KPI: Key Performance Indicators ??

It refers to quantifying the measures to success or expected outcomes on the basis of.

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Every company wants to know,

• Their overall Progress towards the goals

• How they are performing

• How their product is engaging with the customers

• How users are interacting with their product

• How much it is creating values among the consumers

ALL IN ONE SOLUTION: KPI [Key Performance Indicators]

“KPI is a quantifiable measure of progress or performance over time for a specific objective of the business.”

First of all let me clarify the most common myths and confusions between KPI and Metrics before we dive in further for better understanding of KPI. The KPI and Metrics both are performance tracking tools However many people are not able to figure out the difference between KPI and Metric.

Key Difference

1. KPI: Represents the progress or performance of the overall objective/goals.

   Metrics: Represents the progress or performance of specific business activities.

2. KPI: It serves from the business perspectives.

   Metrics: Majorly serves to the department level only.

3. KPI: Used to make Strategic decisions.

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   Metrics: Used to make Tactical/Operational decisions.

“Let’s categorize the difference between both of them more deeper,

Let’s understand with an example if our main goal is to increase sales growth by 30%. Here the big goal is to increase the sales growth by 30% at the end of year relates to the various departments like Sales, Marketing, Management. Which is called as KPI However it depends on the various activities to be performed at each department and how they are meeting their expectations and the components to measure this is called as Metrics.”

“One liners for the distinguish difference between KPI & Metrics:

• Sales Growth for certain period is an example of KPI.

• Customer retention ratio is an example of Metric which is being followed to meet the big goal as it is eventually translates into an increase in sales.”

WHY KPI is important ????

• To take a crucial business decisions.

• To measure the progress and performance of the business goals.

• Identifying Anomalies

• Monitoring business growth

• Adjusting strategies and actions based on circumstances.

How A KPIs should be:

• Select one or two measures which aligns with your core objectives.

• Your measures needs to be quantifiable, easy to understand and ensuring if they can deliver the right statistics to define progress towards goals.

• Assigning an individual to each KPIs to collect the required data and information to analyze.

When KPIs Turn into Vanity Metrics

Before moving further let’s understand what is Vanity Metrics. Vanity metric is a statistics which doesn’t tell you much about how your business performance is going.

• Having lots of followers on the social media doesn’t mean they are really buying and using your product and services.

• Number of vehicles sold in a year doesn’t show the insights about the Traffic jam in certain areas.

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  Number of signed up may not the active users or consumers.

• When someone is surfing on the internet about loans, it will not help you to come on the conclusion about the financial status of the individual.

• Most searched product on Amazon may not be a Most Sold product.

So choosing incorrect KPIs is running like this donkey where you are gaining and tracking the statistics however it is not fulfilling your objective have projected.

Few more examples of Vanity Metrics are,

• Page views of Raw Pages.

• Total Downloads of application.

• Total number of Ad Impressions

Questions to ask yourself while defining KPIs

• What’s your Projected outcome?

• Why this outcome is needed?

• How are you going to measure the progress and performance?

• How you can influence the outcome ?

• Who will be accountable for the specific KPI?

• What is the definition of you have achieved your goal?

• How often you will review your KPIs and take do actionable things.

Read full article here : https://basecamp.com/articles/which-kpi-is-most-likely-to-be-a-vanity-metric

Thank you for sharing this wonderful article & inspiring me Shravan Tickoo

Thank you for reading this article. Your Feedback / suggestions / Comments are always appreciated.

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Category: WHICH