Synonyms: measurement point, success criteria, measurable objective
From a definition standpoint, a Key Performance Indicator (or KPI as us cool kids call them) is a value that businesses identify to measure how effective an organization is doing in regards to achieving business objectives over time. KPIs are used at different levels within the organization to evaluate success at reaching targets across performance, sales, marketing, etc.
Why do we care about KPIs?
Since a KPI is a measurable value that demonstrates how effectively a company is achieving key business objectives, we care about KPIs because they tell us how we’re doing. Organizations use KPIs at multiple levels to evaluate their success at reaching targets. High-level KPIs may focus on the overall performance of the business, while low-level KPIs may focus on processes in departments such as sales, marketing, HR, support and others.
How do we start defining KPIs?
Defining KPIs can be a bit tricky as people often confuse KPIs with other business metrics. The important thing to focus on with KPIs is the K… key. What are the KEY metrics that help measure identified specific business outcomes. KPIs need to be defined early on and agreed upon from the project team. Whether a site redesign or marketing effort that you are defining KPIs for, the whole team should be involved in conversations or workshops around desired outcomes, why the outcome matters and how to measure progress.
Stay thirsty, friends!