What is KPI

What is KPI? Definition, Examples, and Best-Practices

Key Performance Indicators (KPI) are simple and understandable performance indicators. The performance that a business unit provides is measured and presented in the form of a key figure. A division can be an individual employee, a team, a department, or the entire company. The key figure shows whether the respective area fulfills its purpose and to what extent it achieves predetermined goals. There should be a few key performance indicators as possible for an area.

KPIs are used to check how successful certain activities in companies are. All processes in organizations can be controlled using these key performance indicators. Management and controlling can analyze processes in the company using key performance indicators. Through consistent monitoring, processes and measures can be adapted and optimized accordingly.

Depending on the company and area, different KPIs are used to measure performance. For example, marketing is interested in key figures other than sales, accounting in other than logistics. Which KPIs are the right one always depends on which activities are to be checked.

KPIs can be determined in different ways. Many key figures can be measured on the internet and can be determined using analysis tools such as Google Analytics. The relevant KPIs vary depending on whether it is, for example, an online shop or a blog.

Examples of key performance indicators

Good key performance indicators are aligned as precisely as possible with the goals and requirements of an area. They match the critical success factors and are therefore always very special. Here are some examples of key performance indicators for individual company or functional areas that show what kind of key performance indicators can be and what they make visible:

  • Number of pieces per day in production
  • Number of (positive) reports about the company in the media
  • Sales with first-time customers that a sales team reaches
  • Number of projects in research and development that go into pre-series
  • Number of support measures for employees carried out by personnel development

KPIs show how well a process is running

Key performance indicators are mostly related to a process. The key figure is then selected so that it is visible to what extent the result for which the process is carried out is available at the end of the process. The key figure can also be related to the resources used for the process, time and costs.

Example of KPI for the Service Hotline for Customer Calls

Purpose of the process

  1. to receive and process customer calls (direct)
  2. to satisfy customers (indirect)

Accepting individual process steps

  1. Clarifying the matter with the customer –
  2. Offering a solution –
  3. A solution is not immediately possible, forwarding it to experts –
  4. Documenting customer conversation –
  5. No further activities by the employee are necessary,
  6. Mark the customer call as “processed”

Process Result

  1. Processed customer call
  2. Accept and process target with target ten customer calls per employee per hour

Performance indicator and key performance indicator for this process

Number of customer calls per day that are processed and marked as “processed” in a computer system (also possible as an average per week, month or quarter)

Performance counter or KPI in relation to time

Average time to process a customer call (in minutes)

A performance indicator or KPI in relation to costs

The average cost of handling a customer call (in euros)

Further possible key performance indicators for this process

  1. Percentage of directly resolved customer inquiries that were not forwarded to an expert (in percent, on average per month)
  2. Customer satisfaction value after a subsequent customer survey (in a grade value, on average per month)

By depicting the key performance indicator with the target specification in a diagram over time (for example daily), it should be visible to what extent the service has been performed and the goal has been achieved. Figure 1 shows an example of how the course of a key performance indicator can be displayed.

How are Key Performance Indicators Determined?

It is the responsibility of the manager to develop the key performance indicators for their area of ​​responsibility. Important steps are:

  1. The manager must know and name the goals for his area of ​​responsibility.
  2. Definition of the key figures that make visible whether goal X has been reached.
  3. Definition of how the data for the corresponding key figures are measured: measured value, measuring method, measuring rhythm, the person responsible for the measurement.
  4. Calculation of the actual values ​​for these key figures from this data.
  5. The explanation for all employees what the key figure means. There must be clarity and agreement on what the key figure says.
  6. Coordination and agreement of the goals represented by the key figure and the target specifications with the employees concerned.
  7. Collection and measurement of the necessary data, as well as the determination of the key figure and visible representation for all employees; suitable for this, are diagrams, which are hung up in the meeting room, for example, and which show the target specification and the measured values ​​of the last days (or weeks).
  8. The manager regularly works with these key figures by talking to his employees about them and taking measures when something needs to be changed or improved. Goal: To improve the team and the employees in relation to the corresponding key figure.
  9. Check at regular intervals whether the key figure is still needed for planning and controlling the area of ​​responsibility. Otherwise, it will be replaced.

Tip: Visualize Key Performance Figures

On the internet you may find some Excel templates with different diagrams and visualization forms of key figures such as key performance indicators. For example traffic light diagrams, thermometer displays, diagrams as circle segments, progress diagrams, and many more.

What are The Benefits of Key Performance Indicators?

Working with key performance indicators should lead to the company improving overall and asserting itself against competitors. All employees should recognize whether they are performing optimally or in which areas they need to improve.

With a focus on key performance indicators, traditional key figure systems are cleared out so that the decisive success factors (again) come into focus. Because in many companies there is an abundance of key figures that are prepared and presented in reports and that no manager can see anymore. The employees concerned no longer know which key figure is really relevant and which performance is particularly important. It is only about these questions:

  • Will we achieve the goals we set?
  • Where do we have to take countermeasures as quickly as possible?
  • What are our strengths and where are there weaknesses?

When the right key performance indicators have been developed, they provide reliable answers to precisely these questions.

Key performance indicators also help executives, because working with key figures is an important management task and part of personnel and area management. Every manager, from the team leader to the project manager, department head to the managing director and board of directors, must define key figures and be able to use them for planning and controlling their own area. Only then can the manager steer the activities of the employees in the right direction.

Management Risks With Key Performance Indicators

If you focus your actions on individual, selected performance indicators, you also take risks. Because he acts with restrictions and can easily overlook side effects. Examples of risks:

  • Some goals are too general and too abstract (e.g. employee satisfaction or working atmosphere) and cannot be represented directly with a measurable and suitable key figure.
  • There are goals that contradict each other. Then the associated key performance indicators or the target specifications cannot be optimally achieved at the same time. The employee does not know what is more important in individual cases.
  • Employees only have their key performance indicators in mind and only do what improves this key figure in the short term or how they achieve their target.
  • A key figure is measured and evaluated, but there are no consequences if the target value is not reached. No action is taken and there are no changes in behavior. The key performance indicator loses its meaning.
  • Employees feel monitored and controlled by their manager’s key figure. This can limit their willingness to perform and lead to resentment.

How to Choose The Right Key Performance Indicators

You must determine and compile the following information in order to find and determine the right key performance indicators for a selected area (person, team, department).

  • Which process are you considering?
  • What is the purpose or task of the process?
  • Why or what is this process for?
  • What are the process steps in detail?
  • Which result should be available at the end of the processor which state should be reached?
  • What is the best way to measure the performance of the process?
  • Which key figure best expresses this performance?
  • How can you tell that the process serves its purpose very well and that the goals have been achieved?
  • What target is there for this goal or key figure?
  • What value indicates that the performance of the process is adequate?

Now translate this into a key performance indicator for this process. This key figure is measured. The measured value expresses unequivocally whether and to what extent the process delivers the expected performance. Also consider the aspects: quality of performance, time, and costs associated with the process.

Examples of key performance indicators in different departments of a company

Production

  • Number of pieces spread per day
  • Number of reworks per day
  • Time between order release and goods issue

Customer service

  • Number of calls per day
  • Average duration of a conversation
  • Share of necessary referral
  • Number of customer complaints processed per day

Marketing

  • Marketing costs per customer contact or lead
  • Number of (positive) reports about the company in the media per year
  • Number of followers in social networks (Twitter, Facebook)

Distribution

  • Number of customer visits per week
  • Share of sales with first-time customers
  • Average customer turnover per year

Research and Development

  • Number of positive development projects per year
  • Number of projects that go into pre-production each year
  • Number of ideas for semi-annual project planning
  • Number of changes in component drawings per month

Purchasing and materials management

  • Number of framework contracts concluded with suppliers per year
  • Number of supplier audits per year
  • The proportion of purchasing volume for which a price reduction of five percent or more was negotiated
  • Average time from order to delivery of goods

HR development

  • Number of support measures for employees per year
  • Number of employees who quit each year
  • Number of training days per year
  • Personnel development costs per year

Project management

  • Number of projects that are on schedule
  • Number of projects that meet the cost budget
  • Number of employee hours for project work

Management or board

  • Increase in sales per year
  • Increase market share
  • Annual profit increase
  • Cash flow per year
  • The average interest rate on debt
  • The share price of the company on June 30 after one year

KPIs in Content Marketing

Only those who regularly monitor the results can determine how effective their own content marketing measures are. Which metrics are relevant depends on the measure and its objectives.

For example, if traffic on a blog is to be increased, key figures such as visitors, returning users, and length of stay are suitable. However, if the goal of the content measure is to generate leads, For example, the conversion rate of landing pages can be considered. The renowned Content Marketing Institute (CMI) divides the metrics for measuring content success into four areas:

  1. Metrics for lead generation: e.g. Registrations
  2. Sales metrics: e.g. Online sales
  3. Consumption metrics: e.g. Downloads
  4. Sharing metrics: e.g. Retweets

The most important metrics that B2B companies use to measure their content marketing according to the Content Marketing Institute (CMI) are currently:

  • Lead quality
  • Sales
  • Conversion rates

Website traffic and SEO ranking are also among the 10 most important KPIs. Important key performance indicators in content marketing can also be:

KPI Metrics for Page Speed

Like in Content Marketing and SEO, Also Page Speed KPIs are important. Using the right KPI Metrics for Page Speed projects is the most efficient step for improving User Experience. Focusing on the wrong page speed metric can consume the developer’s resources. You can find the Page Speed KPIs and metrics below with their purposes and relevances.

Redirection time

The redirection time shows how long it takes for visitors to be directed to the actual destination URLs. During this time, URLs are redirected before the final HTML page is loaded. General redirects include:

  • Redirect from a non-WWW to WWW (e.g. example.com to www.example.com)
  • Redirect to a secure URL (e.g. HTTP: // to HTTPS: //)
    Redirect to set cookies
  • Forward to a mobile version of the site

The online marketer influences forwarding and rewrite rules.

Incorrect Status Codes

  • 500 Internal server error
  • 503 Service unavailable if it is currently unable to process the request due to a failure or an overload
  • 3xx redirection – Too many redirects have a negative impact on page speed

Ensures that the redirect is correct and that sitemaps only contain URLs with status code 200. 5xx errors should be checked by IT. Forwarders and forwarding loops can be analyzed and adjusted by the online marketer.

To learn more about HTTP Status Codes, you can read our related guideline.

TTFB Time to First Byte
/ Server Response Time

Time to First Byte (TTFB) is the time it takes for the client to send an HTTP GET request to receive the first byte of the requested resource from the server. This is the sum of “Forwarding Duration” + “Connection Duration” + “Backend Duration” in GTmetrix. This metric is one of the key indicators of web performance and an important metric to focus on.

TTFB cannot be optimized directly and depends on the administration of the server configuration. This is primarily IT work but should be observed by the online marketer.

First Paint (Paint Time)

In page speed analysis, the first paint is the time at which the browser performs any type of rendering on the page. Depending on the structure of the page, this first paint may only show the background color (including white), for example, or a large part of the page may be rendered. First Paint cannot be optimized directly. At FP, the focus should be on the asynchronous loading of the scripts, the adaptation of the cache header, and the compression of static files.

First Contentful Paint (Paint time)

First Contentful Paint is triggered when content is drawn. Compared to First Paint, the user experience is paramount! This timing is said to be more representative of the user experience since it shows when the actual content was loaded on the page and not just a change. First Contentful Paint refers to the time when the user can see the actual content with HTML elements, images, and Javascript elements. The online marketer also has an influence on this, for example through image optimization and dynamic elements.

First Meaningful Paint

First Meaningful Paint (FMP) is the area of ​​the website that is displayed to visitors after they have entered a search query in the search engine (Google) and are thus shown some meaningful content. First Contentful Pain affects factors such as user-friendliness, navigation on the pages, and their elements. Depending on the CMS, the elements can be controlled directly.

CLT – content loaded time / DOM content loaded time

The Content Loaded Time, or CLT for short, is the average time that the browser needs to analyze a document and is calculated in seconds. Scripts inserted by the parser are taken into account, including the DOMContentLoaded. The DOM begins with the first byte from the server and ends when HTML, CSS, images, and synchronous JavaScript are loaded. A distinction is made in GTmetrix between DOM Interactive and DOM Loaded. When loading the DOM, stylesheets that block the execution of JavaScript are taken into account and there is a parser that blocks JavaScript. More information is available here at https://gtmetrix.com/blog/new-performance-timings-available-default-to-fully-loaded-time/.

There are important elements that are relevant to SEO optimization. However, there are technical elements such as style sheets, parsers, and the elements up to the first byte that should be optimized by IT.

Request Size

The HTTP request includes cookies, requested resource URL, referrer URL. The request size should be less than 1500 bytes. The optimization concerns topics such as cookies, resource URL, URL length, and browser fields. The length of the URL could be interesting with regard to the HTTP GET request. But such tasks are more IT. For smaller pages, the URL length can be controlled directly. In e-commerce shops, they should be created in a meaningful automated manner.

RTT – Round Trip Time

Round trip time is the time it takes for a signal pulse or packet to travel from a particular source, e.g. the computer that initiates the signal to a specific destination, e.g. a remote computer or system, and to get back. The RTT is measured in MS and is one of the main factors for measuring network latency. RTT is less relevant for online marketing and SEO but should be kept in mind.

TTI – Time to interact (Lighthouse)

The TTI (Time to Interactive) metric indicates how long it takes for a page to become interactive (the useful content displayed is measured by the FCP). This is similar to FCP and can sometimes be influenced, which falls into the area of ​​web design and usability of the page. To simplify things, you can analyze First Contentful Paint.

Average Speed ​​Index (Lighthouse)

The speed index is a performance metric that indicates how fast the content in the above the fold section is being downloaded in an interactive way with the users. The function of the Lighthouse features mainly affects mobile web apps, but can also be used on websites on a PC or laptop. Technical changes are a problem for app developers. With programmatic or native apps, you can bring these values ​​closer to the developers.

Last Thoughts on KPIs and Its Importance for SEO Projects

 KPIs are used to review areas and measures in organizations. With their help, it can be evaluated which actions are successful and where there is potential for optimization and cost savings. Which key figures are suitable as key performance indicators depend on the respective company.

Regular measurement of the success of processes in companies is not only important for controlling and management. In content marketing too, it is important to regularly check your activities according to the content goals based on defined key figures. Which KPIs can be used to measure the performance of content marketing always depends on the respective content measure and its goals. There are many possible KPIs that can be used depending on the business model, goal, and content type.

In addition to these, Holistic SEOs have to know the relationship between KPI Metrics. Using the right KPI Metrics for the right SEO purpose is important. For instance: if the SEOs’ purpose is to increase brand awareness, using search volumes and keyword trends for the specific time along with related landing page’s performance in terms of click path can be used. KPIs can show the weak and strong sides of an SEO Project, choosing the wrong KPIs can blind a developer team, marketing team, and managers in terms of an SEO Project’s health.

We will continue to improve our KPI Metrics Guideline to prevent these kinds of mistakes in marketing campaigns.


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