It seems we live in a world saturated with data, business metrics, and performance reports. KPIs (Key Performance Indicators) are used by both small and medium-sized enterprises (SMEs) and large corporations as a fundamental analytical system to understand how a company performs in its market. Unfortunately, it’s very common for companies to become overwhelmed by them or to use them so poorly that they achieve the opposite effect of what they’re meant for.

Sometimes, this is due to the excessive number of metrics considered, which makes data analysis tedious and ineffective. That’s why it’s essential to understand the four basic KPIs of a company, depending on its sector or business model. Bernard Marr proposes the following exercise: “Select a set of KPIs whose metrics are the ONLY information you can use to judge whether the company is doing well or poorly. The challenge is to agree on just four that, combined, give a complete picture of the situation.”

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Fundamental Business Metrics

This exercise can be carried out in any company, with a team selected from among employees—or even from customers. It helps implement effective measurement systems without massive spreadsheets that track everything imaginable, focusing only on what truly matters. In any case, the four KPIs that typically emerge from this type of exercise—whether in a large corporation, SME, public administration, or nonprofit organization—are:

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Financial Performance Index

Money matters in any organization: investor satisfaction, profits, value creation, cost control, and savings all depend on the funds available.

Key business metrics for the Financial Performance Index include sales growth, profit margin, and cash flow.

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Customer Satisfaction Evaluation

Without customers, a company cannot exist. Every business has customers that it must satisfy and must ensure that these customers get everything they need from the company. Some ways to measure this indicator are customer retention and the Net Promoter Score (NPS).

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Quality of Internal Processes

Every company must ensure that its products and services meet standard expectations, while also optimizing how they are delivered. Processes should be as efficient and effective as possible to provide the quality customers expect.

Some metrics that can be used here include utilization rates, project performance, order fulfillment, quality standards, and similar indicators.

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Employee Satisfaction

Employees are the main asset of any company, no matter how much technology or artificial intelligence is used. Companies don’t function properly if employees aren’t happy and motivated. People are the key to a business’s success or failure, so measuring employee loyalty and monitoring absenteeism can help track this indicator.