What is Key Performance Indicator or KPI?

Name: Key Performance Indicator

Referred to as: KPI



A Key Performance Indicator or KPI is a quantifiable performance measurement device over time for any specified objective. These indicators provide targets for the teams, milestones for gauging progress, and some insights to help people across the firm to make solid decisions. Right from marketing to sales, SEO, finance to HR, KPI will help out every business-centric area to move forward at the strategic level.

The difference between KPI and metrics:

Even though KPI and metrics are more or less related, they are not actually considered to be the same. Understanding the difference is important before you take hold of one.

Generally speaking, KPIs are the main targets that you must track to make the most impact on strategic business outcomes. These KPIs will help in supporting strategy and help teams in focusing on what is important. It works on targeted new customers, every month.

Then you have metrics in the list. It helps in measuring the current success of daily business activities, which are supporting KPIs. While metrics are known to impact outcomes, they are not always critical measures. Some significant examples will be “white paper downloads,” “monthly store visits” and more.

The importance behind KPIs:

Through KPIs, you will get to realize if the teams are supporting the complete goal of the organization. There are some good reasons why you need to learn and understand KPI more. Let’s focus on those points first.

  • KPIs help in holding your teams together. It ensures that everyone provides value with the KPIs to help employees track down the progress report and help out managers to move things accordingly.
  • With KPIs, you can see the success and failures of your performance. So, you can easily cover up those points that prove to be beneficial for business growth and avoid the ones resulting in negative issues.
  • Get a complete health check with KPI. Key Performance Indicators are more used for their realistic looks at the organization’s health. Right from the risk factors to the financial indicators, you will get an answer for it all.
  • Lastly, you get the chance to keep your teams all aligned. Whether you are focusing on employee performance or measuring the success ratio of your project, KPI will help your teams to work together in one direction.

Correct Use: n/a

Key Performance Indicator
KPI = Key Performance Indicator

Our take:

It is to be believed that KPI is available in so many options. While some are proficiently used for measuring your monthly progress towards the set goal, there are others with a long-term focus. The one thing that is common in KPIs is that they have strategic goals to follow. Some of the special types are listed below for your reference.

  • Strategic KPIs will help in monitoring the goals of your organization. Here, executives look for one or two strategic KPIs to help find out how the firm is doing within the stipulated time frame.
  • Operational KPIs will measure performance for a shorter span of time. They are focused primarily on organizational efficiencies and processes.
  • Functional unit KPIs will be dealing with specified functions like IT or finance. While IT might track down time to average uptime, you have finance KPIs tracking down the gross profit margin or returning on assets. Such functional KPIs are known as operational or strategic.

Extra reading


  • Always look for the big picture with KPI
  • Make sure to focus on the outliers, who are employees or sub-teams whose results are materially lower or higher than the team average
  • Always think out like a detective
  • Make sure to always lead and tag


  • Avoid getting tunnel vision while working on KPI and focus on the big picture. While you receive a KPI report, never react when you see high or disturbing low numbers. Instead, take a step back to check out the entire picture.
  • Make sure to not address everything and everyone. With access to so many numbers, you can spend hours crunching stats. That won’t be good for your time.
  • You should not think like a statistician.
  • Avoid leading or tagging, but cover them both. It helps in running a service operation organization or sales smoothly.


In order to track down and evaluate the program, you need to define KPI. It helps you to focus on the necessary activities only, which are important for your business growth. Make sure to follow the tips mentioned below for a better understanding.

  • Remember to identify the results that you are expecting
  • Know more about the lag and lead measurement differences
  • Always focus on quantitative measures instead of qualitative ones
  • Do not measure over 10 KPIs
  • Remember to measure KPIs monthly or weekly
  • Always be ready to revise your current list

These simple tricks and tips will help you to make proper use of Key Performance Indicators and use them in your favor. 

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