How to Use KPIs to Measure Strategy Success and Drive Business Growth
By: Yessenia Hernández, CPA at Strategic Minds
“What Gets Measured, Gets Improved” – Peter F. Drucker
In business, as in life, we need indicators to measure how far or close we are to our goals. These indicators are the first step toward making impactful decisions for the present and future.
For example, a distance runner might decide to improve their time for the next race. A department store may plan to increase foot traffic by 50% over the next year. Meanwhile, a restaurant might aim to reduce food costs by 10%. But how do they track progress?
More importantly, how do companies measure the decisions made every day? What metrics determine success? How do you know if you’re close to achieving your goal? And how do you decide what adjustments to make along the way? To answer these questions, we must understand how successful businesses measure performance. The runner improves their time by developing a training strategy focused on distance and speed. Similarly, businesses need clear goals aligned with specific performance areas.
Why is KPIs so important in Business Strategy
KPI is essential for any operational plan is to establish short-, medium-, and long-term objectives. In addition, the development of strategies aligned with those goals is key to tracking progress and adjusting as needed. To dive deeper into business growth strategies, check out our post on Strategic Planning.
When we collect data and turn it into measurable metrics, we define the performance indicators that are critical to success.
Definition of KPIs
Key Performance Indicators (KPIs) are measurable values—usually percentages or numerical figures—that reflect progress toward specific business goals. Tracking them helps monitor the performance of key areas like:
- Sales
- Marketing
- Customer Service
- Business Health
By selecting the right KPIs, you can directly monitor the strategies formulated for your business and adjust them as needed.
How the KPI reflect business Strategy
- They echo organizational goals and strategies. They translate the vision into measurable goals.
- Management decides which Key Performance Indicators (KPIs) will be used based on the key objectives that will be closely monitored.
- They provide relevant content and information.
- They deliver meaningful insights for all levels of the organization.
- They are based on legitimate data. The foundation for the metrics and results is your own data.
- They are easy to understand. These are simple results that you compare with the industry and the determined goals.
- They empower users and lead to action. They help you make timely decisions and implement assertive strategy changes.
As your business grows, you’ll need to stay close to operational details. Measuring productivity and profitability through KPIs allows you to track progress and adjust strategies when necessary.
You will quantify your success by comparing actual performance against the objectives you established. Choosing the right KPIs for each department ensures you are measuring what truly matters.
