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A KPI, Key Performance Indicator, is an outcome-based tracking mechanism that defines which results your Business As Usual is required to accomplish. Your Business As Usual is everything you need to do to maintain the status quo. Business As Usual typically consists of processes that you execute on an ongoing basis. A KPI, therefore, defines what your critical Business as Usual is (or should be) and enables you to easily monitor if it’s successful.
A KPI is an important instrument for every results driven organization. This article explains the components that make up a KPI. To learn more about how to get the most out of KPIs, check this article.
The components of a KPI
A KPI consists of the following elements:
- Current value
- Target or Threshold value
The metric is what makes the KPI measurable. Popular metrics for product and customer success teams are Net Promoter Score (NPS) and Monthly Active Users (MAU). Software-as-a-Service companies often look at Monthly Recurring Revenue (MRR) and Churn Rate.
It’s important, of course, that you are able to track the metrics that you’re using in your KPIs.
Current value & Target or Threshold value
The current value and target value require little explanation. The current value is simply the value that your metric has at any given point in time. The Target or Threshold value is the minimum or maximum value that you want that metric to have.
The title should consist of the Metric and the Target or Threshold value. Right above the title, you can then display the Current value, and that’s all the information someone needs to see what the KPI is and if the KPI is healthy or not.
Here is how the Perdoo Sales Team have set up their KPIs:
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Eager to get the most out of KPIs? This article explains how to ensure that you’re working on the right KPIs, and how to ensure that everyone in your organization understands them.