Both types of KPIs are important, but they should be used to tell different stories. While operational KPIs are a measure of performance, strategic KPIs are an indicator of whether the company is properly following up on long-term business objectives. On the one hand, strategic indicators track the company's fundamental objectives, which are usually long-term. How to increase revenue by a certain percentage over a defined period.
On the other hand, operational indicators measure the progress of the different activities that aim at that strategic objective. For example, the lead conversion rate, the net profit margin, or the ratio between leads and opportunities, just to name a few. Strategic KPIs are those that help you measure and track progress toward your long-term goals. Operational metrics, on the other hand, are short-term measures that focus on specific aspects of business operations.
By tracking operational metrics, companies can identify areas for improvement and make the necessary changes to improve their overall performance. Continuing an example of financial analysis, receivables turnover is a key performance indicator that is often used by financial and operations managers to understand how quickly the company collects its receivables. A strategy can simply be a simple idea about how you want (or don't want) your company to be. On the other hand, having a clear idea of your best-selling products can help you plan inventory according to expected sales and plan advertising strategies to take advantage of best-selling products.
The goal of the strategy is to offer your team a shared vision and explain how you want to achieve it. An operational Key Performance Indicator (KPI) shows how well a company performs its daily work. KPIs are a specific category of metrics that are of particular interest to the organization and usually have clear objectives, which is not always the case with metrics. This is one of the fundamental operational metrics to ensure your customer satisfaction, but it also gives you an idea of if your company is growing and if you need more help.
These include aspects such as inventory turnover, cost per unit, and operating expenses as a percentage of sales. Creating an application to track your operational metrics is a great way to stay on top of your KPIs and ensure that you're making progress in the right areas. NetSuite's cloud-based ERP system provides a comprehensive platform for tracking operational metrics and KPIs across the organization. When considering the sales cycle process, it's of utmost importance to compile a succinct operations monitoring process to ensure that all sales stages that lead to conversions are covered.
Tracking your operational metrics will not only help you improve your business operations, but it will also help you make better decisions regarding strategic planning.