KPI is a word that comes from English and means key performance indicator.
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In this article you will find:
What is a KPI?
A KPIsIt is a specific measure of an organization's performance in some area of its business. It is a general concept (essential to the management control), with different implementations depending on the type of business and objectives of the organization.
Examples of key performance indicators might include such things as the percentage of deliveries made on time, total inventory at one time given, distribution costs as a percentage of total sales, the accuracy of invoices sent to customers, or the delivery time of a product.
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Image: Krokodilkalle -> Wikipedia
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The purpose of the KPIs It's giving a business quantifiable measurements of the things proven to be important to its long-term success. Identifying the most important key performance indicators is the first step towards achieving greater profitability and efficiency for most companies. For KPIs to be useful, they must be consistently quantifiable, have an established correlation to the area of the business in need of improvement, and not give false readings.
Examples of KPIs
- Conversion rate: This KPIs It is widely used in digital marketing and sales. Conversion rate is the percentage of website visitors who complete a desired action, such as making a purchase, signing up for a newsletter, or downloading a resource. To calculate the conversion rate, divide the number of conversions by the number of unique visitors and multiply by 100. For example, if an online store had 1,000 visitors and 50 of them made a purchase, the conversion rate would be 5%. This metric is crucial to assess the effectiveness of marketing and sales strategies and can help identify areas for improvement, such as optimizing the user experience, adjusting the sales funnel or changing the focus of advertising.
- Return on Investment (ROI): ROI is a key financial KPI that measures the profitability of an investment. It is calculated by dividing the net return of an investment by the total cost of the investment and multiplying it by 100 to obtain a percentage. For example, if a company invests $10,000 in an ad campaign and generates $20,000 in additional revenue, the ROI would be 100%. ROI is useful for evaluating the effectiveness of business investments and can help leaders make informed decisions about where to allocate resources. Comparing the ROI of different projects or initiatives can also help identify growth opportunities and areas that need improvement.
- Employee turnover rate: This KPI is used in HR to assess employee retention and job satisfaction. Employee turnover is the number of employees who leave a company during a specified period, expressed as a percentage of total employees. To calculate it, divide the number of employees who left the company in a given period by the average number of employees during that period and multiply by 100. For example, if a company has 100 employees and 10 of them leave in a year, the employee turnover rate is 10%. A high turnover rate may indicate job satisfaction issues, while a low turnover rate suggests that employees are happy and engaged. This KPI can help companies identify areas where they can improve their sourcing practices. retention and develop strategies to increase customer satisfaction and commitment. employees.
