Key Performance Indicator
[noun]
What is a key performance indicator or kpi metrics’ meaning?
A ‘key performance indicator’, or KPI, is the go-to tool companies and industry players such as digital agencies would use to gauge or compare performance in terms of achieving operational and strategic goals across all available touch-points.
How to measure KPIs?
As part of data-driven informed approach, marketers rely on KPI analysis and key metrics as a form of quantitative type of data assessment to measure productivity, success and growth by different numbers and within different sectors/departments/aspects that are part of a business. More specifically, through both key performance indicators and kpi metrics a business can map and capture the status of specific performance in terms of reach and achieved goals. This facilitates the ability to clearly identify targets and then demonstrate the success of a company online and offline – all via a series of measurable values that would ensure consistent mapping of progress of each channel against previously established objectives, past performance metrics, norms and timelines.
KPI vs Key Metrics
Key Performance Indicator
KPI’s offer a quantifiable type of measurement that allows the ability to target critical areas of performance. By setting up clear goals since the very beginning of a growth process followed by periodic key performance analytics moments, it is possible to evaluate the success of an organization in meeting specific objectives tied to performance management. Moreover, monitoring KPI’s also verifies if companies are progressing towards the right direction and at the right speed, planning for back-up solutions in case they are not.
Key Metrics
Key metrics (or business metrics) are performance measuring tools that offer an accurate picture of the status of things based on a series of pre-set parameters (the KPI’s). Working in tandem with KPI’s key metrics help track all areas of a business, which by its value gives a measure of health and performance of a whole organization or of a specific department within it, and therefore allow to plan a strategic way forward.
However, even though key performance measures are a quite common practice within many business organizations, digital agencies and a ‘key’ factor in analytics consulting, they would still tend to be ‘generalized’ by most 3rd Party Contractors and marketers. Additionally, when evaluating a social media agency performance management partner, channel attribution is key. For example meta is always going to take credit for a sale regardless, if the final transaction was actually driven an email marketing campaign, or SMS promotional notification, in the event that meta’s algorithm cross associates engagement with that user. That’s why attribution tools that normalize the consumer digital journey is critical to evaluating KPI’s such as conversion metrics, Add to Carts or even email subscribe campaigns within the ever shifting algorithms of meta, Google and TikTok. Despite being one of the most ‘talked about’ acronyms for digital and traditional business alike, the actual full scope and potential of KPI analysis is often left untapped.
Types of key performance indicators
Its important to be metrics-driven to evaluate any successful marketing campaign. We know that choosing the right KPI or KPI’s relies upon a detailed understanding of both business processes and what is important to the organization we are supporting achieving their full growth. And we know that adopting generic and industry-recognized KPIs might be quicker, but it is also potentially ineffective as it often leads to a substantial mismatch between the KPI metrics and the specifics of the businesses they are applied to. We are also aware that the role and meaning of KPI’s and key/business metrics is often quite blurry and sometimes the two terms are used to say the same thing, even though KPIs actually refer to business objectives and parameters, while metrics focus more on the results achieved towards meeting and exceeding said goals.
How to define KPIs
KPI’s are not fixed and actually vary between companies and industries, depending on priorities and performance criteria; and they might also differ between companies and industries, depending on priorities, performance criteria, business size or teams. Moreover, the type of business and its size would influence the professional roles involved in the identification, analytics and management of KPI’s with the consequence differentiation between the types of key performance indicators: when the focus is on the overall performance of a business from a senior manager or CEO perspective, the KPI of choice would be of the high-level type, whereas when there is a much more targeted type of attention i.e. on the processes within certain departments (marketing, sales, data collection,…) we would track more granular level KPIs in order to attract larger TOF – top of funnel traction.
Zoom In: KPI Example
In this mock-up scenario we would have a metric of traffic to a website, of which a conversion metric is typically defined as orders divided by traffic. However, if your business sells a service that relies upon a call center, then the KPI becomes a metric defined by the number of telephone calls that call center receives from the traffic garnered to its website, which might happen in say a lead driven teen mental healthcare business. But then it goes a level deeper, what happens if that call generated did not result in a ‘conversion’? Now there is a new KPI that has materialized between the call center representative who answered the call, what transpired and what may or may not have contributed to the conversion and booking of that service…
The world of KPIs might be not-so-immediate to navigate or track, but identifying, pre-setting and measuring key performance indicators deriving key metrics as a result is an option available within all types of business activity: from marketing to social media, from campaigns to sales all would have quantifiable metrics available and hence would offer solid KPI analytics opportunities.
Based on the results captured during our Discovery Phase, we would for instance always advise our clients on which types of key performance indicators to focus upon, supporting them in choosing the more strategic metrics that would allow their business to evolve, be better, thrive for more, and be differentiated in its model and offering to that of their direct competitors. The performance management strategies we would initiate are centered around ‘our measures of success’, these are in essence KPI’s that typically relate to revenue, audience behavior (marketing) and omnichannel objectives.
Through key performance indicators and KPI analysis we would capture the quality of the work and progress that comes as a direct consequence of our 3rd Party Support to clients. Hence, when we refer to our ‘metrics’ driven approach, we are referring to the components of data consulting by which we’ll define our client’s success, and then the consistent analytical reporting that measures performance against these metric benchmarks and goals.
It is all a work-in-progress for sure, but one thing is for certain in data consulting, that if an organization is growing, KPI’s consistently shift. neta’s adaptive business logic and data excavation is what allows us to continue to understand what has the greatest impact on company performance and ROI, and what instead does not really work.
