What are Key Performance Indicators (KPIs)?
“Key Performance Indicators” are indicators that quantify the overall long-term performance of a company.
More precisely, KPIs help determine the goals, or financial, strategic and operational results of a company, comparing these values with those of other companies in the same industry.
Also referred to as Key Success Indicators – KSI (Key Success Indicators), KPIs vary not only between companies, but also between industries depending on the criteria that are requested.
For example, a software development company might detect the revenues obtained year after year as the best index of personal or industry growth.
Differently, a medium or large retail chain might attribute greater value to the sales of individual stores as the best value to take into account for the KPI metric.
It is now clear that at the heart of KPIs are the collection, storage, processing and synthesis of data that can be financial or non-financial in nature and that can concern any sector of the company.
The primary objective of KPIs is to communicate the results in a clear, simple and concise way to allow management to make more informed strategic decisions.
But let’s look in more depth at how these parameters work, how to use them best and above all the various most widespread types especially in the marketing field.
The main categories of KPI (Key Performance Indicators)
As already mentioned, there are different types of KPI, but most of them fall into four main categories, each with its own characteristics, times and end users:
Strategic KPIs
Strategic KPIs are the highest level performance indicators that can provide the most tangible benefits in both the short and long term.
This type of KPI can indicate how a company is doing based, precisely, on the study of the strategies adopted by various companies in various sectors.
It is not just an analysis based on instantaneous results, but it is a real study of the best marketing strategies that the company can adopt in the individual chronological periods outlined over time.
After all, the sales results of a product or service will be high or low only based on how the company manages to sell. Finding the right way to sell will increase profits, while selling badly, and in an uninformed manner, can only cause damage that is gradually irreparable.
Operational KPIs
Operational KPIs are those performance indicators that focus on a much shorter period of time.
These specific KPIs measure how a company is doing month after month (in some cases even day after day) by analyzing: internal processes, market segment and/or geographic position of influence of the company.
An example of an operational KPI could be the company’s turnover, a parameter that must not only alarm the management, but also carry out an in-depth investigation into which products/services require a new marketing strategy, or sales.
Functional KPIs
Functional KPIs, unlike the previous ones, focus mainly on specific departments or functions within a company.
For example, the marketing department that measures how many interactions a specific email sent to the company mailing list receives. This type of parameter gives us valuable data not only on the department, but also on specific actions it carries out on a daily basis or in particular cases.
The so-called leading KPIs, unlike the previous ones, describe the very nature of the analyzed data by providing real interpretation keys. It is useless to have precious data if you are not able to decipher them in the correct way.
KPI Marketing
Marketing KPIs are those indicators structured to better understand how effective both marketing and promotional campaigns have been.
These metrics are often used to measure conversation rates, or the frequency with which potential customers perform certain actions in response to certain marketing actions, such as sending promotional emails.
Here are some examples of Marketing KPIs:
Website Traffic
This KPI is used to track the number of people who visit certain pages of a company’s website.
Thanks to web traffic, it is easier to understand whether online traffic is being pushed to the right sales channels or if customers are not being channeled correctly.
Social Media Traffic
This KPI tracks everything related to Social Networks.
Followers, Views, Likes, Shares, Interaction, etc. are just some of the interactions that can be measured by this indicator, thanks to which it is possible to understand what the public appreciates the most.
Conversion Rate
This KPI indicates precisely how many conversions, or sales, a given marketing campaign was able to generate.
Always taking the example of the newsletter, it will be enough to compare the number of emails sent with the number of sales generated by the emails thanks to interaction tracking systems.
Click Through Rate
This KPI measures the number of specific clicks performed by various users on certain marketing campaigns and especially on their choices.
For example, some programs can track how many customers have opened a certain link on a page of a site or in an email.
Using this parameter it will be possible to understand how much an interaction has had an effect on the end users.
This works almost in the same way as the Conversion Rate, that is, it is almost always based on comparing two or more parameters.
Conclusions
KPIs are powerful tools that can drive an impressive number of new potential customers to your business by reworking your marketing strategies.
However, like any marketing tool, it requires precise and structured data analysis in order to guarantee functional solutions.
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