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KPI Examples For Management, Finance, Sales, Marketing and HR

written on 20-3-16-Mon 06:19
Home KPI KPI Examples For Management, Finance, Sales, Marketing and HR
How to Choose the Right KPIs?
Management KPIs 
Finance KPIs
Sales KPIs
Marketing KPIs
Human Resources KPIs
Final Thoughts

  The acronym KPI stands for key performance indicators and represents a measurement that evaluates the performance of the company's processes and all business activities towards their operational and strategic goals. Key performance indicators measure and monitor the success of a company from various performance aspects. They can observe both high-level, overall performances, or low-level processes that are managed by individuals. 

  Regardless of which department needs to measure success and track performances, KPIs are vital tools for making the right decisions, which will make your business successful. How to choose relevant KPIs? Are all KPIs good, or some may cause failure?

  With KPIs, managers will be able to evaluate the effectiveness of their and employees' actions, processes, and campaigns. For managers and leaders, KPIs are vital tools for tracking whether a company is moving towards organizational goals and for the right decision making. 

  With this article, you will be able to choose the right key performance indicators and have an insight into actionable data. When you monitor the crucial KPIs for your business, you will be able to obtain a comprehensive overview of your company's growth.

  KPIs are only useful if they are the right fit for your company, department, or platform you want to track progress for. Choosing the proper KPIs isn't quite so easy, but once you determine the right once, you will be able to manage a successful business, company, or organization. 

  You must always determine the most relevant and significant KPIs that are providing you the best insight into the performance and growth of the company.  

  In this article, you can find KPI examples that are most relevant to a particular department. But remember, choose only KPIs that are relevant for  your company or business goals!

kpi metrics

How to Choose the Right KPIs?

  For the right KPIs, it's the most important thing to choose them accordingly to your company's goals and objectives! If you aren't sure how to do that, take a pen and paper and write down what you want to accomplish. After that, think about what measures you could take to track that progress towards your goals. Key performance indicators should be able to provide you with a quantitative value that clearly shows you whether you're moving to your goals or your business is in the lag development. 

Management KPIs 

KPI examples

KPI: Customer Acquisition Cost

How much does it cost you to sign up a customer?

  Customer Acquisition Cost, with acronym CAC, is a vital KPI for managers, but it's also very important for your investors and the entire company. Customer Acquisition Cost includes all costs related to convincing a potential buyer to purchase a product or service and hence turn him into a customer. These expenses differ depending on your business industry and use. For example, an online marketer will add all expenses related to the campaign, while the SaaS business will include staff costs, marketing, and sales expenses. 

  If your business is based on the subscription model, it would probably be the best if you cover back the Customer Acquisition Cost within one year, or it will burn all your funds before you can even depend on monthly recurring revenues.

  You should set a solid goal and try to decrease your CAC steadily over time.

KPI: Customer Lifetime Value

How much money will you get from a customer in total?

  CLV is an estimation of all the profit that will originate from a customer. It would be best if you would state the customer lifetime value as a periodic earning, for example, for 6, 12, or 24 months. This is important because we never know how the relationship between buyer and company will last. You will need to extract the Customer Acquisition Cost of the total value of revenue you expect from a customer over the chosen period. 

  Customer Lifetime Value allows you to have an insight into how much money you can spend within CAC and still maintain a profit. 

  This KPI is important to track because the longer you keep your customers to pay you, the more revenue you will make. 

  If you want to run a successful business, it's crucial to increase your customer lifetime value over time, and that is why these metrics are vital for business management. 

KPI: Sales Target (Actual revenue vs. forecasted revenue)

Confirm that you are on track with your sales targets

  It's critical that you check whether you're on the right track towards your target, or maybe you are lagging behind. If you are lagging, what are the reasons for that lousy performance? Did you take all the complex factors into account when forecasting these sales targets? Answering these questions will help you determine what you can do to improve and identify outliers from trends, and it will help the management predict more accurately in the future. These answers will help you have a good insight into your team's processes and whether they are doing good if they need help, or you need to reform the whole strategy. 

  Your goal is to reach and excel in your sales target!

KPI: Operating Profit Margin Percentage

How efficient are you at generating profit per dollar of revenue made?

  This KPI is also known by the acronym EBIT, which stands for Earnings Before Interest and Tax, and represents the operating profit as a percentage of the total revenue. This KPI shows you how profitable your business approach is, and it tells you what's left from your income after you pay all the operational expenses. Still, it doesn't cover the interest you can earn from the company's investments nor the impacts of taxes. The EBIT also shows you how effective is the control over your operational processes. 

  Operating Profit Margin Percentage can be calculated by splitting the operating profit with the sales number. You should monitor this KPI constantly, so you can react as soon as you see the decreased performance, and identify the reasons behind it. EBIT is represented as a percentage of sales.

  When your operating income is high, your business is more profitable and more reliable for your potential investors.

Finance KPIs

KPI: Gross Profit Margin

How much revenue have you left after COGS (Costs of goods sold)?

  Gross Profit Margin applies for your total revenue minus the COGS, or services delivered and divided by your total sales revenue. This financial KPI implies the percent of total sales revenue left after deducting all expenses related to producing your products, and it represents the valuable measure of the production performance of your business. 

  Direct costs include the cost of materials and labor, but expenses like distribution and rent aren't included. Let's say your gross profit margin for the past year was 40%. You would have 40 cents out of each dollar of profit and put it towards running your business for expenses like administration, marketing, and rent. 

  How to know whether your performance is good or not? Naturally, if you manage to obtain a higher gross profit margin, the more revenue you retain from every dollar of your sales. 

KPI: Operating Expense Ratio

How do you optimize your operating costs?

  The Operating Expense Ration (OER) provides you with insight into the operational performance of your business by comparing operating expenses to your total profit. Operational expenses include all costs related to running the core operations of your company. Naturally, the lower your operating expenses are, the more revenue you will make. 

  There are customized KPI financial dashboards with whom you can deeply analyze and track your operating expenses. Dashboards are convenient when you're benchmarking your business versus other organizations. Make sure to survey other companies in the same field, because numbers can be very different depending on the nature of the industry.

  Possible investors always like to have an insight into operating ratio, so they can estimate how high your operational expenses are in relation to generated profit. 

  With Operating Expense Ratio, you should be able to track whether your company is scalable or not, over the given period. Can you boost sales without rising operating expenses?

KPI: Net Profit Margin

How good your company develops its net profit?

  This KPI measures your profit after deducting all operational costs, reductions, interest, and taxes divided by the total revenue. The math formula is net income x 100, divided by total revenue. This is one of the most measured KPIs in finance. It shows you how good is your company turning revenue into profit.

  The higher your net profit margin is, the better your company performs.

KPI: Working Capital

Is your company in steady financial health?

  Working capital is the amount of money you have left after you deduct all your current liabilities from current assets. Assets include accounts receivable, prepaid expenses, inventory, cash, etc. Thanks to assets, you can pay for continuous operational costs and fund your standard business operations. Liabilities include taxes owed, bank operating credit, accounts payable, etc. Current liabilities include all obligations and debts that are due within 12 months. 

  This KPI is vital in the process of financial reporting and analysis and represents the company's operational performance and short-term financial health. 

  If your working capital is high, that doesn't automatically imply an excellent performance. It often means that your business isn't investing the excess money. 

Sales KPIs

KPI: Sales Growth

Is your business growing steadily?

  By tracking the growth of your sales, you automatically follow the development of your company. Professional sales KPI dashboards are great tools for monitoring the performance of your sales representatives and their target industry. You should be flexible and analyze your sales key performance indicators frequently to bring more sales revenue and, therefore, more profit for your company. 

  If you have a positive sales development within a specific time frame, that means you're on the right track with your sales goals.

KPI: Sales Target

Are you on the right track with your sales targets?

  One of the most important priorities is whether you are on the right path towards your planned targets. Consider using an automated sales report because that way, you can answer many common but important questions, such as:

  • Is your actual revenue better or worse than forecasted revenue?
  • What are your current goals based on?
  • Is your baseline incorporated in your charts?

  Answers to these questions will help you foresee deal actions, results, and, in case deviations occur, you will be able to recognize outliers versus trends.

  Using this metric, you will have a more in-depth insight if your team is taking the right actions, do they need help, or maybe the strategy isn't good enough, and you'll have to adjust it or completely reform it to achieve your goals. 

  It's also vital for forecasting, and it lets you know if any other factors can influence your goal. 

  In a proper assessment of your actual revenue versus your forecasted revenue, the goal is to exceed your forecasted amount.

KPI: Customer Acquisition Cost

How much does your new customer cost?

  Customer acquisition cost, also known by acronym CAC, includes all expenses related to convincing a potential buyer to purchase a product or service and hence turn him into a customer. These expenses differ depending on your business industry and use. For example, an online marketer will add all expenses related to the campaign, while the SaaS business will include staff costs, marketing, and sales expenses. 

  If your business is based on the subscription model, it would probably be the best if you cover back the Customer Acquisition Cost within one year, or it will burn all your funds before you can even depend on monthly recurring revenues.

  You should set a solid goal and try to decrease your CAC steadily over time.

KPI: Average Revenue Per Unit (ARPU)

What is your average revenue per user?

  In ARPU, the unit refers to a user, account, or any other paying customer. The average revenue per unit indicates the average customer's income from all your trades from that one buyer. You can measure it by simply taking your total revenue per month and divide it by the total amount of customers you have. 

  Even though most of the people know this, it's still worth pointing it out, in case some of you don't know. If your ARPU is lower than the acquisition costs, you have a severe issue. Customer acquisition should always be lower comparing to ARPU, or else you aren't making any profit from your revenues.

  ARPU that is growing is a sign that you are on the right track, meaning you're developing a bigger customer network, or your buyers are purchasing more. 

Marketing KPIs

KPI: Cost Per Lead (CPL)

How much should you spend per lead?

  In CPL, word lead means a potential customer that interacted with your business thought your marketing actions. Cost per unit is one of the leading marketing KPIs that is necessary for effective marketing performance tracking and managing. 

  You can measure it by taking the total expense of a particular campaign and divide it by the number of leads generated. The quantity you get will help you determine where you should focus your marketing activities since you can compare the CPL with all other CPL values from different channels and campaigns. 

  If you compare CPL over time, you will see when your marketing strategies had the most effectiveness. 

KPI: Sales Target & Growth

Do you outperform your sales targets?

  This high-level marketing KPI is affected by the entire business strategy. All marketing activities directly influence your sales, and therefore your profit and business growth. That's why KPI Sales Target & Growth should be carefully monitored.

  By using a marketing dashboard, you will have full insight into all your marketing and sales data in one place to carefully track the effectiveness of performance and lead your business towards success. Comparing your results with previous months, you will know whether your current strategy is efficient, or there is something that needs to be adjusted. 

KPI: Return On Investment (ROI)

How efficiently are you spending your budget?

  The Return On Investment is crucial KPI in marketing, and it's often called the efficiency of an investment. How can you calculate this KPI? You should divide the profit (benefit of investment) by the total expenses of that particular investment and display this ration in %. Let's say you spent $8.000 for one marketing campaign, and you made $10.000 revenue from it. Your Return On Investment is 25%.

  ROI KPI is especially useful if your marketing activities are performed on online platforms. You can compare your results from different channels and campaigns and see where do you have the most efficiency, and on what platform you should focus your online marketing activities for more profit.

  If your Return On Investment % is high, that means you spent your marketing budget on the right marketing activities. With this KPI, you can see what marketing metrics are bad and which ones are better at performing and plan your strategy according to this.

KPI

KPI: Website-Traffic-To-Lead Ratio

How many of your website visitors convert?

  It's focused on the relation of the total number of website visitors that turned into leads (source of incomes). This marketing KPI is convenient if you want to determine the quality of the traffic on your website, especially if your website is your primary business tool, like SaaS or e-commerce businesses. 

  The Website-traffic-to-lead ratio is calculated by dividing the total amount of website visitors with the number of leads within a specific period. Let's say you had 100 000 visitors and you generated 5 000 leads, your conversion rate is 5%. Within this KPI, the target is to grow your conversion rate, but still be able to make the lowest expenses per lead.

  In case your conversion rate drops lower over time, mix this metric along with other marketing KPIs to identify possible issues. 

Human Resources KPIs

KPI: Absenteeism Rate

Evaluate the engagement of your employees

  With this KPI, you will be able to measure the average absenteeism rate as a percentage of the total working hours from all employees. This crucial human resources KPI is illustrating the employee's motivation and engagement towards the company.

  Monitoring, and eventually reducing, absenteeism rate is crucial because it will unavoidably affect the performance of your business as well as the profitability.  

 Compare the absenteeism rate in the past, and if it's higher than usual, you need to identify why that occurred and what you can do about it, so you can implement appropriate measures to overcome this issue. 

KPI: Overtime Hours

Monitor your employees' workload in detail

  Overtime hours may indicate many things, mostly positive. If this KPI is growing, it's most probably because of a temporary higher volume of work or orders. Overtime hours KPI can show you that your employees are more devoted to the job, and it can indicate the understaffed department that has a high workflow. 

  This key performance indicator can have an impact on other KPIs, like the absenteeism rate we mentioned above. If working hours get extremely high and lead to a permanent high workload, the motivation and satisfaction of your employees will drop, which will lead to absenteeism rate increasing.

  Carefully follow this KPI, and if there is the continual growth of overtime hours, there is a potential growth of a company, when it's resulting in missing orders or projects.

KPI: Training Costs

The best investment is in your employees

  When you want to measure how much you invested in new hires or upgrading the education of your employees, use this key performance indicator. It's a great metric if you want to follow the expenses related to your employees' development and make better decisions about future educations. 

  You shouldn't focus only on training new employees. Studies show that many people wish they had an opportunity to grow and develop their education and skills set for a particular position in the company they were already hired on. Investing in employees' skills is often less considered, but the return on training expenses is higher than the initial investment.  

  Try implementing knowledge and evaluating tests within your company, as this can help you see if the training provided was adequate.

KPI: Cost Per Hire

Evaluate what it takes to find the perfect fit

  Cost per hire is a pretty straightforward human resources key performance indicator that is measuring the value of all funds you invested for each new employee. Cost per hire includes all costs for recruiting, such as marketing, referral incentives, reviewing, selecting and conducting interviews, expenses for training a new employee, like costs of manager or trainer, materials needed, and so on. 

  It's crucial to invest in new talents that will bring more value to the work produced. After all, without the right employees, the job can't be done, and the company can't run properly.

  Review expenses per hire according to the recruitment source, and understand which is the most or least expensive.

Final Thoughts

  These are just examples of excellent KPIs for most popular departments, so you can have a deep understanding of how to determine, calculate, and review your KPIs. Always choose KPIs relevant to your business goals, and don't automatically adopt the ones we mentioned. Even if the KPI is good, if it's not aligned with your strategy and goal, it's useless.



























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