In this article, you will learn what strategic kpis are, how to develop effective strategic KPIs and some examples from 6 different industries.
What is a Strategic KPI?
A strategic KPI (Key Performance Indicator) is used to track progress towards a long-term strategic objective or goal. For example a company might want to Increase market share by 15% within three years.
Strategic KPI Examples
Here are some examples of strategic KPIs for different industries:
- Increase average customer spend by 20% over the next two years.
- Grow online sales revenue by 30% within the next 18 months.
- Expand store network by opening 10 new locations in the next three years.
- Reduce production lead time by 15% over the next two years.
- Increase overall equipment effectiveness (OEE) by 10% within 18 months.
- Decrease product defect rate by 8% in the next 12 months.
- Improve patient satisfaction scores by 15% within the next two years.
- Reduce average patient waiting time by 20% in the next 18 months.
- Increase the percentage of successful treatments by 10% over the next three years.
- Launch 3 innovative products or services in the next two years.
- Increase active user base by 25% within the next 18 months.
- Achieve a 5% market share in the target segment by 2025.
Financial Services Industry:
- Increase assets under management by 20% over the next three years.
- Improve customer acquisition rate by 15% in the next 24 months.
- Reduce operational costs by 10% within the next two years.
- Increase student enrollment by 15% over the next two years.
- Improve average graduation rate by 10% within the next three years.
- Expand course offerings by adding 5 new programs by 2025.
How to Create Strategic KPIS
To create strategic KPIs, a company should follow these steps:
1. Align KPIs with Organizational Goals:
Ensure KPIs support the organization's vision, mission, and strategic objectives.
Example: A retail company might aim to increase customer satisfaction and brand loyalty.
2. Develop Specific, Measurable KPIs:
Define quantifiable KPIs with clear targets or benchmarks for evaluation.
Example: A healthcare provider may set a target of reducing patient wait times by 15% within the next year.
3. Select Relevant KPIs:
Choose KPIs that directly impact strategic objectives and highlight critical areas.
Example: A manufacturing firm could focus on improving production efficiency by tracking overall equipment effectiveness (OEE).
4. Track and Analyze KPIs Regularly:
Monitor KPIs to identify trends, measure progress, and make strategic adjustments as needed.
Example: A technology company might assess monthly user growth and adjust marketing strategies accordingly.
5. Set Realistic, Ambitious Targets:
Establish achievable yet challenging goals to drive continuous improvement and performance.
Example: A financial services firm could aim to increase assets under management by 20% over the next three years.
6. Communicate KPIs to Stakeholders:
Share KPIs with relevant parties, ensuring a shared understanding of their roles in achieving strategic objectives.
Example: An education institution may communicate student enrollment targets to faculty and staff, emphasizing their roles in reaching these goals.
By following these best practices and examples, organizations can create strategic KPIs that effectively drive progress towards their long-term objectives.