Constantly monitoring the performance of a company’s strategic actions is fundamental to its success. This monitoring allows managers to understand what is working and what is not, what needs to be adjusted and what should receive more investments.

These analyzes are based on numbers and these numbers determine whether the results are in accordance with the objectives outlined by the company.

What is KPI

The acronym KPI comes from the English Key Performance Indicator. It is a way of measuring the performance of a business or strategy. It has the function of analyzing whether an action is effectively meeting the proposed objectives, be it sales, launching a new product or service or a marketing campaign, for example.

There are several key indicators that can be measured, but it is essential to define with each team which are the most appropriate to monitor each strategy. The important thing to keep in mind is that KPI is all data that will help you understand the performance of a strategy.

A KPI can be a number or a percentage and, once defined, must be clearly shared with everyone involved, as they will guide decision making and the achievement of goals.

What is the difference between KPI and Metric

KPIs are not the same as metrics, but a metric can become a KPI. Although KPI originates from metrics, they differ from each other.

KPIs are essential indicators to guide the making of important decisions that will make the company achieve success. A metric is just something that can be measured. When a metric becomes a relevant factor for your strategy, it can be considered a KPI.

What are the KPI types

As we have already seen, there are several indicators that may be important for your strategy and are divided into 3 types:

Primary KPIs

They are the main ones for your objective and indicate if the adopted strategy is bringing results.

In the analysis of Inbound Marketing and Digital Marketing strategies some examples are:

• Leads
• Acquisition cost per Lead
• Traffic
• Conversion rate
• Revenue per purchase
• Total revenue

Secondary KPIs

Secondary indicators should reinforce primary ones and show how those results are being achieved. They make it possible to carry out a closer and more detailed follow-up. Here are some examples:

• Cost per visitor
• Newsletter subscribers
• Acquisition cost per lead at each stage of the funnel
• Traffic origin (organic, paid, social networks, direct, email, among others);
• Average price per transaction

Practical KPIs

These have the function of explaining the results pointed out by the primary KPIs and secondary KPIs. The marketing team needs to follow a slightly longer list of indicators, analyzing more detailed data on user behavior, acquisition and characteristics.

Some of them are:

• Pageviews
• Most read / visited content
• The reach of each publication
• Most searched keywords
• New vs. Old Visitors
• Social interactions

How to choose your KPIs for 2021

1. Define KPIs for each objective, area or strategy

The first step is to identify the objective for which you want to measure performance and what are the strategic questions for which your company needs answers. From there, define the KPIs needed to track each one.

2. Choose relevant KPIs

Define your KPIs based on your business, your product and your market, and decide which ones are really important to evaluate your company’s performance.

Your performance indicators need to help you make smart choices. They must be the basis for choosing the best path for your strategies.

3. Analyze the possibility of measurement

There is no point in defining a KPI that cannot yet be measured due to lack of data, such as the generation of Leads when you have not yet started generating them.

In addition, they must be measured from a numerical indication, never subjectively. Example: Instead of “improving the sales process”, define the indicator as “conversion rate to sales”.

4. Create a database

It is essential that the information is available and organized so that the company can make the necessary decisions with agility and assertiveness. Therefore, create a knowledge base with strategic information. They will be instrumental in choosing and monitoring KPIs.

Now that you know what KPIs are, it will be easier to define and manage the indicators that are geared to the needs and goals of your business.

Don’t forget that this is a constant job of analyzing, redefining goals and your KPIs.