KPI: what is it and what is it for? Learn how to measure your results

Despite being a very popular term in certain market sectors – such as advertising and marketing, for example – the term KPI can still raise many doubts for those who are not so familiar with the subject.

What is KPI?

The acronym, which comes from the English Key Performance Indicator – or Key Performance Indicator, in Portuguese – are the main indicators used to measure and monitor a company's progress and results.

This information is extremely important for the functioning of a company. With it, it is possible to determine whether the company – or even a department or sector – is achieving the proposed objectives or not.

In this way, it is possible to outline new routes and strategies aimed at improving this performance and, consequently, the results achieved in the company.

How do KPIs work?

KPIs play a fundamental role in the future of any company. It is through this set of indicators that serve – or measure – the performance of an organization in its areas of activity.

It is up to the company to select the indicators that make the most sense – and are most important – for managing the work routine.

It is also important to keep these indicators up to date. This way, it is easier to monitor their updates and how each one of them develops.

This will also make information and results flow more easily and objectively between the company's sectors.

A very simple and easy-to-understand model: the rating that customers give to an employee's service after a specific service. When given, this rating becomes an indicator of the service provided.

This evaluation is recorded in the system – with the score and feedback given by the customer. This satisfaction score is visible to all responsible departments. They will make the best decision to deal with the situation.

What are the main categories of KPIs present in the market?

As you can see, there are many possibilities involving KPIs. But how do you decide which ones are most fundamental for successfully managing your business?

With this in mind, we have listed some of the main categories of KPIs present on the market.

Capacity indicators

It is the indicator that represents the quantity that a given product can be produced and the time that such production can take.

An example of this indicator is the quantity of products that a given machine can make in a period of time.

Strategic indicators

Regardless of the sector of activity, drawing up good strategies is essential to achieving success.

Through strategic indicators, it is possible to monitor the company's progress in relation to the goals that were previously defined.

This allows you to create a comparison between the situation the company is currently facing and what the expected result would be at that time.

Productivity indicators

As the name suggests, the main objective of these indicators is to evaluate the performance of the company/sector and the efficiency of the processes carried out by it.

In general, it is a way of measuring the amount of resources that a given company/sector uses to generate the product and/or service it is designed to make.

Quality indicators

In this aspect, quality indicators can be used when measuring customers' perception of your company.

Through it, the company can access the level of satisfaction that customers have in relation to the products and/or services and/or customer service provided by the brand.

A quick example is the rating a customer gives for an employee's service.

How to use KPIs?

KPIs are extremely necessary for the management and good performance of a company.

Therefore, it is essential that responsible managers know how to properly assess the main indicators for the company's success and how each of them can be adopted in the corporate routine.

However, before defining the KPIs that will be adopted, it is necessary to define the objectives you want to achieve. Only then will it be possible to define the metrics and indicators that will be used to measure the results.

The advantages of defining KPIs

This is a special topic for those who are still wondering what the advantages of using KPIs are in managing a company. Therefore, we have listed some items that clearly express the importance of this tool.

A clearer vision

One of the main benefits of using this tool is the possibility of having a broader view of how the company is functioning and developing. Through the indicators, decision-making will also be easier.

Efficiency

Through KPIs, the company tends to discover its potential, helping to ensure greater efficiency in processes – from the production area to the optimization of performance reports, for example.

Greater knowledge about the aspects involving the company

Defining KPIs is an excellent way to learn more about some essential aspects of the company, such as identifying the company's strengths and weaknesses, for example.

Conclusion

As you can see, KPIs are excellent tools for managing a business. But before adopting them, you need to have clear objectives. Only then will you be able to define which metrics will best help you achieve your goals.

It is also important to highlight that each type of business may require a different KPI, meaning that a metric that works in a certain company may not be useful in another in the same segment.

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Nathalia Silva

Journalist, writer, and lover of words.

December 3, 2021

Business