How Do You Create Key Performance Indicators?


Quick Answer

Creating key performance indicators, or KPIs, requires connecting business goals to measurable results. Start by considering the desired end goals and the quantifiable actions that are involved in achieving them. For example, growing a business can be measured with new sales as a KPI. Determine what the number for that KPI needs to be to consider the goal to have been achieved. Create a timeline for achieving each goal based on where the KPI should be at certain milestones.

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Full Answer

Key performance indicators can be almost any measurable metric; however, the most effective ones are those that clearly represent progress towards a given goal. The best way to accomplish this is to always start by examining the problem or objective and determining the KPIs from there.

In many cases goals are best-represented using a collection of KPIs as a scorecard. For example, although increasing revenues can be represented by new sales, measuring leads may also be helpful. For an online business, measuring click-through and bounce rates is frequently useful.

The frequency of milestones should depend on the goal and the KPIs being measured. For example, a profitability goal may only need to be reviewed once per quarter whereas a safety-related one may need to be reviewed monthly.

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