Why are KPIs Important?

Why are KPIs Important?


KPI stands for key performance indicator. KPIs provide targets for teams to shoot for, milestones to gauge progress, and insights that help people across the business make better decisions.

KPI’s are specific to each company and can be designed to fit around your business model and the way your company works. There’s no specific way of constructing KPI’s, but they should be quantitative, practical, and directional (to determine if the company is heading in the right direction).

Five of the most used KPIs include:

  • Revenue growth.
  • Revenue per client.
  • Profit margin.
  • Client retention rate.
  • Customer satisfaction.

Five reasons KPIs are important for your business:

From reviewing employee performances to tracking company progress, there are several reasons why KPI’s are an important factor in assisting your company’s growth.

  1. Monitor targets for your businessSet targets at the beginning of each year and each quarter and use KPIs weekly to measure your progress toward those goals.  Setting the right KPIs helps you measure your progress towards your long-term goals.
  2. Boost team moraleEmployee’s motivation is extremely important to keep growing your business, setting targets can increase this. A team reward once a target has been hit will keep motivation within your business.
  3. Address any problems that ariseUse a combination of KPIs in a dashboard so that you have the right information at your fingertips to solve problems or tackle opportunities.
  4. Create team learningWhen you notice an unfavourable reading on a KPI, you have the chance to talk to the individual or team involved with that specific KPI. This a great opportunity for you to teach the employees how to do things differently and perform better in order to reach targets.
  5. Monitor your business health – KPIs are like a scorecard for your business, you can track progress and see where things need extra attention and improving.


Always create KPIs that will achieve the end result wanted for your business. The growth and success of your company will be determined by the consistency of results. And those results can only be achieved if your team works together to consistently meets desired goals and targets.

Date: October 4, 2021

Author: Morris

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