Smart in 60 Seconds! Today: the KPI

A new post in our "The Agency Bloggers" series which regularly explains the most important terms used in agency controlling in a short, brief and practical definition. Today: the KPI.

When working on controlling in an agency, it is, of course, important to know and specify the targets involved in order to be able to check that they were met further down the line. In order to do so, agencies are also increasingly using so-called KPIs. In this context, the abbreviation KPI stands for "key performance indicator". KPIs are simplified performance figures that facilitate the rapid presentation of successes or failures. In most cases, they ultimately focus on increasing profitability. When using KPIs, a number of important requirements need to be observed. Before the KPIs are defined, the targets need to be known precisely and specified in detail. The targets should definitely not be too abstract because otherwise a measurement will not be possible. The working atmosphere, for example, would be too abstract to use as a focus. In contrast, examples of KPIs suitable for concrete measurements include the profit per customer (with the target of increasing this amount) or the amount of time required for each project.

Once the targets have been specified, they need to be quantified. The first stage of this process is a prioritisation: Which targets, requirements and strategies do I consider to be particularly important? This stage is essential because only the most important (key) performance indicators will ultimately be considered. This provides both the management and staff with a better overview. It also enables solutions to be found in a quick and target-oriented manner if any weaknesses are identified. Agency software helps with the automatic evaluation and clear presentation of KPIs and whether/how their targets are met, both on a company level and for individual projects. It therefore enables rapid action to be taken to deal with any deviations from the targets specified.