KPIs: Definition and examples of Key Performance Indicators

Topics index

  1. What is the KPI
  2. Key
  3. Performance
  4. Indicator
  5. KPI marketing

It does not matter how well a job is done or how many sales a company has made if it is not possible, in some way, to measure these elements and evaluate them in terms of performance or it is not possible to identify the key performance indicators .

In today’s industrial processes, the value of an organization is established only on the condition that it is measurable and therefore comparable with other values, perhaps of competing companies.

The term performance is so exploited and inflated that it is attributed to all kinds of activities. Just think of the feats of an athlete, even in this case, we talk about measuring performance between one period or another or between the athlete and his competitor in the race.

On the basis of the values ​​expressed by the indices that are taken into consideration, for example, corrective strategies are implemented on training and preparation or, speaking of revenues, the compensation due is determined.
The higher the performance level, the higher the market value of the athlete’s compensation.

With this simple example we think we have clarified one of the many areas of application of this system but, what has been said, is not sufficient to describe it in full. In the following paragraphs, we will deal with both the definition of the term and the exploration of some key indicators referring to company contexts. 

What is the KPI

KPI is the acronym for “Key Performance Indicator” which literally stands for: key performance indicators . These are indices that represent critical elements within an organization.
The organizational area to which this methodology refers is that of the so-called ‘management control’ but, as anticipated in the introduction, other company areas may also be interested in applying these concepts to make decisions.

Each term of the more generic definition presupposes the assignment of a specific value within an organization . Let’s try to clarify its meaning below.

Key

The term ‘Key’ is not a predetermined value but can assume different values ​​based on the type of organization and on the basis of the specific area. We have said that a key corresponds to an element that has a great intrinsic value for someone or something as that element is strategic or is a goal to be achieved. 

Performance

But that’s not enough, because in the definition, the term key is associated with performance.
In fact, what is of interest is precisely to measure the performance and therefore the company will have to identify elements that produce performance.

Specifically, taking a company that produces skis for example, we will have as ‘ key performance’ , the reduced level of friction between the ski and the snow which will make the object more efficient and faster.
But still it is not enough to complete the picture of the description as the example we cited responds to two terms of the definition: key and performance.

Indicator

But what does this have to do with indicator ? The ‘indicator’ label corresponds to an item that is measurable.
Does our example fit the present case? The answer is yes.
The friction that the ski produces in contact with the snow surface, is a force that can be measured with tests and therefore it adheres to the definition.
It is therefore precisely the value we were looking for.

KPI marketing

Among the many applications of the KPI method , the best known and also the most practiced is in the marketing field . Given the huge investments of advertising campaigns, the KPI is the best method to measure the achievement of set objectives and therefore to determine the conversion rate of the campaign into results, for example, the increase in sales. The KPI in marketing can measure the performance indicators of contacts (leads). 

The benefits that can be gained from this activity are enormous because they allow the company to know more about its contracts and to propose highly personalized marketing campaigns generating a greater ROI . To become an indicator that can be measured, leads (contacts) must be generated and increased.
The methods of generation of contacts are mainly two:
. online lead generation;
. offline contact generation.

Online contacts are now well known and go through digital marketing campaigns to collect subscriptions from users who visit the company website, rather than the blog or social profiles.

Offline contacts are generated through a direct relationship with the public and a widespread presence on the territory.
Some of the most effective methods for the generation of offline contacts are as follows:
. participation in trade fairs;
. setting up of corners inside large commercial establishments;
. organization of sponsored activities;
. publication of forms in sector and theme magazines;
. sending material to users’ homes.

Since the goal is to collect user data and then be able to use them for specific marketing campaigns, it will be necessary to equip themselves with tablets for computerized collection, paper forms to fill out and, obviously, the disclaimers on the processing of personal data to be signed. to the signatories.

The importance of training the people called to deal with the collection of data should not be underestimated, who must not only possess excellent communication skills but also be trained on the product / service we want to sell.

Conclusion

The measurement of the key performance indicators is based on a preventive design work which, as we have said, must frame the method on one’s business model. As exhaustively explained in the lecture notes of the course of information technologies applied to business processes of the University of Bergamo, “the management control system that aims at the success of the company must identify the parameters and objectives, and the related indicators, arising from the sequence analysis:. critical success factors; . critical management areas; . key variables. ”

Exploring together and defining examples of key performance indicators has introduced us to different skills in subjects ranging from management control to marketing that deserve to be explored and deepened to equip ourselves with the tools necessary to build a successful model in your business.

 

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