What is KPI?

KPI is a shortened form of "Key Performance Indicator". It is an indicator for measuring the degree of achievement of organizational goals.

In general, KPI refers to the quantification of related factors and their use as indicators to achieve "Key Performance Indicators (KGI)". In other words, if you can achieve KPIs well, you will naturally achieve KPIs as well.

In many retail stores, KGI is set to achieve a sales budget (monetary basis) and sales-related indicators (such as "number of customers visiting stores," "sales per customer," and "purchase rate") are set as KPI.

Setting KPIs can provide the following benefits.

(1) Clarification of actions

When you set KPIs, the actions required to achieve the goal become clear.

Simply stating that the goal is to achieve a 30% increase in sales over the previous year is not enough for store employees to know what actions to take. By setting KPIs, each employee will be able to act with the same awareness.

(2) Clarify the process

When you set KPIs, the process to achieve the goal becomes clearer.

If you only present KGIs, employees will feel anxious about whether they can really achieve their goals with these actions, or whether they are taking the wrong actions, and they will not be able to perform well.

If you present KPIs, the process to achieve the goal will be clarified, and you will be able to modify your actions as necessary.

(3) Identifying issues

When KPIs are set, issues in the business will be highlighted.

Clarification of the issues is essential for business improvement. Since any factor that prevents the achievement of KPI targets becomes an issue, it becomes easier to identify factors that lead to improvement.

4) Establishment of Evaluation Standards

When KPIs are set, the evaluation criteria become clear.

Since the values are the same for everyone, they can be used as evaluation criteria.

If KPIs are used to unify the evaluation standards, it will be possible to evaluate appropriately based on numerical values.

When setting KPIs, the most important factor is whether they are linked to the achievement of KGIs.

Especially in the case of brick-and-mortar stores, the conditions necessary to achieve KGI change greatly from time to time due to changes in the external environment. At this time, setting appropriate KPIs makes it easier to understand which factors are changing and having an impact on KGI. In this way, it becomes possible to set and evaluate KPIs by identifying indicators related to KGI.

1) Make a plan

After setting KPIs, let's make a rough plan for achieving KGIs.

Since the conditions necessary to achieve KGI in actual stores change greatly from time to time due to changes in the external environment, it is best to keep the plan only as a reference based on past trends.

(2) Periodic evaluation

It is necessary to periodically evaluate the progress of both KGI and KPI to confirm whether you are taking appropriate actions.

At this time, it is important to be aware of the fact that "evaluation is conducted to achieve KGI.

It is common to set KGI to achieve the sales budget and point out the bad points by bringing up one KPI even though the budget progress is going well.

(3) Take action immediately when improvements are found.

In the course of regular evaluations, it is expected that deviations from the rough plan (1) made in advance will occur. when factors that affect the achievement of KGI are identified, take action for improvement immediately.

If it is difficult for you to make decisions on your own, do not hesitate to consult with your supervisor.

Since achieving the KGI is a mission for the company, your supervisor should be able to provide you with friendly advice.

KPI is an important indicator for corporate growth. Appropriate use of them can greatly increase the chances of achieving goals.

We hope that this article will provide you with some hints to help you achieve your goals. Thank you for reading!