour/ machine ratio. That is, this indicator assesses the use of company resources based on the quantity of production delivered;
  • Strategic indicators: these indicators offer a benchmark in relation to the pre-established objectives for the company. They indicate and provide comparisons of how the company’s current scenario is in relation to the ideal scenario previously proposed according to the strategy that was followed;
  • Capacity indicators: measure the responsiveness of a process. We can cite as examples the amount of products that a machine can pack during a certain period of time.

All of these categories are equally relevant. The KPI provides the necessary insight so that you know the processes and that you are able to align them with the established objectives.

Average ticket and turnover KPI

First of all, we have to understand what the average ticket and the so-called turnover index are about.

Average ticket

The average ticket is the average amount spent by your customers on a purchase in your business, be it in a physical establishment or a service that will be provided. This indicator determines your customer’s behavior with your brand and can also normally be related to that customer’s satisfaction with your company.

So, in this sense, we can define the average ticket as a very important KPI, because, if that number grows, consequently your profit will also increase. In other words, the amount spent by your customer increases, but the number of customers remains the same.

It is an indicator that allows to understand how the sales dynamics work, and that can and should be monitored. With the detailed analysis it is possible to identify the sector’s performance more broadly, in addition to verifying what type of action can improve the sales and conversion process.

Turnover and employee satisfaction indicators

Another very common indicator in organizations is the companies’ turnover index. A high turnover of employees can represent problems of management and organizational culture. It is necessary to understand the internal mechanisms, a high turnover rate must be seen as a major problem and needs to be closely monitored by the board.When the company faces issues of this nature, customer service and the organization’s ultimate goal are certainly undermined.

This fee can be calculated based on the average length of stay of each employee in the company. The classic formula is: (number of dismissals + number of admissions) / 2, divided by the total number of employees.

The monitoring of this turnover rate is very important in order to be able to develop sectors and departments that are more aligned with the company’s philosophy and culture and thus establish greater returns and improve results.

Marketing KPIs

In addition to the indicators already mentioned, in the scope of digital marketing we have several KPIs that are extremely useful, especially when it comes to a digital product.

It is usually quite common to use terms such as leads, blog views, ROI, views, CPC and several others in companies’ marketing departments. All of these acronyms are or can be very efficient KPIs and should be analyzed closely by the responsible analysts.

Conclusion

Nowadays, measuring results and performance indicators are extremely necessary for the health of any company. Analyzing them with quality and adjusting errors and misunderstandings in all processes within the organization must always be a guiding principle of any business.

In order to do this in the best way, Adnia Solutions has the best management and analysis tools for indicators.

The KPI Management Template Package is a package with 3 templates developed specifically for you to monitor and analyze your company’s KPIs in a didactic, beautiful and functional way!

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