Measure performance and set targets

Key performance indicators (KPIs) help you measure business performance and assess how well your processes and activities are working. They link to your business strategy and track progress against specific targets. This helps you understand if you are on track to achieve your business goals.

Types of KPIs

Many types of KPIs exist, focusing on objectives like:

• increasing revenue
• reducing costs
• improving efficiency
• increasing customer satisfaction

Common KPI areas

Fundamental KPIs for most businesses typically fall under several key areas:

• sales - sales revenue, growth rate, customer loss, inventory turnover
• marketing - customer acquisition costs or retention rates
• finance - net income, profit margins, working capital
• human resources - employee turnover and training spend

Many other business metrics could be vital to improving company performance. Choose KPIs that align with your business strategy and focus on the areas that have the greatest impact on performance and growth.

Examples of KPIs for business performance

Common key performance indicators help you measure different areas of business performance. Examples include:

• average time to complete a task
• percentage of tasks overdue/completed on time
• cost of service delivery
• downtime and system availability
• customer complaints received
• volume of tasks per staff
• number errors or defects
• return on investment (ROI)
• profit margins and financial ratios
• revenue per employee
• employee satisfaction index
• order fulfilment time
• production output or yield
• customer satisfaction index
• customer acquisition cost

No single KPI is better than another. The key is to choose the right metrics for your business and goals. For example, a manufacturer may track production speed or error rates, while a service business may focus on customer satisfaction and service quality. Your KPIs should focus on areas you can control. For example, you cannot control interest rates, but you can manage how your business responds to them.

You can download our KPI assessment template (DOC, 18K) to help you evaluate the effectiveness of your KPIs. 

Importance of KPIs in business

KPIs help improve business performance by allowing you to:

• identify problems or opportunities early
• set targets for your business and staff 

Using KPIs helps you stay focused on your strategic goals and measure progress effectively. Find out how to  set business performance targets.

How to measure KPIs?

Once you have chosen the right KPIs, decide how to measure and track them. Break KPIs into smaller parts to make them easier to assess. Review them regularly to ensure they remain useful and accurate.

You can use management information systems and digital tools to track, analyse and report on KPI performance.