What is KPI’s and why to define them

KPI or Key Performance Indicators are indicators which helps to demonstrate how effective is company in achieving the key business objectives. Do you know which one are best for you?

KPI is a performance measurement that helps organization track toward its stated objectives. A good KPI should help you and your team understand whether you’re taking the right path toward company’s goals. Well-defined KPIs must:

• Be well-defined and quantifiable.
• Be communicated throughout whole organization.
• Be crucial to achieving your goal.

The question is, how to choose the right KPIs, when there are thousands of them? Best way to find out is to do some research by yourself and understand which might be relevant for your company. Take a look into some chosen KPIs, the give you a better clue of which should be one that you look into closer.

Performance indicator examples & definitions

Financial metrics

Profit - profit is one of the most important performance indicators out there. It’s important to analyse both gross and net profit margin to better understand how successful your organization is at generating a high return.

Cost - measure cost effectiveness and find the best ways to reduce and manage your costs.

See also

Marketing department metrics

Ad click-through ratio (CTR) - measures the number of clicks advertisers receive on their ads per number of impressions.

Average response rates of campaigns – gives a percentage of whole campaign population who responded to campaign.

Brand awareness percentage – hard to measure, however its a percantage of people who recall your brand.

Brand consideration – people who didn’t buy your product but consider buying it

Brand credibility – brand’s reputation and it’s ability to convert that into sales

Contact rate - number of contacts effectively contacted / number of contacts in the target list

Cost per lead - cost per each validated lead that has been generated

Cost per mille (CPM) – cost pre 1000 impressions of your advert

Reach - the number of people who saw your ads at least once. Reach is different from impressions, which may include multiple views of your ads by the same people.

Impressions - the number of times your ads were displayed on screen.

Effective reach – differs from reach, calculates percentage of reach, which is making an impact on the viewer

Engagement - interaction would be any action that the user performs in relation to your brand or content

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