KPI stands for Key Performance Indicator.

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Key Performance Indicators are measurable goals that companies use to evaluate whether they are achieving important business objectives. They act as benchmarks or yardsticks, if you will.

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The KPI acts as a compass that helps and guides the company to understand whether it is moving in the right direction towards achieving strategic goals.

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A distinction is often made between high-level and low-level KPIs. High-level often focuses on the company's overall performance, while low-level is often more specific to a given activity, for example.

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To ensure that KPIs don't just become hot air, we recommend

• KPI is formulated very concretely
• It must be measurable
• KPI must be relevant to the given strategy period
• it should be ambitious, but not unattainable

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For example, market goals can be goals related to

• customer satisfaction and customer loyalty
• awareness level
• number of followers on social media
• market shares
• Achieving proof of concept
• Supplier satisfaction and supplier loyalty

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Financial goals can e.g. deal with

• revenue
• return on equity
• cash flow
• growth rates
• earnings
• margins
• contribution margin
• tied-up capital
• debt
• solidity
• max cost per customer lead
• max purchase price per product
• Revenue on old/new products

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Organizational goals can e.g. deal with

• delivery speed and capability
• employee turnover
• employee satisfaction and employee loyalty
• efficiency
• machine utilization rate
• complaints
• number of innovative actions

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Another method is OKR(ObjectiveKey Results) - read more HERE.

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Using MakeMyStrategy™ as a framework tool guides you through the entire strategy process, including the use of KPIs. Contact us for more info.

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Incredible helpful for me as a leader

Rune Skov

Sales Director

The Gryphon