You know you need them, but finding the right KPI for you or your business can be difficult. To make things a little easier, we have put together a resource that has KPI examples for all the departments in your organization, and even KPI examples by different industries. Scroll down to check it out, first though, we wanted to include a definition for KPIs just make sure we're all on the same page.
What does KPI stand for?
KPI stands for Key Performance Indicator. A KPI is a measurable value used by an organization to keep track of and determine progress on a specific business objective. KPIs allow organization's to evaluate how well they're performing, and if current behaviors should be continued or if a change of strategy is needed.
Scroll down to view the KPI examples, or you can view the individual pages for each category by clicking the links below.
Gross Profit Margin
Expresses your profits as a percentage of total sales revenues generated. This gives you a high level view of how much profit you're making. Although, it doesn't factor in all expenses so shouldn't be used for detailed decision making. It is however useful for bench-marking your performance over time, or comparing your profitability to another similar company.
Net Profit Margin
The percentage of revenue remaining after operating expenses, interest and taxes have been deducted from a company's total revenue. This gives a more accurate internal figure for understanding profit, but is less useful for comparisons outside of your company.
Monthly Recurring Revenue (MRR)
Monthly Recurring Revenue is a popular metric for SaaS companies such as ourselves. This metric looks only at the revenue you generate each month which will re-occur with little to no additional investment. For example any customer who signs up to a recurring monthly subscription to Cascade increases our MRR.
Return on Equity (ROE)
ROE measures your net income against each unit of shareholder equity. Return on equity ratio not only provides a measure of your organization’s profitability, but also its efficiency. Less useful for startups, but an important KPI for established organizations.
The Current Ratio KPI weights your assets. Assets such as accounts receivables, are weighted against your current liabilities, including accounts payable. This will help you understand the solvency of your business.
Revenue per FTE
Employee costs usually make up the bulk of a company's expenses. So, it's often useful to measure how much revenue you are actually generating for each employee in your company. This gives you an idea of whether you're making an appropriate amount of revenue for the size of your business.
Revenue per Customer
This is a quantifiable measure that gives you an idea of how much gross revenue you make per customer. How you calculate this will vary depending on the type of business. For us as a SaaS business, we look at the Life Time Value of a customer (LTV) based on what they pay in their subscription and how long a subscription typically lasts. If you were coffee shop you might instead look at the average spend in a visit.
Revenue Growth Rate
This KPI helps to ensure your business continues to grow at a target rate, measured by a percentage. Ideally you would measure this monthly or on a 12 month rolling average basis.
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The most obvious example of traffic would be website hits - but the same applies if you have a physical store-front too. How many people are walking past your store (or browsing your site) and therefore how many people have a chance to see your products and perhaps become leads. This is usually measured by combining a volume measurement with a time period - so your KPI might be 'Website visitors per day'.
Traffic to Lead Ratio
A logical extension of measuring traffic is to measure how much of that traffic actually converts into leads. You'll need to define what a 'lead' means to you - is it a free trial, or a conversation with a sales clerk? Typically you'd express this as a percentage such as '% of traffic which starts a free trial'.
Cost per Lead
Once you have traffic converting into leads, it's time to measure how much each of these leads is costing you (you'll then compare this number with one of your sales KPIs around value per sale). Depending on how you source your traffic, this might be easy or hard - online platforms such as Google AdWords give you a clear cost per lead - whereas inbound marketing campaigns are much harder to quantify.
This becomes more important as your organization grows, and is a great way to track any 'halo' effect from your marketing efforts. Brand recall measures how many people remember and correctly identify your brand after having seen it somewhere. In other words, how effective was/is your marketing at placing your brand at the forefront of your customers' minds. This is typically measured through a survey to people who have been exposed to your marketing efforts (such as attendees at a conference) - they're asked to identify your brand from a list of competing brands (who were not present) - the percentage that succeeds represents your brand recall (or awareness).
Net Promoter Score (NPS)
You could certainly argue that your NPS isn't really a marketing KPI. Your NPS measures how likely your customers would be to refer a friend or colleague to your product. However given existing customers are a crucial marketing channel for gaining new customers, we would be remiss to ignore it. NPS is calculated by asking customers on a scale of 1 to 10 how likely they would be to recommend your product. This is then converted to a scale between -100 and +100 to give your NPS. NPS is usually time-bound, so typically you would look at your NPS for the past 30 days, rather than the total from the beginning of time to ensure that the KPI remains relevant. We measure our NPS score at Cascade using a system called Delighted and then synchronize the data back to one of our marketing dashboards built in the Cascade Strategy solution.
Page Conversion Rate
When it comes to websites, everything is ultimately about conversions. Getting people to start a free trial, buy a product or whatever it is that you want them to do. You need to measure as a percentage, which of your pages is the most effective at getting people to complete that action. Once you understand this, you can start to figure out why it's so effective, and how to repeat that success on other parts of your website. Page conversion would be measured using a percentage of the total visitors to the page that ultimately goes on to convert.
Time On Site
If people are spending just a few seconds on your site before clicking the back button, it's likely that you're doing something wrong. They're certainly not converting if they end up heading back to the Google search results page within a few seconds of clicking on a link to your site. A good time on site will vary depending on the complexity of your product and the depth of your content. Making sure your content is filled with useful internal links is a great way to keep people engaged.
New User to Returning User Ratio
Every visit to your site is not equal. When you start diving into your conversion rates, you'll likely notice that returning users (people who've been to your site before) have a much higher conversion rate than new users. That's because they've made a conscious effort to return to your site and are clearly interested in what you're doing. Measuring and increasing this ratio is key to driving healthy site conversion rates.
NOTE: The examples of KPIs provided in this post are just that, examples - we don't recommend copying these exactly and plugging them into your own strategy. The best KPIs for your organization start with defining your business objectives and then designing KPIs that measure them. This list is perfect for those who have already defined their business objectives and are looking for some inspiration around ways to measure these objectives. We've organized the Key Performance Indicator examples by department and industry to help you find the KPIs you need.
Visualize your Marketing KPIs in our Free Marketing Strategy Template!
A simple count of the number of leads that your sales people are working on each month. Start by setting a target for the month (say 100 leads). Then break this down into the areas you want the leads to come from (outbound, inbound, free-trials, etc).
Qualified Opportunity Rate
So you've got leads coming in, but are they quality leads that can actually result in sales? Measure what percentage of your leads moved through your sales pipeline into a qualified stage. CRM systems like Pipedrive have this percentage built in to their reporting.
Opportunity to Win Ratio
The ultimate test of whether your opportunity pipeline is working - what percentage of all new opportunities ultimately turn into sales. You should measure this at an overall level for your sales team, but also by individual sales person as this is the acid-test of their performance.
Total Sales Volume
We'll keep things super simple to start - you need to be measuring the total volume in $ sold by your sales team on a minimum of a monthly basis. Ideally you'll set a constantly growing target, but don't forget to factor in seasonal changes such as around Christmas or the holidays.
Discounts Applied / Margin Retained
Selling is one thing, but it's easy if all your sales team is doing is applying heavy price discounts to get sales over the line. At the end of each month, take the total sales volume, and calculate it as a percentage of the total sales volume if all sales had been made at full price. Measure this regularly and ensure you're not on a trend that is driving higher and higher discounts just to hit the volume targets.
Sales Cycle Length
One of the things that hurts sales teams isn't so much the lack of sales, but rather that the sales cycles are simply too long. That makes targets hard to reach quickly, and gives you less room to course-correct if sales start to take a downturn. Use your CRM system to measure the average time between a lead becoming an opportunity, and when they close to become a sale - the shorter the better.
Average Retention Rate
This might look a little different depending on your business. Essentially we're looking to measure churn / retention after the sales cycle is completed. A low retention rate is often an indicator of problems in the sales process (in the worst case, it could even be due to misselling). Measure what percentage of your customers cancel each year / month (or whatever is most appropriate for your business).
Sales Cost to Sales Volume Ratio
The cost of making a sale is often higher than you think when you factor in lead costs, salaries, commissions, fixed building costs and more. Understanding your sales cost to sales volume ratio helps you make informed decisions about whether (and how) to grow your sales team efficiently. Measure the total cost of your sales efforts in a month vs the total sales volume generated in that month (or factor your sales cycle time into the formula for a more accurate view). Then convert that to a ratio and express it as a percentage.
Number of Support Tickets & Complaints
It’s important for customer service teams to measure the number of new issues/support tickets/complaints being generated every day, week, and month. This allows you to understand if these new issues correlate to any new business developments such as new product launch. If the number of new issues spikes up, you might need to investigate and resolve the root cause.
Customer Satisfaction Score
A customer service department needs to keep track of your customer satisfaction (CSAT) score. This customer service KPI measures the performance of your customer service department. You can achieve this by issuing a mini-survey to your customers after they have completed an experience with your service. You need to take it seriously and don’t rely on email feedback alone as your survey mechanism
First Contact Resolution (FCR)
FCR measures the percentage of support issues resolved by the customer service department upon first contact with a customer. For web chats or live calls, this means your agent resolved the issue before the customer ended the chat session or hung up the phone. FCR is calculated by dividing the number of issues resolved on first contact by the total number of customer contacts with the department. Issues are deemed “resolved” if the customer says they are resolved. As a result with this information, you can narrow down to issues that aren’t being resolved on the first contact and address the root cause.
Abandon Rate of Calls & Chats
Analyzing the abandon rate can help customer service departments decide what measures need to be taken to address the issue. Consequently, the CS department may agree ring-backs should be implemented where a customer has an option to request a call back after holding on to a queue. Additionally, abandon rates can help you optimize resources such as utilizing staff from other departments during peak hours.
Average Resolution Time
Great customer service is synonymous with timely resolution of issues. Therefore, if your department responds to customer queries faster, they will be happier with your services and will be more likely to stick around for long. If the department is unable to keep the resolution time low, it might be an indication that your team is understaffed.
Companies that make their customers wait on hold for long periods of time, will struggle to please their customers. This is actually a major cause of client resentment and dissatisfaction across the globe.
Average After Call Work Time
In most customer service departments, the work doesn’t end when a customer disengages the call. In many cases, agents will spend some more time informing colleagues about the call, sending emails and updating the database. Therefore, “after call work time” is the time a customer agent spends wrapping up a transaction at the end of customer call. Most managers will want to reduce this time so as to minimize the cost of interaction with a customer.
Training Investment per Employee
Whilst this is very much a lead indicator, you should closely monitor how much you're investing in training and development. If you invest too little, it's likely that you'll either (a) struggle to develop top talent internally or (b) have top talent leave to pursue training and development opportunities elsewhere. Again, it's hard to say what a good number is here, but at Cascade we're aiming for a spend of around $2,000 per employee per year on direct training and development.
Wait Time for Callers
Having to wait in queues for endless minutes can be quite frustrating. Therefore, organization's should ensure the average call wait time for support is within an acceptable range. Calculate this customer service KPI by dividing the total time customers wait in call queues by the total number of customer calls answered.
Project Delivery Time
This is one of the KPIs that IT teams often get measured on by the wider business: Did they deliver what they promised on time? It is relatively easy to measure if you are managing projects with timelines and clear targets (weekly, monthly, quarterly, yearly). Slight delays in any process in the organization are likely to cost you time in the end.
One thing is to deliver a project on time, but if it is riddled with issues and bugs, this means very little. Therefore, measuring the number of issues per project and as a whole, can help determine where there may be challenges when launching projects, and with time, this will improve the process and reduce friction.
Service Level Agreements (SLAs)
This is quite a specific way to measure and present both performance (time) and quality. The numbers are agreed and measured monthly or quarterly to identify if the agreed level of service is being delivered. Consequently SLAs often get a bad rap because they often show an IT team is not as good as hoped, but on the flipside, they can present transparency and set realistic expectations if used positively.
Measuring IT Budgets
This one is a pretty obvious one, but accurately measuring the budget and tracking it as a project progresses. This will put teams in a position to stay on target or address anomalies well ahead of over-spending.
A common approach from IT departments is to provide ‘chargebacks’ to other departments for rendered services. This demonstrates the value IT brings, but it is often met with resentment. By switching to ‘showback’ IT teams can measure and report the resources allocated to each department, maintaining the awareness. Measuring where resources are allocated can really help IT identify areas of weakness or stress.
Application And Service Of Total Cost
This metric helps to understand what it costs to deliver each IT offering. For example, how much do you spend on storage, networks, security, and which departments use these offerings the most. This can help uncover the ‘long-tail’ application run cost, while also aligning the expenses with business objectives.
Employee engagement and satisfaction
Although new and exciting projects are great, IT teams spend most of their day helping other employees and customers in the less sexy tasks (“I forgot my password again”). For that reason, it’s important to measure the level of engagement from employees and maintain focus on the overall strategy. You can measure this through surveys (eNPS - see HR KPIs).
This is almost a direct result of the level of engagement from the IT team. Highly engaged teams are more likely to come up with new initiatives and/or new ways of solving current challenges. Measuring internal initiatives will not only give you an indication of the level of engagement, but also readiness. As in the readiness to tackle unexpected turns in an agile environment.
Visualize your IT KPIs in our Free IT Strategy Template!
You've almost certainly heard of NPS, or Net Promoter Score. It's how we measure how likely a customer is to recommend our product or service to someone else. Well, eNPS is a simple but effective take on the same principle. Simply modify the question to suit employees, and measure it in the same way as described here.
High rates of absenteeism can be indicative of major problems with your culture. Whilst individual employees may have legitimate reasons for absence, you need to closely monitor the blended overall trend of absenteeism. This is especially so as your organization grows. The formula is (Total lost workdays due to absence) / (Number of available workdays) = (Absenteeism rate).
Turnover Rate of High Performers
Culture is important for everyone in the organization. High-performers are arguably the most sensitive to whether or not your culture is effective. That's because they tend to have a plethora of employment options, and can look beyond hygiene factors such as money alone. If your top performers are leaving, either you're not paying enough, OR you have a major problem with your organizational culture.
Internal to External Hiring Ratio
Hiring internally is almost always preferable to hiring externally. It's more cost-effective, a great way to retain talent and inspires others to build their careers at your organization. It's also reflective of the effectiveness of your training programs and talent management capabilities. Simply measure, of the hires in the last 12 months (rolling), what was the ratio of (internal hires: external hires).
% of 'Cherish & Retain' Employees
If you're using a performance management platform, you'll be measuring employee performance but also their future potential for the organization. One of the most useful tools here is the 9-Box Talent Grid. This grid helps you measure those two dimensions of employee success in a fair and consistent way. Implement the 9-Box Talent Grid, and measure how many employees fall into the 'Cherish & Retain' group each year.
Training Investment per Employee
Whilst this is very much a lead indicator, you should closely monitor how much you're investing in training and development. If you invest too little, it's likely you'll either (a) struggle to develop top talent internally or (b) have top talent leave to pursue training and development opportunities elsewhere. Again, it's hard to say what a good number is here. Personally though, at Cascade we're aiming to spend of around $2,000 per employee per year on direct training and development.
Revenue per Employee
This is a stat that almost all of the investors I've spoken to have said is important when they look at which companies to invest in. Whilst not a precise science, the revenue per employee (total revenue / total employees) is a good indicator of how efficient your overall organization is. Payroll is usually the biggest cost on the P&L. Organizations with a low revenue per employee rate don't tend to survive long. The key is to benchmark within your industry, as there is no 'right' answer for what this should look like overall.
3-Month Failure Rate
Most organizations have probation periods in their contracts with employees. But this doesn't protect you from the damage that a bad hire can cause. The amount of wasted money, time and energy that goes into bad hires (who don't make it through their probation) is a huge driver of overall efficiency. Measure how many employees failed before the 3-month mark, and try to manage this to be as low as possible.
Visualize your HR KPI's in our Free HR Strategy Template!
Number of Reported Accidents & Incidents
This ‘lagging indicator’ is a pretty obvious one, but it really gives a high-level benchmark to the organization in terms of knowing if safety is improving or worsening. In addition to monitoring the number of accidents/incidents, you'll probably also want to convert this number to a ratio per employee - i.e. 0.001 accidents per employee. Keep an extra close eye on this Health & Safety KPI during times of change - new processes, new machines, etc.
Lost Time Injury Frequency Rate
This refers to the number of lost time injuries that happen per million hours worked. So a 'LTIFR' of 8, would mean that 8 lost time injuries take place every million hours worked. To work out the LTIFR you multiply the number of lost time injuries by 1,000,000 then divide that number by the total number of hours worked in an organization. So if you have 8 lost time injuries and 3 million hours worked, your LTIFR is 2.6.
Lost Time Injury Incidence Rate
This measures the events that occur over a standard period of time by a standard number of people. So if we want to calculate the 'LTIIR' (Lost Time Injury Incidence Rate) for 1,000 people, we multiply the number of incidents by 100, then divide it by the number of people. So let’s say we have 3 incidents. 3 x 100 = 300. Divide that by the number of people and we get a LTIIR of 0.3. So for every 100 people, an organization would have a 0.3 LTIs.
Employee Perception of Management Commitment
This KPI for Health and Safety is usually measured through regular surveys. These allow an organization to understand if employees feel that what they do on a daily basis and the management objectives are on the same path. People tend to follow procedures and instructions better if they see a connection in what they do and ‘the big picture’. It’s a little like running an NPS for employees.
Average Overtime Hours Per Person
This average is a great KPI to help measure the average time worked by someone beyond their normal working hours. The idea is that if you keep this number low, it can mean that an organization is successfully managing workload and reducing the chance of fatigue in the workplace. You do want to be careful with this KPI, as it is not applicable to all types of organizations and the definition of ‘overtime’ will vary per organization.
Monthly Health and Safety Prevention Costs
This is the expenditure that will be aimed at minimizing health and safety hazards within an organization. It will include training, inspections and audits that will be aimed at offering conducive and safe working conditions.
Productive Days %
This is a nice twist on the more negative approach of measuring sick days and time off due to accidents. It flips those KPIs into a more positive approach of celebrating the number of days of productive work that were successfully delivered. You can do this by using productive days as a percentage of the total available working time. For example, if your organization had 10 employees and there were only 5 days lost due to health and safety issues, your Productive Days % would be 99.86% ((3645 days / 3650 available days) x 100 = 99.86%).
% of Management Trained in Health & Safety
This simple leading indicator will help you avoid many of the accidents and incidents that might otherwise occur. It also helps you to understand the effectiveness of your training programs. It's up to you to define what that health and safety looks like. But, once you have, it's as simple as measuring how many managers have undergone it and expressing as a percentage. You can do the same thing for all employees if you want to.
Visualize your Health & Safety KPIs in our Free Health & Safety Strategy Template!
Sales Per Square Foot
Retail business owners with a physical sales area put in a lot of effort into product presentation. This can influence the customer’s purchase decision, which is why it is a good idea to track sales per square foot. You can calculate this by dividing your net sales by the sales space. This will give you a clear idea of how much it costs to maintain your retail space and the amount of revenue that space generates.
KPI Example: Increase sales per square foot by 20% by 31/08/2019
Every customer that steps through your door or hits your site costs some money and has the potential to contribute to your revenue. It is important to keep track of how many visits convert to sales. You can determine this by dividing the total number of sales by the number of visitors. This gives you an insight into the efficacy of your sales process.
KPI Example: Increase conversion rate to 5% by 30/06/2019
These are the key performance indicators under the Sales category. If you keep track of actual sales, you know how much revenue is flowing in and can make business decisions accordingly.
This tracks how many people walk into your store. Foot traffic also helps you determine if particular locations, ad campaigns, or products are successful. For example, if you open a branch in a different location and don’t get as much traffic as other locations do, it might not be the best place for your business. Foot traffic provides a lot of information regarding customer behavior and response. This article does a great job of walking you through foot traffic and the various ways to measure it.
KPI Example: Increase daily foot traffic to 150 by 31/03/2019
This metric correlates with retention since the level of service and/or quality of goods sold will have a direct effect on retention and foot traffic. This can be measured with NPS score and/or regular surveys delivered to the customers after the transaction (we've covered NPS in this article). You can also look at your website analytics to gain a good insight into customer behavior. You can track things like bounce rates, dwell times, and other similar factors on the platform.
NPS example: On a scale of 0 to 10, how likely is it that you would recommend our company, product, or service to a friend or colleague?
KPI Example: Increase NPS by 15 by 30/09/2019
You can determine inventory turnover by using this formula – the cost of goods sold/average inventory. This will give you a clear idea of how much stock is used up in a given period. If this figure is too low, you’re not selling enough of the inventory and are at risk of overstocking or deadstock. If this figure is too high, you may be selling out because you aren’t stocking enough product.
KPI Example: Decrease inventory turnover by 5 days by 31/12/2019
When you divide the number of units sold by the starting inventory and multiply that by 100, you get the sell-through percentage. This gives you an indication of how much of your inventory is being sold compared to how much you purchased. It will also help you understand which products are performing well and which ones may need further consideration.
KPI Example: Increase the sell-through rate by 15% by 30/06/2019
Year Over Year Growth
Business owners want sustained growth over time. They want their venture to bring in more customers and increased revenue each year. Comparing the current year’s performance with the previous year’s records can help provide some insight. If you see a downward trend in growth, you may need some remedial action to put the business back on the right track.
KPI example: Increase year over year growth by 10% by 31/10/2020
Gross and Net Profit
Gross profit tells a business owner how much money they’ve earned after deducting product creation and sales costs. Net profit is the profit earned after all business expenses are accounted for. Both of them provide insight into your expenses and earnings. The data from these metrics can help you channel your resources, plan cost cuts, and introduce business strategies accordingly.
KPI example: Increase net profit by 16% by 31/12/2019
Visualize your Retail KPIs in our Free Retail Strategy Template!