A Key Performance Indicator (KPI) is a measurable value that demonstrates how effectively a company is achieving key business objectives.

Organisations use KPIs at multiple levels to evaluate their success at reaching targets. High-level KPIs may focus on the overall performance of the business, while low-level KPIs may focus on processes in departments such as sales, marketing, HR, support and others.

We can calculate almost anything in terms of business success, but it needs to be focussed on what makes sense in that business scenario. To do this, we will use summary statistics or more advanced formulas to reflect the business scenario that we want to track.

There are many different business scenarios for many different types of analyses and all of them are meant to calculate the key performance indicator that makes the most sense for that business context.

What makes key performance indicators useful is that we can figure out exactly what summary statistic to calculate and in exactly which business scenario to be most useful.

From there we can tell a story with our data so that the data becomes meaningful. This could include tables of data, graphs, trendlines, colour codes, etc.

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What types of KPIs do you think would be significant for an ecommerce company selling products online?

Use the discussion section below and let us know your thoughts. Try to respond to at least one other post and once you’re happy with your contribution, click the Mark as Complete button to check the Step off. In the next step, we’ll look at some KPI examples.