Aug 23, 2017
The Key Performance Indicator
Posted in Blog
What is a key performance indicator or KPI? It is a quantifiable indicator that can help determine the current status of an organization and help predict the condition of a company in the future. These indicators vary organization to organization as businesses are based in different fields. Some examples may be the following:
- Addition of new customers
- Sales numbers of a product
- Top selling product
- Top sales agent
These factors have a significant effect on a company’s development and will help point them in the right direction. What are other reasons why they are so important?
KPIs can be used as quantifiable tools to investigate goals. After a month concludes, the company will be able to use the KPIs to check how far off a company is away from their set goals. Another advantage this indicator enables is to view how well the sales team performed to meet the set goal. If they are performing less than adequate, the management will be able to notice and can take the proper action.
Learning and Improving
After thorough analysis and comparisons with KPIs, a company will be able to notice if consistent patterns are forming. Through these patterns, the organization will be able to become aware of faults within the company that need to be addressed. After fixing these problems the business will be able to improve themselves and also be able to set new goals as well as additional KPIs.
KPI data can prove to be especially useful during performance evaluations. Without KPIs an employee that may seem incapable and has undesirable characteristics, may actually be contributing and performing well. A poorly performing employee will not be able to justifiably defend themselves if the KPI data indicates their inadequate performance. Employers can also be responsible for setting unrealistic targets, another aspect of a business that KPIs can indicate.
Performing well is a great way to boost morale and obtain job satisfaction. Happy employees tend to be more productive and have a sense of importance within an organization. It can be very demoralizing if a certain target can be reached once or twice a year. Studies show that many supervisors are underutilizing their team. A well thought out KPI system can help improve this and keep the sales team on the right track.
KPIs vary when different organizations are considered. For retail businesses, a possible KPI could “be number of products” or “most popular product sold”. For the pharmaceutical industry, a potential KPI could be the most popular brand of medicine. Regardless of what industry and as helpful as they are, they are a bit difficult to set. For example, if a company wants to see improvement, how will they set the KPI? What would classify as improvement. Once these questions are answered the KPIs can be properly utilized. If these KPIs and other key sales performance measurements are considered, growth in an organization will be seen in no time at all.