KPI stands for Key Performance Indicator. It is a measurable value that indicates how well a company achieves its goals over time. KPIs help teams set targets, track progress, and make informed decisions. They are essential across all business areas, including finance, human resources, marketing, and sales. By utilizing KPIs, companies can enhance their strategies effectively (Qlik, n.d.).

KPIs should utilize the REAN model, which comprises four key elements for assessing and strategizing marketing efforts: Reach, Engagement, Activation, and Nurture (Jackson, 2015).

1. Reach refers to the effectiveness of increasing brand awareness and attracting visitors to your website. This can be achieved through paid ads or marketing tools designed to grow your audience. To calculate your reach, divide impressions by frequency (Miro, n.d.).

2. Engagement indicates how customers interact with your brand. Key metrics include the number of clicks, conversion rates, and average session duration. A high engagement rate typically signifies effective marketing (Miro, n.d.).

3. Activation tracks customers’ actions on your website. Many teams focus on conversion metrics, such as the number of users who click on a call to action, to better understand the customer journey. This data helps improve customer relationships and enhances satisfaction (Miro, n.d.).

4. Nurture assesses whether visitors return to your website and engage with more content. The goal is to build a loyal audience that actively seeks out your products. Remarketing plays a significant role here, targeting users who have previously visited your site or made a purchase. Nurture can be tracked by analyzing how past customers interacted with your business (Miro, n.d.).

Specific examples of how KPIs are used include (Qlik, n.d.):

Sales-related KPIs:

Revenue generated, average deal size, conversion rate, customer acquisition cost 

Marketing-related KPIs:

Website traffic, click-through rate (CTR), social media engagement, lead generation 

Customer service-related KPIs: 

Customer satisfaction score (CSAT), Net Promoter Score (NPS), first contact resolution rate 

Operations-related KPIs: 

Inventory turnover rate, production cycle time, capacity utilization 

Human resources-related KPIs: 

Employee engagement score, employee turnover rate, training completion rate

KPIs are crucial for businesses as they measure success. These benchmarks enable organizations to monitor progress toward their goals, communicate effectively, and ensure alignment among all stakeholders. By employing KPIs, businesses can maintain focus, make informed decisions, and adapt quickly when necessary (Quantive, n.d.).

References

Jackson, S. (2015). Cult of Analytics (2nd ed.). Taylor & Francis. https://mbsdirect.vitalsource.com/books/9781317561880

Miro. (n.d.). Rean Model Framework Template: Miro. https://miro.com/. https://miro.com/templates/rean/

Qlik. (n.d.). What is a key performance indicator (KPI)? guide & examples. https://www.qlik.com/us/kpi#:~:text=Download%20eBook-,Why%20Are%20KPIs%20Important?,help%20managers%20move%20things%20along.

Quantive. (n.d.). What are Kpis? definition, examples, & importance. https://quantive.com/resources/articles/what-are-kpis

Sabharwal, G. (2024, September 19). KPI alignment: Drive performance with strategic goal setting. JOP. https://www.getjop.com/blog/kpi-alignment#:~:text=For%20KPIs%20to%20align%20effectively%2C%20they%20must,time%20frame%20to%20ensure%20deadlines%20are%20met.