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Finding Your Metrics: KPI Examples

Key Performance Indicators (KPIs) provide a quantifiable metric by which a company is able to reliably gauge its success. KPIs offer a company something to shoot for: a way to achieve continuous improvement. Of course, just as every company is different, every company's leading KPIs may also be different. Which KPIs are most relevant to the organization depends on industry and the size of the business.

For startups, some of the most important types of key performance indicators include:

Customer churn rate. How quickly customers come and go. A high customer churn rate means that the company is having difficulty retaining customers.

Revenue growth rate. The higher the revenue growth rate, the better; many companies focus on revenue first.

Burn rate. How quickly is the business is running through its cash. A burn rate tells a company how much time it has before it needs another cash infusion.

Active users. Monthly and daily active users tend to be particularly important for startups and tech-based companies.

Together, these KPIs will give a startup information about how fast it's growing — as well as how long it will be solvent. These KPIs won't just show a company whether it's improving and growing, but it will form the foundation of the company's decision-making process.

Consider the following interactions between burn rate, revenue, and users:

If a company's burn rate is low, and revenue and growth rate is high, the company is likely to be moving in the right direction.

If a company's burning through its cash flow but is gaining large volumes of active users, it may be moving in the right direction, but it may need a cash infusion in order to continue.

If a company is burning through its cash flow and has a high customer churn rate, on the other hand, it may need to reconsider the direction that it's moving in.

While there can be an instinct to start tracking absolutely everything, it's important that KPIs be simple. Only a few KPIs should be emphasized by a company's strategies, because a simpler set of KPIs means a more focused and structured business. Of course, this also puts the emphasis on selecting the best KPIs, and tracking them as accurately as possible.

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Tracking Your Sales KPIs

General KPIs are used for board members and key stakeholders, but each department within a business will also have their own KPIs to track. Sales departments will usually be tracking primarily revenue and operations. A good KPI for sales should be measurable, accurate, and able to be influenced by the sales team.

A few of the most important sales KPIs include:

Average profit margins. An important revenue KPI, this indicates how much money the company is actually making on its products.

Quote to close ratios. This sales operations KPI indicates how successful sales departments are regarding following up and securing their leads.

Monthly sale numbers. This revenue KPI will indicate how many sales are actually being closed. While it may not give indications of how to improve, it will reveal the company's progress, for better or worse.

Average cash value of sales. This is another revenue KPI that can indicate how sales are being accomplished, and when combined with monthly sales numbers, can tell an important story.

These KPIs are the ones that are most important to the sales department. For instance, a sales department might see that their monthly sales numbers have risen, but the average cash value of their sales has gone down. That indicates that the department is getting conversions, but that they should be seeking to upsell on their sales. A sales suite may be used to automatically reveal the KPI meaning in sales reports, as many sales suites include analysis solutions.

Setting Employee KPIs

One important aspect to KPIs is that they can be customized and tracked on an individual basis. Key performance indicators for employees may reveal which employees are performing the best, and which employees may require additional training or resources. While KPIs don't always tell the complete story, they are an excellent way for a company to get a broad overview of employee performance.

To better manage employees, companies can:

Take a look at an employee KPI template excel sheet. Employee KPI templates can be customized for your business and will help you determine which KPIs are most important to track.

Look at KPI examples for admin staff. KPI examples for admin staff include sales volume, sales averages, and overall sales trends. If an employee has performed well in the past but is having difficulty recently, there may be an external reason.

Investigate how KPIs are trending over all employees. If all employees are suffering from reduced sales or reduced productivity, it's more likely to be an issue with the company culture or company business processes than it is to be an issue with the employee themselves.

Identify trends over departments and teams. Departments or managers could be an issue if employees in specific teams or departments are seeing their performance suffer. Likewise, if one department or team is doing much better than others, their processes or strategies may be adopted over the entirety of the business.

These KPIs can be used for a Key Performance Indicators Employee Evaluation, through which an employee's performance is discussed and explored with them. Often, employees may not realize that their work product has slipped, or they may need additional help and training. If an employee is doing particularly well, acknowledgment and rewards will be key to keeping their outcomes high.

Key Performance Indicators are extremely valuable methods of determining whether a company is operating successfully or not. By adopting the right KPI strategies, you can control the direction of your business and its employees moving forward. With the wrong KPIs, you may find your company chasing its own tail.