KPI What is it and what is its meaning? If you have this doubt, know that KPIs (or key performance indicators) are essential to understand if your company is, in fact, achieving your business goals . And that's exactly why all successful companies use KPIs in all of their projects.
So, if you want to understand what KPI is, what are the ideals for your company and how to apply them in the right way, watch this video and solve all your doubts in a very practical way! You want to receive tips and information to set up your own business. So subscribe to this channel and stay on top of everything you need to know to start your own business.
To try to clarify this matter for you, let's explain the following points: 1. KPI WHAT IS (AND ITS MEANING)? 2.
WHY ARE THEY SO IMPORTANT? 3. MAIN KPI TYPES FOR YOUR BUSINESS 4.
HOW TO CHOOSE KPIS THE RIGHT WAY So, let's go! 1. KPI WHAT IS (AND ITS MEANING)?
KPI comes from the acronym in English “Key Performance Indicator”, which means Key Performance Indicator in Portuguese. Basically, KPIs are used to measure whether an action or a set of actions are meeting or exceeding the goals planned by your company. In other words, measure if things are going according to plan.
Thus, we can say that KPIs are responsible for providing the necessary assistance for the company, team and managers to make better decisions. And KPI can be measured in numbers or percentages. And it is up to the company to understand which are the appropriate KPIs for each action or process.
For example: - A KPI in number could be the number of visitors who have accessed your site in the past few days. - Or a KPI in percentage would be the increase in sales of a product of your company in a certain period. Like a 30% increase from last month.
However, it is important to point out that a KPI is different from a metric. KPIs are the techniques that will be used to achieve better results, which move companies in the expected direction. While metrics help to understand a given scenario with a solid foundation for analysis.
They are specific points that need to be measured for an informed analysis. But if these metrics bring significant results to your company, it can indeed become a KPI. 2.
WHY ARE THEY SO IMPORTANT? KPIs help your company to have a good foundation with rich information for decision making. And thus, having a critical and detailed view of the business to be able to work out a solid and assertive strategic plan .
Another important point is that you have solid information about the business. And this facilitates the elimination of errors in the company's processes and possible rework expenses . Likewise, the key performance indicators help to find points of improvement in the company's processes or areas.
And thus, being able to know exactly what needs to be worked on so that the results are achieved in a satisfactory and organized way. Plus, KPIs help improve your business' productivity. Mainly because it will be possible to work on points that guide your company to achieve the proposed objectives through solid information and data.
So having this information is critical to finding ways to increase the productivity of the team and the company as a whole. 3. MAIN KPI TYPES FOR YOUR BUSINESS Basically, there are three types of KPIs that can be used: primary, secondary and practical.
PRIMARY KPIs These are the main KPIs for your objective, which indicate whether your company is really succeeding or not with the actions or strategies. That is, they demonstrate through the data that the adopted strategy is bringing results and that everything is as expected. As an example, we can mention: - generated leads; - acquisition cost per customer; - traffic; - sales; - revenue per purchase; - conversion rate; - profit generated - among others.
SECONDARY KPIs Secondary KPIs are those that reinforce and justify whether the primary KPIs are really working or being achieved. With them, it is possible to follow each action even more closely. For example: - detailed cost of each lead; - origin of traffic; - how many visitors interacted with your actions; - value of each sale - average purchase price - among other PRACTICAL KPIs AND the practical KPIs are those that serve to explain the results indicated in the primary and secondary KPIs.
In other words, they are more practical, as the name says. These are the indicators that go into a little more detail to help justify the other KPIs. For example: - number of posts or videos viewed on social networks; - how many people were impacted by a post; - how many likes or likes your post had; - which pages on your website were most visited; - which keywords were most effective; - which products were most sought after; - among many other points.
Here, can you use as many practical KPIs as needed according to your business analysis , combined? 4. HOW TO CHOOSE KPIs THE RIGHT WAY As we said earlier, choosing KPIs depends on the objectives that the company pursues.
Therefore, it is up to each business to assess which KPIs will be important for each type of action or project. And the key indicators will do just that: pointing out which strategies are bringing a more significant response to your company and which ones need to be improved or even eliminated. Therefore, here we are just going to show some examples of KPIs that can be used according to your business needs or objectives.
But let's try to explain it in a very short way to make it easier to understand. However, if you want us to go deeper into each KPI, leave it here in the comments and we 'll be happy to put together another video about it, okay? 1.
Efficiency or Effectiveness KPI These are the indicators that show which action or strategy had the most positive effect for your company. In this way, it is possible to focus on those actions that generate the most results for your business. 2.
Capacity KPI Here shows the production capacity results , what actually is produced in a given period. For example: a cap company can produce 100 units per week, while a competitor produces 150 units. Therefore, the competitor's production capacity is greater.
3. Productivity KPI This KPI may even be similar to Capacity, but here the idea is to really hit the result of a work in relation to used resources. And in this case, resources are not only related to material goods, but also human.
For example, a candy company has two employees. Employee A can pack 200 bonbons in 1 day, while Employee B can pack 150. Therefore, Employee A has a better productivity.
4. Quality KPI These indicators refer to the expected quality of the company. In other words, it is necessary to fulfill some requirements to pass the expected quality test before being made available to consumers.
For example, the customer complaint rate can help you measure the quality of your company 's service or products. The greater the level of dissatisfaction on the part of your consumers, the worse the quality worked by your company. So, it is a level of attention and this must be worked out.
5. Profitability KPI As the name implies, here it is related to your business profits. And here, it is up to the company to define what is the index or expected value to have a satisfactory profit, which meets the expectations and needs.
6. Profitability KPI In this key performance indicator, what is analyzed is the relationship between profits and investments made by the company. In this way, it is possible to understand whether a given investment is going to be worth it and whether that resource allocation made is bringing the projected result.
7. Competitiveness KPI In this KPI, competition is the parameter to work on this indicator. Understanding what your competitors are doing is essential to know the real situation of the company in the market and create a strategic plan based on it.
8. Value KPI And finally, this indicator shows how much your customers paid to buy your product/service compared to their satisfaction after the purchase. Literally, it is the material and emotional value of your customers in terms of what they paid for.
This is a way to know if what the company offers generates value and satisfaction for the consumer. You saw how KPIs are very important and valuable for any type of business. For sure, they will help your company a lot to work with solid and concrete data to trace and achieve all your goals.
However, remember that applying the KPI needs to meet the company's ideas and plans. So, it's up to you to understand which KPIs are really important and valuable according to your business combined? And just to recap what we said here: 1.
KPI WHAT IS (AND ITS MEANING)? 2. WHY ARE THEY SO IMPORTANT?
3. MAIN KPI TYPES FOR YOUR BUSINESS 4. HOW TO CHOOSE KPIS THE RIGHT WAY We hope you enjoyed!
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