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Why are KPIs Important? [6 Reasons in 2023]

In this article we cover the importance of KPIs (Key Performance Indicators) for businesses and give 6 examples from different industries.

6 Reasons Why KPIs are Important

Help Companies Set Clear and Achievable Goals

KPIs provide a solid framework for goal setting, helping companies to set specific, actionable objectives that align with their overall business strategy.


A company may set a goal to increase its customer satisfaction score by 10% in the next quarter. By tracking this KPI, the company can measure its progress and determine if it's on track to reach its goal.

Assist With Real-time Performance Monitoring

KPIs allow companies to continuously monitor their performance and make adjustments as needed. By tracking KPIs in real-time, companies can quickly identify areas for improvement and take action to resolve any issues.


A company that sells products online may track its conversion rate (the number of visitors who make a purchase) as a KPI. If the conversion rate drops, the company can adjust its website, marketing strategies, or product offerings to improve the customer experience.

Help Align Departments Around Business Objectives

KPIs help to ensure that all parts of a company are aligned with its overarching business objectives, leading to more focused and intentional work.


A company that provides software development services may track the number of bugs or defects in its code as a KPI. By monitoring this metric, the company can ensure that its software development processes are aligned with its goal of delivering high-quality products.

Assist With Employee Development and Growth

Tracking KPIs provides employees with a clear understanding of their performance, allowing them to focus on their strengths and address any areas for improvement. This leads to personal growth and development, and increased motivation and satisfaction in their work.


A sales team may track the number of sales calls made as a KPI. By monitoring this metric, each team member can understand their individual performance and work to improve their sales skills.

Allow for Effective Performance Management

KPIs provide a clear, transparent measure of performance, making it easier for companies to manage and evaluate employees. By tracking KPIs, companies can simplify performance management and make informed decisions about employee development and promotions.


A customer service team may track the average response time for customer inquiries as a KPI. By monitoring this metric, the company can ensure that its customer service processes are efficient and effective, and make decisions about employee training and development accordingly.

Help Track Continuous Improvement

By tracking KPIs on a real-time basis, companies can quickly identify areas for improvement, leading to a culture of continuous growth and development. This helps companies to stay ahead of their competition and remain relevant in an ever-changing business landscape.


A company that produces and sells physical products may track the number of products returned as a KPI. By monitoring this metric, the company can identify areas where it can improve its product quality and reduce returns, leading to increased customer satisfaction and loyalty.


Why are KPIs important?

KPIs help companies set clear goals, monitor performance, align departments, support employee development, simplify performance management, and track continuous improvement.

Why are KPIs important in goal setting?

KPIs provide a framework for setting specific, measurable goals aligned with business strategy, enabling progress tracking.

Can you explain the importance of KPIs for employee development?

KPIs give employees clarity on performance, enabling personal growth and improved performance through focused development.

We hope you now have a clear understanding of the importance of KPIs and how they can have a positive impact on your company.

If you enjoyed this article, you might also like our articles on the types of KPIs and KPI targets.

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