What is Key Performance Indicator (KPI)?

A Key Performance Indicator (KPI) synthesizes raw business data into key metrics used to measure the performance or efficiency of various business activities such as finance, sales, customer support, and production, to achieve common goals.

ERP Software uses a multitude of KPIs to track the leads & conversion ratios, average response time, net profit margin, and return on investments, among others. It is a strategic tool that fosters smart & informed decision-making and lets you fuel growth & success.

Different Types of Key Performance Indicator (KPI)

1. Quantitative Indicators

These indicators are based on numerical measures. They provide data-driven numerical results which are typically more accurate than their Qualitative counterparts. For example, tracking sales targets, revenue targets, and leads conversion using a Sales Management System.

2. Qualitative Indicators

Unlike Quantitative Indicators, these indicators are not based on numerical measures. Instead, they are open to multiple interpretations. For example, using an Automotive ERP to track the customer experience of your clients.

3. Lagging Indicators

Lagging Indicators are the indicators that provide analysis of past occurrences for decision-making. For example, pharmaceutical companies may deploy Pharma ERP Software to analyze the past year’s sales and revenue growth.

4. Leading Indicators

Unlike Lagging Indicators, these indicators are futuristic. They allow decision-makers to predict future trends & events and make futuristic decisions. For example, identify revenue opportunities in the next fiscal quarter or year using Financial Management Software.

Examples of KPIs Used Across Different Business Functionaries

I. Marketing

• Marketing Qualified Leads
• Sales Qualified Leads
• Social Media ROI
• Goal-based Conversion Rates
• Conversion Rates
• Return on Ad Spent

II. Sales

• Sales Volume by Location
• Average Order Value
• New Inbound Leads
• New Qualified Opportunities
• Total Pipeline Value

III. Finance

• Operating Expense Ratio
• Working Capital Ratio
• Gross Profit Margin
• Operating Profit Margin
• New Profit Margin

IV. Information Technology (IT)

• Total Support Tickets
• Open Support Tickets
• Reopened Tickets
• Ticket Resolution Time
• IT Costs vs Revenue
• Security-related Downtimes

V. Customer Support

• Average Response Time
• Cost Per Conversation
• First Contact Resolution Rate
• Most Active Support Agents
• Customer Effort Score

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