A measure of success or a nightmare? If you ask an average manager what makes their life at work miserable, they will most likely answer: “KPI”. 

Is it really that bad? After all, it is easier to achieve goals if they are clearly and correctly formulated. And if the size of the salary depends on their achievement, the team’s motivation will increase.

Today we will talk about: 

  • what KPIs are and why they are needed;
  • types of performance indicators;
  • how to correctly determine KPIs for your business;
  • what good performance indicators should be;
  • KPI system at Solve Marketing agency. 

What is a KPI? 

KPIs, or Key Performance Indicators, are key performance indicators, a system for evaluating the achievements of a company and its individual employees. It allows you to assess the degree to which goals have been achieved, as well as the effectiveness and efficiency of the work process. 

Why use them?

KPIs are not only necessary for management to control and motivate subordinates. They are primarily a powerful tool for self-organisation, as these indicators allow employees to independently assess the amount of work performed, rationally allocate time, and understand how to prioritise tasks. 

KPIs also allow you to identify less effective employees, determine the reasons for their inefficiency, provide training as needed, or make certain changes to the work process. 

Тypes of KPIs 

The main types of KPIs are divided into: 

  • process-related — determine the economic efficiency of operations;
  • project — demonstrate the effectiveness of the project and the expectations of the project manager;
  • target indicators — indicators of progress towards a goal or compliance with set tasks. 

When it comes to business process management, the following indicators are typically used: 

  • Performance KPIs — reflect the ratio of results achieved to time spent;
  • Outcome KPIs — determine the results achieved and their volume;
  • Efficiency and cost KPIs — reflect the ratio of the result achieved to the resources expended;
  • Operational KPIs — assess the extent to which all requirements were met in full and clearly in accordance with the required workflow.

In strategic management, KPIs are divided into: 

  • proactive — managing work, achieving set results by the end of the reporting period;
  • belated — reflection of performance results after the end of the reporting period (financial and resource indicators). 

Determining performance indicators correctly

To clearly define your goals and objectives, you need to ask yourself the following questions: 

  • what the ideal result should be;
  • why it is a key objective;
  • whether progress in achieving it can be clearly measured;
  • who is responsible for tracking KPIs and reporting on them;
  • how progress towards the goal will be monitored;
  • how you will know that it has been achieved.

How can you determine if you have created effective KPIs?

ХA good KPI should help you achieve your strategic goals and give your team a clear idea of what results need to be achieved and how they will affect the project they are working on. 

Therefore, performance indicators should be: 

  • specific and measurable that is, they should be easy to measure, calculate, understand, and communicate;
  • relevant to the project objectives;
  • timely which means that the necessary information must be collected in a timely manner;
  • realistic and achievable. 

System KPI in Solve Marketing

Moving without a specific goal is like wandering aimlessly. At Solve Marketing, we use specific KPIs to help achieve our operational and strategic goals, identify and solve problems that negatively affect results, and more. 

To see how much the work of departments and individual employees brings the company closer to certain goals, we have established a KPI system for each of them. Therefore, the salary of each agency employee consists of a fixed rate, bonuses for working on client projects, and bonuses for achieving KPIs.

Examples of KPIs for our agency’s departments:

Lead generation department: CTR, CPA, and planned number of leads.

Content marketing department: planned amount of content per month: mailings, articles, social media posts, etc. 

PM department: completion of planned work on time or ahead of schedule. Also, at the end of the month, along with the report, the PM sends the client a form asking them to rate the team’s work. If the rating is between 8 and 10, the bonus for KPI achievement is credited. 

Thus, KPIs help to improve the efficiency of individual departments and the company as a whole and provide a transparent assessment of employee performance.

Conclusions

It is important for any business to have a strategy with clear goals. And to achieve these goals, it is extremely important to effectively organise the work of employees, track progress, and motivate them. The KPI system is excellent at handling these tasks. 

But it is important to remember that you should not use standard performance indicators, as they may not work specifically for your business. To avoid this mistake, simply convert your goals and objectives into KPIs, and they will undoubtedly help you achieve your desired end goal. 

Terminology dictionary

CTR —ad click-through rate; the ratio of clicks on an ad link or creative to the number of times it is displayed.

CPA — payment for advertising only when a specific action is taken.