key results indicator (KRI)
A key result indicator (KRI) is a metric that measures the quantitative results of business actions to help companies track progress and reach organizational goals. KRIs offer an overview of past performance, help corporate management unify information on a company or department’s performance and provide insight on what steps leaders should take to make improvements.
Generally, KRIs offer insight as to whether an organization is moving in the right direction at the right pace. However, KRIs do not specify which actions have resulted in success (or failure) and why, they are just benchmark business metrics that determine if a goal has been met.
Characteristics of KRIs
While KRIs vary depending on the organization’s relevant metrics, they typically have a few common characteristics:
- Can be financial or non-financial related, but are frequently financial.
- Are categorized as lagging, or an indicator that follows the event.
- Give an entire organizational snapshot result.
- Are measured at regular time intervals, such as quarterly or monthly.
- Are often used to communicate business data and health with shareholders.
KRIs vs KPIs
Key results indicators are different from, though often used along with, key performance indicators (KPIs). A key performance indicator measures the actions and events leading to a result. Company leaders can study and analyze results through KRIs and put in place corrective actions based on KPIs. Both results indicators can be measured regularly.
While KRIs can be financial or non-financial indicators, KPIs are non-financial indicators only. Additionally, although KPIs are a result of a single activity or actions of single team, KRIs reflect the activity of more than one team, and thus, can show how teams are working together.
Further, while KPIs offer information actions to take to improve business, KRIs provide just a snapshot or summary of a result. Because KRIs offer an overview, they provide good insight for board members and governors who are not involved in day-to-day operations.
Examples of KRIs
Key results indicators are typically broken into two categories, financial related and non-financial related. Examples of financial KRIs include:
- Net or gross revenue.
- Net or gross profit before tax.
- Profit margins broken down by product, location, customer or segment.
- Profits in relation to revenue.
- Return on capital.
- market share.
Examples of non-financial KRIs include:
- Number of customer complaints, returns or inquiries.
- Lead Conversion rates.
- Average number of closed sales.
- Customer satisfaction
- Employee retention
- Amount of memberships or subscriptions.
- Implementation or waiting times of a service.