Why You Need to Use Qualitative and Quantitative KPIs to Grow Your Business (+ Examples)
Every industry is full of buzzwords and “acronyms,” and a few even manage a whole-hearted crossover, as they're relevant regardless of the industry. Key performance indicators (KPIs), for example, exist within multiple industries, across multiple roles and teams, and carry the same amount of weight regardless of who is monitoring them. They reveal quite a bit about the health and success of a business.
However, choosing the right, and specific, KPIs to track changes depending on the role of the team or business function. Still they're critical for measuring operational and financial progress. While most business owners know the importance of proper KPI selection, many miss tracking opportunities by focusing solely on one type of KPI over others.
In fact, having a solid understanding of the different KPI types helps ensure you have a complete and well-rounded picture of the entire business landscape. If we focus only on numbers (quantitative), we sometimes miss anecdotal feedback (qualitative). In short, knowing how to classify your KPIs can help you get a deeper, more thorough look into your business and its performance.
- What are KPIs?
- Types of KPIS
- Qualitative and Quantitative KPIs
- The Why and How of Qualitative KPIs
- Examples of Quantitative KPIs
- How BrightGauge's dashboards can help you track KPIs
What are KPIs?
Most of us feel pretty familiar with the term “KPI,” but many people commonly associate them as solely numerical. KPIs are measurements of performance, typically of the elements critical to a business being successful (e.g., sales, finance, service).
Because it’s a measurement, the natural assumption is that KPIs should always be a number; something we can count. However, evaluation, particularly of service and customer experience, often go beyond a number.
To get a true complete picture of a business, past, present and future, understanding all the types of KPIs is essential. Each one provides valuable insight that can inform strategic decision making and business development.
Types of KPIs
1. Quantitative Indicators
Quantitative indicators are the most straight-forward KPIs. In short, they are measured solely by a number. There are two types of quantitative indicators — continuous and discrete.
Continuous quantitative indicators can take any value (including decimals) over a range and may include measurements like Miles Traveled (for a mobile service or shipping business) or Time Spent Per Call for call centers and help desks. Discrete quantitative measures are whole numbers and include things like complaints, accidents, and customer acquisition numbers.
2. Qualitative Indicators
Qualitative indicators are not measured by numbers. Typically, a qualitative KPI is a characteristic of a process or business decision.
A common qualitative indicator that organizations regularly use would be an employee satisfaction survey. While some of the survey data would be considered quantitative, the measures themselves are based on the opinion of a person. Qualitative indicators tend to focus more on experiences or feelings and the intangible value we place on them.
3. Leading Indicators
Leading indicators are used to predict the outcome of a change in a process and confirm long-term trends in data. In a survey of several Fortune 500 companies centered on the metrics that they use as leading indicators, 3M Corp, a mining and manufacturing company, supplied these answers:
- Number of new patents
- Number of new innovations
- Customer service perception
In short, leading indicators look at what might happen, such as when you introduce a new product or service. Forecasting these indicators can enable predictive decision making in relation to potential industry trends or customer demands. In and of themselves, they are not standalone indicators of success.
4. Lagging Indicators
Lagging indicators are used to measure results after an action has taken place in order to reflect upon the success or failure of that initiative. Often, they are used to gauge historical performance or to analyze the impact of a business decision. Lagging indicators enable businesses to determine whether their business decisions facilitated the desired outcome.
Much like leading indicators, by themselves they’re not as useful as they are when used in something like a historical comparison such as month over month or quarter over quarter performance. The other issue with lagging indicators is that as they provide a historical view, it is sometimes too late to make corrections to address shortfalls.
5. Input Indicators
Input indicators are used to measure resources needed for a business process or project. They are necessary for tracking resource efficiency in large projects with a lot of moving parts, but are also useful in projects of all sizes.
Some examples of input indicators include staff time, cash on hand, or equipment required.
6. Process Indicators
Process indicators are used specifically to gauge the performance of a process and, hopefully, facilitate any needed changes. A very common process indicator for support teams are KPIs focused around customer support tickets.
Tickets resolved, tickets opened, and average resolution times are all process indicators that shed light on the customer support process. In this example, that data can be used to influence changes in the support process to improve efficiency and response time or resolution time.
7. Output Indicators
Output indicators measure the success or failure of a process or business activity. Output indicators are one of the most used KPI types. Examples of output KPIs include revenues, profits, or new customers acquired.
8. Practical Indicators
Practical indicators take into account existing company processes and explore the effects of those processes on the company. For this reason, many practical indicators may be unique to your company or work processes.
9. Directional Indicators
Directional indicators evaluate specific trends within a company. Where are the metrics moving? Are they improving, declining, or maintaining?
An example of a directional metric used by many service providers would be Time on Site. This metric is used to measure the time that techs spend on-site fixing issues and troubleshooting problems. Ideally, most companies would like to lower their average Time on Site, as it is indicative of a faster, more effective service. Broad directional indicators can be used to evaluate your company’s position within your industry relative to competitors.
10. Actionable Indicators
Actionable indicators measure and reflect a company’s commitment and effectiveness in implementing business changes. Those changes could be within business processes, company culture, or political action. These metrics are used to determine how well a company is able to enact their desired changes within specified time-frames.
11. Financial Indicators
Financial indicators are the measurement of economic stability, growth, and business viability. Some of the most common financial KPIs include gross profit margin, net profit, aging accounts receivable, and asset ratios.
Financial indicators provide straightforward insight into the financial health of a company but must be paired with the other KPI types mentioned in this article to provide a complete picture.
Qualitative and Quantitative KPIs
As noted above, in several instances, KPIs should be paired with other KPIs to provide a full picture of the process, service, or outcome you’re attempting to measure. You can get a pretty powerful measurement when it comes to situations where both qualitative and quantitative KPIs are available.
More specifically, you’re looking for instances where the feedback received or data collected is both a number and provides some kind of open-ended response that enables a person to report on their experience.
For example, if you’re looking at trouble tickets for a help desk or support team, the qualitative KPIs might include Time to Resolution or how long it takes your team to solve a problem. If looking only at a number, you might get an incomplete view of the situation. If the number is higher than your current goals, it might imply that the team is taking too long or is ineffective at solving customer problems. However, qualitative data, such as client comments or feedback, may report that your team is actually quite thorough, particularly when it comes to solving complex and multi-step problems.
As the example demonstrates, KPIs are great at providing feedback and measurements, but in the same way as a tailor measures everything completely to get the right fit, your organization should be doing the same. That often means measuring multiple KPIs and analyzing all the data prior to making responsive decisions.
The Why and How of Qualitative KPIs
As discussed above, qualitative KPIs will not be measured in a number. For that reason, they’re often perceived as more complex to gather.
However, many people are more than willing to share their thoughts and experiences when asked. Further, as a management strategy to gather these measurements, simply being active in your organization, chatting informally with employees, or walking through your office, you can gather a lot of data.
Further, qualitative KPIs include anecdotes or customer stories, comments, feedback, or responses to, often, open-ended questions. That’s why in any survey, whether customer or employee, you should include and provide an opportunity to share experiences, thoughts, and feelings. Again, when paired with quantitative data, you’re more likely to get a more complete picture of any business situation.
Examples of Quantitative KPIs
Qualitative KPIs are likely the ones you’re most familiar with and are represented by numbers. They include KPIs such as:
- Sales growth
- Customer Lifetime Value
- Number of Resolved Tickets
- Customer Acquisition Cost
- Monthly Recurring Revenue
- Service Response Time
- KPIs for your finance team
- KPIs for your service team
- KPIs for your customer service team
How BrightGauge’s Dashboards Help You Track KPIs
At BrightGauge, we work closely with our clients to drive business growth by using KPIs and advanced metrics. Understanding the different types of KPIs can help teams to design a well-rounded evaluation system that boosts profits and improves business processes.
Our tools enable your team to create custom dashboards that help you to measure, visualize, and report on the KPIs that matter most, regardless of the type of KPI. No matter which teams or functions you need to monitor, you can see it all with our simple tools that do not require any complex coding. BrightGauge provides the ability to save you time and effort by pulling together the data you need in one place.
If you’re ready to talk about how our dashboards can keep you on top of your KPIs, and your business, get in touch with our team today!