Defining Key Performance Indicators

KPIs, or key performance indicators, are a statistical way of measuring specific metrics to meet a company’s objective. These can include- but are not limited to- impressions, views, click-through-rate, conversion rate, net promoter score, and engagement rate. These metrics help businesses determine which elements in their marketing strategy are working and which areas need improvement. KPIs metrics can be classified by a timescale, a benchmark, a reason to be reported, and an established associated action in case a problem arises (Jackson, 2015). KPIs also provide each person in every department with a clear depiction of what the company’s goals are, where it is headed, and how their personal contributions align with the overall objective. Without properly established KPIs, confusion is bound to ensue. Employees may be working towards goals that don’t align with the company’s overall goals, resources such as time, money, and effort can be wasted by not targeting the appropriate audience, employees can become discouraged by what seems like a lack of payoff from their efforts, and important opportunities can be missed by overlooking new shifts or trends in the market. If KPIs are aligned with an organization’s business goals, these challenges are less likely to occur and the business will be more likely to succeed (Aligning…2024).

More specific benefits of well-aligned KPIs are the sense of clarity they provide to the members of an organization. All employees no matter their position benefit from understanding the targets to be measured, and this cohesiveness ensures that all working efforts align with the same goal. Another benefit is strengthening management’s ability to make important decisions. With clear metrics that depict exactly which elements are working and which aren’t, KPIs are able to provide distinct insight as to which adjustments need to be made in the strategy to ensure resources are being used appropriately and to their full potential. Higher employee involvement and motivation are also a benefit of well-aligned KPIs as they evoke a sense of purpose behind the work being performed. Having a common goal that directly correlates to their daily tasks creates intrinsic motivation that generally increases job satisfaction and productivity. Lastly, organizational goals are met quicker when KPIs are well-aligned due to all members of the company working towards a common goal. Having well-aligned KPIs accelerates progress rapidly, allowing a business to reach its goals more efficiently than if proper KPIs were not being measured (Aligning…2024).

To give an example of how KPIs could be used within a company, let’s assume a company establishes a digital marketing campaign with the goal of increasing online sales by 15% in one fiscal quarter. Employees will be working to reach this goal through the social media platforms Facebook, Instagram, and TikTok, and data from the website itself will need to be pulled as well. The KPIs that need to be measured for the social media platforms are the number of impressions, video views, post reach, follower count, audience growth rate, reactions, comments, shares, saves, average engagement rate, click-through rate, and conversion rate (Ali…2023). The KPIs that need to be measured for the website are the number of visitors, traffic source, conversion rate, bounce rate, click-through rate, customer lifetime value, average order value, cart abandonment rate, rate of return, time on site, and session duration (The most…2023). As you can see, multiple KPIs tie into one common goal of the company. Ensuring all employees are informed of this goal and on-task to complete the proper work aligning with these metrics is key to any business’s cohesiveness and success. 

Ali, A. (2023). 18 social media Kpis (and how to track them). Retrieved from https://www.semrush.com/blog/tracking-social-media-kpis/

Aligning Kpis with organisational goals. (2024). Retrieved from https://www.intrafocus.com/2023/10/aligning-kpis-with-organisational-goals/

Jackson, S. (2015). Cult of Analytics (2nd ed.). Taylor & Francis. https://mbsdirect.vitalsource.com/books/9781317561880

The most important ecommerce Kpis. (2023). Retrieved from https://stripe.com/resources/more/ecommerce-kpis