How to Measure KPIs & Types of Key Performance Indicators You Should Monitor

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To grow as a business, you need a way to measure what’s working and what isn’t.

Key performance indicators (KPIs) let your company set goals and evaluate operations. In this post, learn more about KPIs — from the benefits of tracking them to how to implement them for your business.

Keep Reading: 25 Digital Marketing KPIs You Should Be Monitoring

What are KPIs?
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KPI Definition
KPIs, or key performance indicators, are quantifiable measurements you or your company can use to measure long-term performance by tracking specific goals and metrics. You might set KPIs for an upcoming social media campaign or to prepare for an annual performance review.

You should collect and track KPIs over an extended period for the business owner database accurate measurement. The longer you track your objectives, the more valuable data you’ll have to inform future marketing campaigns, budgeting, employee performance and other facets of your business.

Your KPIs should always be measurable and relevant to your business or organization and never based on factors beyond your control, like weather-related impacts on manufacturing production, new competitors opening nearby, or changing community needs.

Many organizations and companies rely on analytics software and reporting tools to create and manage KPIs across teams and departments.

Benefits of tracking KPIs
The more you know about your operations, the better prepared you are to continue growing and reach new goals. Keeping a KPI scorecard to track metrics helps you identify your strengths and weaknesses, streamline operations, and note any trends in marketing or processes.

Some benefits of KPI management include:

Finding growth areas: Find growth opportunities in your current processes by setting KPIs to improve strategies and processes. Examples include improving efficiency, speed, or safety in production or boosting customer satisfaction rates. Use this information to create supplemental training and improve equipment as needed.
Growing profits or customer base: It’s one thing to see an increase in store traffic or online visitors — it’s another to track quantifiable metrics for specific conversion rates, net sales, and profits versus losses. Tracking KPIs helps you see the raw data of your business’s growth.
Making smart marketing choices based on data and forecasting: Insight into your operations through KPIs gives you the knowledge to make smarter decisions and allocate efforts and resources to the most profitable and relevant areas. A series of financial KPIs can help you better divide your next quarter’s budget, while marketing KPIs can inform next quarter’s campaigns.
4 types of KPI metrics
Four common types of KPIs for companies and organizations are process, financial, customer, and marketing-based metrics.

Let’s break down the different types of KPI metrics you’ll want to measure:

1. Process
Process-based metrics are typically reserved for backend operations, such as manufacturing, shipping, production, content creation, and similar.

Process KPI examples include:

Decreasing the average time to complete a specific task, such as shipment turnaround times
Balancing accuracy with completion speed
Fine-tuning efficiency by reducing the number of defective products compared to overall products produced
Meeting industry-specific safety standards
Improving click-through rates (CTR) and time spent on your ecommerce store for online order fulfillment
2. Financial
Measuring financial KPIs gives better insight into quarterly and annual budgets, operating costs and business profits compared to losses. Many financial KPIs go hand in hand with process KPIs, like measuring profits and losses compared to production errors and product defects.