Operating KPI
BeginnerAn operating KPI is a key performance indicator that measures how well a business's day-to-day activities are working, such as production output, delivery times, customer numbers or staff productivity.
Operating KPIs focus on the activities that produce financial results, rather than the financial results themselves. They are often more detailed and more closely tied to what individual teams control.
Examples include orders shipped on time, products made per hour, defect rates, website visitors, customer conversion rates, average handling time in a call centre, hotel occupancy rates and the number of active users of an app.
For example, an airline might track the percentage of seats filled on each flight and the percentage of flights that leave on time. Both affect revenue and costs, and both can be acted on by operational teams.
Operating KPIs are often leading indicators: changes in them can signal future changes in financial results. A falling customer satisfaction score, for instance, may show up as lower sales months later. Combining operating and financial KPIs gives managers a fuller picture of performance.
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