Actionable Insights: Defining KPIs for Business Success


Key Performance Indicators (or KPIs) are known business goals set by an enterprise and are a valuable tool in measuring the rate of success of kpisthese business goals. Thus KPIs are also called Key Success Indicators or KSIs. These indicators are quantifiable and can be adapted into formulae to graph the company’s journey through its various goals. For various enterprises, the KPIs vary:-

  • For an educational institution, the KPI can be thought of average call handling time.
  • For a shopping mall, the KPI could be customers satisfaction index.
  • For a retail website, the KPI could be average order value or cost per customer

KPIs can be defined in multiple ways depending on your business requirements but here is a list of five standard steps to define KPIs for any business –

Define Key Objectives: The KPI of any company is an achievable goal set over a time period. A KPI is a rational summation of the company’s long term goals broken into smaller less-time consuming goals that can easily be measured. For example, using web analytics on a website, the visitor count per week can be measured initially. Analyzing this data and making a goal such as doubling the visitor count per week in three weeks is an objective.

I suggest using the “SMART” technique to define your company objectives. Business owners think that “smart” 0bjective are actually business kpis but this is not true. Your smart object could be to “decrease the customer acquisition cost by x dollars by the end of next quarter” whereas the ultimate key performance indicator to measure this goal will be “cost per visitor/prospect”.

Communicate and Make It Easy to Comprehend: It should be remembered that the entire organization is a part of achieving the KPI. Determining the KPI should also include factors such as ease of communication of these indicators and how the employees react to the KPI. If an employee does not understand the implications of a KPI figure, then the entire exercise of determining the KPI is for naught.

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Use Business Standards / Benchmarks: A KPI is always used for moving ahead of the competition. However, if a KPI for business A is much lower than business B, though A achieves the KPI quickly and easily it is business B that has the last laugh and long term benefits. KPIs of similar enterprises must be taken into account as should the industry standard to maintain quality. In the same vein, KPIs should constantly be relevant and fresh. The KPI measuring term of the company should not be very long.

Integrate Data: The KPI of a company should incorporate all the departments of the company into a single set of performance indicators. It is like flying an airplane in that all the departments – pilots, cabin crew, ground staff – work for one set of goals. Thus, as a company is handicapped without one of its departments, so is the KPI inaccurate when one department’s input is not considered.

Consolidate & Distill: Main purpose of this process is to create a tightly focus set of metrics that can give a quick snap shot your business performance. It is very important to consolidate your KPIs to 5 most powerful and important metrics. 

Your next step is to take action and go do it!

Please share your thoughts, insights and comments because it really helps me write more effectively.

Here is a list of other helpful blog posts –

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What is Web Analytics?

Is Web Analytics Right for My Small Business?

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Thanks for the post! The SMART technique looks like a good way to focus on relevant attainable goals for a company.


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