The ABC’s of KPI’s

For centuries, businesses have been operating with two Key Performance Indicators, or KPI’s. You probably know them well: A profit-and-loss statement and a balance sheet. Indeed, these two KPIs can provide meaningful information about your business.

Ah, but there’s so much more. With today’s free-flowing data, analytics capabilities, remarkable computing power and graphical user interfaces, KPI’s based solely on basic accounting just seem so last-century.

So just what is a KPI? Surprisingly, there are a lot of definitions.KPI

Here’s a hybrid compiled from Avinash Kaishik, KAIZEN Analytics and Bernard Marr:

KPI’s are an actionable scorecard that keeps your business strategy on track. They enable you to manage, control and achieve desired business results. They translate complex measures into a simple indicator that allows you to assess the current situation and act quickly. They provide immediate performance information to help you understand whether the organization is on track or not.

Building effective KPI’s isn’t as easy as it sounds. For example, it’s easy to say that you’d like sales to increase, but how will you do it? Will you shorten the sales cycle? Generate more leads? Get loyal customers to buy more? Create a new market for your product?

When you have these answers, you can build a KPI that reflects your goal. That might mean measuring keyword searches, unique visitors, traffic sources, bounce rates, or even integrating financial data to determine cost per sale, cost per lead, quote-to-close ratios and more.

On the marketing side, you might set up KPI’s to measure how your audience moves through a campaign from one step to the next. Or maybe you want to prove its effectiveness with an incremental sales KPI. Maybe you simply need to determine which keywords are performing the best. Or monitor ongoing open rates for email campaigns.

Some KPI’s (like traffic source, bounce rate and email open rate) are pretty standard and well-known. Others are highly custom and borderline exotic. The important thing is to narrow in on just a few (think about five or six, not 50 or 60), make them easily accessible through a dashboard and monitor them over time.

Remember, the whole point of KPI’s is action. That’s why they exist.

If you’d like more KPI ideas and inspiration, check out sites like and this post from Bernard Marr on LinkedIn. Then reach out to us for help in brainstorming, building and implementing the KPIs that can help your business thrive.

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