What is KPI?

As Peter Drucker famously said, “What gets measured gets done.”

The definition of KPI from few sources are as below:  

  • Oxford’s Dictionary definition of KPI: A quantifiable measure used to evaluate the success of an organization, employee, etc. in meeting objectives for performance.
  • Investopedia’s definition of KPI: A set of quantifiable measures that a company uses to gauge its performance over time.
  • Macmillan’s Dictionary definition of KPI: A way of measuring the effectiveness of an organization and its progress towards achieving its goals.
  • Wikipedia: is a type of performance measurement. KPIs evaluate the success of an organization or of a particular activity (such as projects, programs, products and other initiatives) in which it engages.

A Key Performance Indicator is a measurable value that demonstrates how effectively a company is achieving key business objectives.

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.

Few examples of KPI are as below:

Accounts

  • Percentage of overdue invoices
  • Percentage of purchase orders raised in advance
  • Number of retrospectively raised purchase orders
  • Finance report error rate (measures the quality of the report)
  • Average cycle time of workflow
  • Number of duplicate payments

Customer KPIs

  • Number of Customers Retained
  • Percentage of Market Share
  • Net Promotor Score
  • Average Ticket/Support Resolution Time
  • Call Handling Time
  • Average Response Time
  • Peak Call Time Traffic
  • Average On-Hold Time
  • Customer Service Agent Utilization

Financial KPIs

  • Growth in Revenue
  • Net Profit Margin
  • Gross Profit Margin
  • Operational Cash Flow
  • Current Accounts Receivable
  • Inventory Turnover
  • EBITDA
  • Stock Value
  • Days in Accounts Receivable
  • Quick Ratio/Acid Test
  • Debt-to-Equity Ratio
  • Accounts Payable Turnover
  • Accounts Receivable Turnover
  • Cost of Goods Sold

Human Resource KPIs

  • Organization Headcount
  • Average Number of Job Vacancies
  • Applications Received Per Job Vacancy
  • Job Offer Acceptance Rate
  • Cost Per New Hire
  • Average Salary
  • Average Employee Satisfaction
  • Employee Turnover Rate
  • New Hire Training Effectiveness
  • Involuntary Turnover Rate
  • Employee Engagement Rate

Healthcare KPIs

  • Bed or Room Turnover
  • Average Patient Wait Time
  • Average Treatment Charge
  • Average Insurance Claim Cost
  • Medical Error Rate
  • Patient-to-Staff Ratio
  • Medication Errors
  • Average Emergency Room Wait Times
  • Average Insurance Processing Time
  • Billing Code Error Rates
  • Average Hospital Stay
  • Patient Satisfaction Rate

Marketing KPIs

  • Monthly Website Traffic
  • Number of Qualified Leads
  • Conversion Rate for Call-To-Action Content
  • Keywords in Top 10 Search Engine Results
  • Blog Articles Published This Month
  • E-Books Published This Month
  • Marketing Qualified Leads Acquired (MQL)
  • Sales Qualified Leads Acquired (SQL)
  • Customer Acquisition Cost
  • Advertising Cost Per Thousand Impressions (CPM)
  • Advertising Cost Per Click (CPC)
  • Return on Marketing Investment (ROI)
  • Average Funnel Conversion Rate
  • Number of Earned Media Placements Gained

Manufacturing

  • OEE = availability x performance x quality
  • Availability = run time / total time, by definition this is the percentage of the actual amount of production time the machine is running to the production time the machine is available.
  • Performance = total count / target counter, by definition this is the percentage of total parts produced on the machine to the production rate of machine.
  • Quality = good count / total count, by definition, this is the percentage of good parts out of the total parts produced on the machine.
  • Cycle time ratio (CTR) = standard cycle time / real cycle time
  • Capacity utilization
  • Rejection rate

Professional Services

  • Utilization rate = the percentage of time employees spend generating revenue
  • Project profitability = the difference between the revenue generated by a project and the cost of delivering the work
  • Project success rate = the percentage of projects delivered on time and under budget

Project execution

  • Earned value
  • Cost variance
  • Schedule variance
  • Estimate to complete
  • Manpower spent / month
  • Money spent / month
  • Planned spend / month
  • Planned manpower / month
  • Average time to delivery
  • Tasks / staff
  • Project overhead / ROI
  • Planned delivery date vs actual delivery date

Supply Chain KPIs

  • Number of On-Time Deliveries
  • Inventory Carry Rate
  • Months of Supply On Hand
  • Inventory-to-Sales Ratio (ISR)
  • Carrying Cost of Inventory
  • Inventory Turnover Rate
  • Perfect Order Rate
  • Inventory Accuracy
  • Fill Rate
  • Inventory Days of Supply
  • Freight Bill Accuracy
  • Freight Cost Per Unit
  • Inventory Velocity

Social Media KPIs

  • Average Engagement
  • % Growth in Following
  • Traffic Conversions
  • Social Interactions
  • Website Traffic from Social Media
  • Number of Post Shares
  • Social Visitor Conversion Rates
  • Mentions
  • Issues Resolved Using Social Channels

Sales KPIs

  • Number of New Contracts Signed
  • Dollar Value for New Contracts
  • Number of Engaged Qualified
  • Hours of Resources Spent on
  • Average Time for Conversion
  • Net Sales – Dollar or Percentage
  • Customer Lifetime Value
  • New and Expansion Monthly
  • Number of Sales Calls Held
  • Number of Sales Calls Scheduled
  • Number of Customers Onboarded
  • Number of Sales Calls per Representative
  • Average Purchase Value
  • Sales by Department
  • Same Store Sales Growth
  • Sales Per Area – Geography
  • Sales Per Area – Square Feet
  • Average Purchase Value

System operations

  • Availability / uptime
  • Mean time between failure
  • Mean time to repair
  • Unplanned availability
  • Average time to repair