What Is A KPI? Benefits, Challenges, and Examples

DashboardFox - Convert Data Into KPIs

What Is A KPI?

KPIs or Key Performance Indicators are tools and instruments for companies and businesses to evaluate performance. It allows a business to measure the performance of a process as well as the goals of the business.

It also provides information that is critical in making essential decisions for the company.

KPIs are like navigational tools for managers and other executive leaders. Using these instruments reveal areas that require review or changes. They also point out where the business or company has veered off from the objective it is set to achieve.

Selecting The Right KPIs for Your Business

While researching for the best KPIs for your business, you will find a lot of options. Lots of best practices and recommendations, however, just picking a set of KPIs and hoping they transform your business isn’t the best way to go about it.

The best KPIs will be unique and specific to your business. While the KPIs you find while searching may seem relevant and important, do not just choose randomly. Reality is that most companies have fallen victims of choosing inappropriate KPIs. This results in what we call “eye candy” and ultimately are ignored as they do nothing to help grow your business.

Before we get too far into how to create KPIs, let’s first get a good definition of what they are and are not.

KPIs versus Metrics

Most business people interchange or simply confuse the understanding of KPIs and metrics. Although they have a relationship, these two instruments have a vivid difference.

Metrics, especially those used in businesses, are meant for measuring progress and performance. This is a similar function to KPIs. Metrics is an umbrella term that includes KPIs and all other tools that quantifiably measure performance and progress.

However, not all metrics are KPIs. As the name suggests, these instruments measure ‘key’ aspects of performance and progress. Therefore, only special areas utilize KPIs. If all aspects of performance are key then none of them is special.

Businesses should identify these fundamental areas that need KPIs while the rest can utilize other forms of metrics.

Benefits of KPIs

Measuring performance using KPIs is like shining a spotlight on a specific process or business goal.

Ideally, you want to nail down the primary driver of a process of business and measure that. We have talked about the concept of leading and lagging metrics in the past. KPIs should be focused on those leading indicators of a business process so that you can use it as a lever.

Based on the value of the KPI, it should be predictive of the outcome or result. This means when the KPI is lower or higher than expected, you can take corrective action to prevent a bad outcome (or drive a good one).

Key performance indicators are a useful tool for displaying transparency.

These metrics reveal everyone’s performance and scores as well as those not performing. It is an impartial way of appraising critical areas that determine the success and progress of the business.

These scores can be used to make important decisions that will resolve any issues going on.

Challenges of KPIs

The biggest challenge related to KPIs is picking the right one.

Most organizations fall into the trap of letting best practices factor too highly in their selection of KPIs. Or they look to their business intelligence software, or a consultant to pick it for them.

To pick the right KPIs requires a detailed analysis and knowledge of the key business processes and drivers of your business. If in a sales department what drives your revenue? Is it the number of appointments, demos, number of phone calls made, the value of the pipeline, or something else?

In many cases, it requires trial and experimentation to find the right KPI to measure, and that takes time.

The second biggest challenge is how to create and display the KPIs. This challenge has two main components.

First, there is the challenge of locating and collecting the data needed to calculate the KPI. Ideally, all the needed data is stored in a database and the data quality is correct. If this is not the case, it will require some effort to perhaps pull the data from many different sources, in some cases manually collected and to store it in a format that is easily accessible and queries.

Second, picking the right software to do the queries of the data, calculate and display the KPI. Many organizations may have an existing BI tool they are required to use, but it is labor-intensive and requires a lot of effort to use. This can hamper management’s desire to track and monitor KPIs when it requires a lot of resources, time, and cost to deliver.

This normally drives a request to go find a new BI tool and that opens up the flood gates to all the marketing buzz and hype around the KPIs they can deliver out of the box. Keep in mind the advice above, those eye-candy KPIs are probably not what your business needs.

How DashboardFox Helps with KPIs

We developed DashboardFox to help make generating and communicating KPIs more cost-effective for your business.

As a self-service business intelligence tool, DashboardFox allows you to connect to one or more databases where your raw data is stored (or you can import data from Microsoft Excel spreadsheets).

Once imported you can easily create datasets of raw data without having to write any SQL code. DashboardFox does all that for you. And once you have that dataset, you can build formulas to do any custom KPI calculations you need.

Out of the box we have a few ways to show KPIs that include analysis indicators such as:

  • actual value vs goal
  • a visual indicator if the KPI status is in a good or bad state
KPI Example from DashboardFox With Goal and Status Indicator


  • sparkline to show historical trends of the KPI value
KPI Example from DashboardFox With Sparkline Trend


  • drill-down to do more analysis of underlying or related data
KPI Example from DashboardFox With Drill Down


And then you can bring in all the KPIs for a specific process or business area into an interactive dashboard environment where you can apply filters to do data segmentation. To see how the KPI changes by seasonality, by location, by business area, or any other parameter contained within your data.

Save Cost When Getting Started With KPIs

Best of all, DashboardFox provides a one-time cost to purchase. Unlike other BI software that charges you on a recurring basis, where you have to continue to pay to continue to use the software, you buy DashboardFox once and use forever. This provides a level set that your cost of delivering KPIs won’t exceed the value they bring to your team.

But the savings don’t stop there, you also save in the overall cost of operations and ownership with DashboardFox. As a self-service BI tool, you don’t require all the infrastructure, technical resources, and administration costs that you have with more complicated tools.

Check out a demo of DashboardFox and contact us so we can discuss your KPI requirements. We’re not just able to talk to you about BI software, we can give you some advice on nailing down the right KPIs for your business as well.

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