Key Performance Indicators & Metrics: 3 Things You Need To Know

„Data is the oil, some say the gold, of the 21st century — the raw material that our economies, societies and democracies are increasingly being built on“ (Tells, 2018). In my opinion this quote sums up perfectly the importance and valuableness of data. 

Worldwide, 2.5 trillion bytes of data are generated every day (Schadhauser, 2017). No wonder that it's becoming increasingly important to understand and analyze them correctly in order to improve a companies performance. But, what are KPIs and Metrics? And what’s the difference?

1) KPIS and its importance:  

Key Performance Indicators  are important to achieve key business objectives

„A Key Performance Indicator is a measurable value that demonstrates how effectively a company is achieving key business objectives“ (no author, no date). Sounds simple, but it's not. Far too often, companies blindly adopt the KPIs of others so that the outcome does not fit their own business and its goals. KPIS should be SMART (Specific, Measurable, Attainbale, Relevant, Time-bound) to achieve the overall business objectives. The key business objective and a KPI should be intimately connected to significantly improve performance. KPI example: sales revenue

2) Metrics and its importance: 

Metrics track the status of a business process

„A Business Metric is a quantifiable measure that is used to track and assess the status of a specific business process“ (no author, no date). Business metrics should adress the stakeholders of a firm and every area of a business has different performance metrics. 

Metric example: productivity

3) Difference between KPIs and Metrics: 

Difference between KPIs and Metrics

KPIs show your business how effective you are in terms of fulfilling business obejectives whereas Metrics track the status of companies processes (no author, no date). 

------------------

Concluding, KPIs and Metrics help us to not lose the overview in a world full of data and use them correctly to increase a companies performance. It is important that each company concentrates on its own business and selects the right KPIs and Metrics with regard to the formulated goals. 

What about your company? Which KPIs and Metrics do you use? Have you ever used "wrong" KPIS or Metrics? 

I look forward to your replies! 

Have a good time.

xoxo

Jay

References:

Tells, S. (2018) ‚Data ist he 21st century’s oil, says Siemens CEO Joe Kaeser’, The Economic Times. Available at: https://economictimes.indiatimes.com/magazines/panache/data-is-the-21st-centurys-oil-says-siemens-ceo-joe-kaeser/articleshow/64298125.cms(Accessed 19 October 2019).

Schadhauser, W. (2017) ‚Where did all the data come from?’, Storage Insider. Available at: https://www.storage-insider.de/wo-kommen-all-die-daten-her-a-608824/(Accessed 19 October 2019). 

No author (no date) 'What are Business Metrics?', Klipfolio. Available at: https://www.klipfolio.com/resources/articles/what-are-business-metrics (Accessed 19 October 2019).

No author (no date) 'What is a KPI?', Klipfolio. Available at: https://www.klipfolio.com/resources/articles/what-is-a-key-performance-indicator (Accessed 19 October 2019).

No author (no date) ‚Business metrics vs KPIs. What’s the difference?’, Klipfolio. Available at: https://www.klipfolio.com/blog/business-metrics-vs-kpis(Accessed 20 October 2019).

Images: 

Godfrey (2018) 'How to select the right KPIs for your marketing program'. Available at: https://www.godfrey.com/insights/analytics/select-the-right-kpis-for-your-program (Accessed 19 October 2019).

Klipfolio (no date) 'What is a KPI, Metric or Measure?'. Available at: https://www.klipfolio.com/blog/kpi-metric-measure (Accessed 19 October 2019).

Rabold, T. (2015) 'KPIs vs Metrics'. Available at: https://www.e-nor.com/blog/general/kpis-vs-metrics (Accessed 19 October 2019).