key performance indicator (KPI)
A key performance indicator( KPI) is a performance indicator. The term is used in scorecards and refers to a metric that indicates the level of expected performance against one or more targets or thresholds. It is a score that refers to operational indicators: success, performance, production utilization, etc.
A Key Performance Indicator is determined from existing business data. Examples of such KPIs include sales, sales growth, number of units sold, gross and net profit, number of full-time positions (Full Time Employment), labor costs, unit labor costs, etc. In scorecarding, these metrics are set in relation to target or threshold values. The form of this relation depends on the measured value and the desired comparison. A target value can, for example, be the budgeted sales. A threshold value can be e.g. the minimum sales volume of a product to cover the costs. From the relation between measured value and target value resp. threshold values a tendency results, which indicates how well the targeted performance is achieved. This is often represented with a traffic light function. If the traffic light is red, there is a loss; if it is yellow, the gain is below expectations; if the traffic light is green, the gain is within expectations or above. A key performance indicator can be better if it is larger than expected (e.g. revenue), smaller than expected (e.g. costs) or as close as possible to the expected value (e.g. utilization).
In the evaluation of web advertising, the Key Performance Indicator is of particular importance because characteristic values such as the click rate, cost per click( CPC), cost per impression( CPI) or the bounce rate determine the web analysis and the efficiency of online advertising. The term Key Performance Indicator (KPI) is also often used more broadly in Business Intelligence( BI), as a central key figure within an evaluation structure. There is also a Key Performance Indicator in network management. In this context, it is focused on load distribution and response time behavior.