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Key Performance Indicator (KPI) is a measurable value and a key tool that guides businesses to control and strategize the process to achieve business objectives. KPIs are the metrics that effectively fine-tune the business, analyze the business functions, and lead it to measurable profits. Like a GPS (navigation system) in a car, it will give you a very accurate way of getting to your destination and tell you how long it will take to get there. If you detour or miss a turn, it reroutes you back to your planned course. Every industry and business has its own set of KPIs.

Why you need Key Performance Indicators (KPIs)

“What gets measured, gets managed. – Peter Drucker

The success of every business relies heavily on these key performance indicators. If the KPIs are identified and managed attentively, the data generated can identify issues, indicate which business segment needs attention, and, most importantly, identify the different business areas that are doing well. Using KPIs, you can assess how a campaign is performing in the short term or how well a business segment is performing in the long run. Some common KPIs are: CTR and Conversions, Cost Per Lead, Order Fulfillment Cycle Time, Net Profit, Gross Profit Margin, Pageviews and Bounce Rates. KPIs vary from business to business, and different areas of a given business have different KPIs to manage.

Key Performance Drivers

A Key Performance Driver, or KPD, is a performance metric or a component that directly contributes to KPIs. KPDs are actionable items. If a KPD is monitored regularly, it yields effective outcomes and helps make operational decisions. The KPD is measured against a goal or an industry benchmark and impacts the current reporting period. If the KPI is the GPS, then the KPD is the battery and mount for the GPS. The GPS of this navigation system must be charged in order to work as expected, while the mount must be in good condition to support the GPS unit.

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