What's the Difference between a KPI and a KRI?
When it comes to contact centers and data, most everyone knows what a Key Performance Indicator (KPI) is.
A lot of us get printouts and have people working on creating these to give us a pulse on critical areas within our business. But some may be less familiar with a KRI. A KRI is a Key Results Indicator and you may be surprised to learn that most of the metrics you think of as KPIs are actually KRIs.
Note: For the purposes of this posting, we are discussing KRIs as Key Result Indicators. KRI can also be a Key Risk Indicator. To be clear, Key Risk Indicators can also be very valuable in making business decisions but is a very different type of measurement.
The basic difference is that KRIs and KPIs is this: KRIs are trailing indicators. They are business outcome-based measurements. This means you’re looking at something that has already happened and measuring it then. For example, reviewing revenue would be considered a KRI. This is because you would be looking at a number that is made up of aggregate data from the past.
Now, that definitely doesn’t mean that it isn’t important. The past may be the best predictor of the future. Properly presented, KRIs can be very valuable sources of information for making decisions within your company.
- Financial metrics - actually, almost all financial metrics are actually KRIs
- Customer metrics - such as customer satisfaction or profitability
- Other metrics – as long as they cover longer periods of time such at quarters or years
KPIs are a little different.
They are leading or forward-looking indicators and are strategic in nature. An indicator, by nature, is telegraphing to you what’s over the horizon.
These individual metrics measure the direct results of strategic decisions at the executive level as to the overall direction of the organization.
While most companies in any given industry may find a similar set of KRIs useful in a dashboard, almost every individual company (even within the same industry) will have a completely different set of KPIs depending on their strategic focus.
For example, an electronics component manufacturing company that focuses on developing new products within their existing customer set will have a completely different set of KPIs compared to the same type of manufacturing company that is looking to market its current products to a new set of customers.
- Example 1: Electronics component manufacturer focused on developing new products for existing customer set
- Avg % of Design wins that are New Product Introduction (NPI) product lines, per customer
- Example 2: Electronics component manufacturer focused on increasing customers in a newly developing market
- % of registered design wins that are at new customers, with no previous booking
Furthermore, KPIs characteristics:
- Have a significant impact on a strategic objective
- Are linked directly to teams and individuals
- Are non-financial in nature (in general)
- Have short measurement cycles
- Are constantly monitored
- Are often and most effectively tied to some Business ScoreCard methodology.
By tweaking these metrics, you can have a material effect on the performance of KRIs within your company.
Note: KPIs are for a defined, short period of time (weeks, days, or sometimes even hours) and must be constantly monitored.
The chart below does a great job of comparing apples-to-apples on KPIs and KRIs. It was inspired by the site Strategy Driven and clicking on the chart will open a window with a great article on the subject.
Finally, it is critical that leadership teams (at contact centers and beyond) have a thorough understanding of how they fit into the strategic puzzle and the corrective action to take if their organization’s KPIs are not on track for success.
Looking for a quick, practical way to get your team on track with your customer engagement KPIs that feed into your KRIs? Reach out to our team at email@example.com to talk more about this!