key performance indicators in business plan

More Like this

Kpi meaning + 27 examples of key performance indicators.

As your organization begins to sketch out what your strategic plan might look like, it’s likely to come to your attention that you’ll need to gain consensus around what your key performance indicators will be and how they will impact your organization. If you haven’t thought much about your KPIs yet, that’s okay. We can help!

We’ve compiled a complete guide that includes an overview of what makes a good KPI, the benefits of good key performance indicators, and a list of KPI examples [organized by department and industry] for your reference as you develop your organization’s strategic plan and goals.

Video Transcript – How to Write KPIs

Hi, my name is Erica Olsen. Today’s whiteboard video is on key performance indicators, or KPIs for short. These are those things that are associated with either goals or objectives, whatever you’re calling them, those elements of your plan that are the expressions of what you want to achieve by when those quantifiable outcome-based statements.

So KPI’s answer the quantifiable piece of your goals and objectives. They come in three different flavors. So we’ll talk about that in just a minute. But before we do, putting great measures together and making sure they work well for you, you need to have these four attributes. And before I talk about those four attributes, so I just want to say the reason they need to work well for you is because KPIs are the heartbeat of your performance management process. They tell you whether you’re making progress, and ultimately, we want to make progress against our strategy. So KPIs are the thing that do that for us. So you’re going to live with them a lot. So let’s make sure they’re really good.

Okay, so the four things you need to have in order to make sure your these measures work for you.

Our number one is your measure. So the measure is the verbal expression very simply, in words, what are we measuring, which is fairly straightforward. The tricky thing is, is we need to be as expressive as we possibly can with our measures. So number of new customers, that’s fine. There’s nothing wrong with that. But a little bit advanced or a little bit more expressive, would be number of new customers this year, or number of new customers for a certain product or a certain service. So what is it is it? Yeah, so it is, so be really clear. And when it comes to measuring it on a monthly basis, you’re gonna want to be as clear as possible. So number of new customers, let’s say this year,

Number two, is our target, or target is the numeric value that we want to achieve. So a couple of things that are important about this is, the target needs to be apples to apples with when the goal date is set, or the due date is set. So we want to achieve 1000 new customers by the end of the year. So the due date in the target works hand in hand. The other thing is the measure and the target need to work hand in hand. So it’s a number. So this is a number, this is a percentage, this is a percentage, you get the idea.

Third thing, we actually run a report on this data. So where is it coming from? Be clear about what the source is. Most organizations have all sorts of data sources, fragmented systems. So making sure you identify where this data is coming from will save you a lot of time.

And then frequency. So how often are you going to be reporting on this KPI, ideally, you’re running monthly strategy reviews to report on the progress of your plan, at least monthly, in which case we’d like to see monthly KPIs. So you got to be able to pull the data monthly in order to make that happen. That’s not always possible. But let’s try to get there. Certainly some organizations are weekly and others are daily, monthly is a good place to start. So frequency. Great.

So now we know the components that we need to have in place in order to have our KPIs. Here are some different types of KPIs that you might think about as you’re putting your plan together.

So there are just straight up raw numbers, I call these widget counting, there’s nothing wrong with widget counting, they don’t necessarily tell a story. And I’ll talk about how to make this tell a story in a minute. But this is just simply widget counting number of things.

The second thing is progress. So this is really often used, it’s great. We use this, which is expressed as percent complete percent complete of the goal, percent completed a project, whatever it might be, it’s a project type measure. It’s a good measure, if if you don’t have quantifiable measures, or you can’t get the data, and you just want to track the performance of the goal as it relates to action items being completed under it.

The third type of indicator is a Change Type Indicator, like percent increase in sales, making this better would be percent increase in sales compared to last year. And the idea is 22%. So you can see how that starts to be more expressive, and work with the target. So this serves to tell a little bit more of a story than this one does, right? And if you want to actually make your widget counting measures tell more of a story like this one does, you might change something like this to read percentage of new customers acquired compared to same time last year. So that’s an example.

Okay, so now we know what we have to have in place and kind of different types of measures to get our ideas flowing. Let’s talk about one thing that you might take your measure writing to the next level and that is think about the fact that there are leading and lagging measures so are leading and lagging indicators. So percent increase in sales or sales is a lagging indicator it occurred as an outcome. If you want to make sure that you’re on track ACC, you might have a KPI in place, which is telling us whether we’re going to hit that increase such as your pipeline, maybe number of leads, or the size of your pipeline. So we don’t want to over rotate on this necessarily, but we do want to make sure we have a combination of leading and lagging measures when we’re looking at our performance on a monthly basis.

So with that, that’s all we have for today. Hopefully you have what you need to write great KPIs for your organization. Happy strategizing. And don’t forget, subscribe to our channel.

What is a Key Performance Indicator KPI — KPI Definition

Key performance indicators, also called KPIs, are the elements of your organization’s plan that express the quantitative outcomes you seek and how you will measure success. In other words, they tell you what you want to achieve and by when, and are crucial for evaluating the success of an organization. They are the qualitative, quantifiable, outcome-based statements you’ll use to measure progress and determine if you’re on track to meet your goals or objectives. Good plans use 5-7 KPIs to manage and track their progress against goals.

DOWNLOAD THE FREE KPI GUIDE

KPI Meaning & Why do you need them?

Key performance indicators are intended to create a holistic picture of how your organization is performing against its intended targets, business goals, or objectives. A great key performance indicator should accomplish all the following:

• Outline and measure your organization’s most important set of outputs.
• Work as the heartbeat of your performance management process and confirm whether progress is being made against your strategy.
• Represent the key elements of your strategic plan that express what you want to achieve by when.
• Measure the quantifiable components of your goals and objectives.
• Measure the most important leading and lagging measures in your organization.

The Five Elements of a KPI

These are the heartbeat of your performance management process and must work well! They tell you whether you’re making progress or how far you are from reaching your goals. Ultimately, you want to make progress against your strategy. You’ll live with these KPIs for at least the quarter (preferably the year), so make sure they’re valuable!

Great strategies track the progress of core elements of the plan. Each key performance indicator needs to include the following elements:

• A Measure: Every KPI must have a measure. The best ones have more specific or expressive measures.
• A Target: Every KPI needs to have a target that matches your measure and the period of your goal. These are generally a numeric values you’re seeking to achieve.
• A Data Source: Each of these needs to have a clearly defined data source so there is no gray area in measuring and tracking each.
• Reporting Frequency: Different measures may have different reporting needs, but a good rule to follow is to report on them at least monthly.
• Owner: While this isn’t a mandatory aspect of your KPI statement, setting expectations of who will take care of tracking, reporting, and refining specific KPIs is helpful to your overall organizational plan.

Indicators vs. Key Performance Indicators

An indicator is a general term that describes a business’s performance metrics.

There can be several types of indicators a company may track, but not all indicators are KPIs, especially if they don’t tie into an organization’s overall strategic plan or objectives, which is a MUST!

Key Performance Indicators

On the other hand, a key performance indicator is a very specific indicator that measures an organization’s progress toward a specific company-wide goal or objective. We typically recommend you narrow down the KPIs your organization tracks to no more than 7. When you track too many goals, it can get daunting and confusing.

Pro Tip : You should only track the best and most valuable indicators that tie to your organization’s long-term strategic goals and direction.

Benefits of Good Key Performance Indicators

What benefits do key performance indicators have on your strategic plan, and on your organization as a whole? A lot of benefits, actually! They are extremely important to the success of your strategic plan as they help you track progress of your goals. Implementing them correctly is critical to success.

• Benefit #1: They provide clarity and focus to your strategic plan by measuring progress and aligning your team’s efforts to the organization’s objectives. They also show your measurable progress over time and create ways to track your organization’s continued improvement.
• Benefit #2: Key performance indicators create a way to communicate a shared understanding of success. They give your team a shared understanding of what’s important to achieve your long-term vision and create a shared language to express your progress.
• Benefit #3: They provide signposts and triggers to help you identify when to act. A good balance of leading and lagging key performance indicators allow you to see the early warning signs when things are going well, or when it’s time to act.

How to Develop KPIs

We’ve covered this extensively in our How to Identify Key Performance Indicators post. But, here’s a really quick recap:

Step 1: Identify Measures that Contribute Directly to Your Annual Organization-wide Objectives

Ensure you select measures that can be directly used to quantify your most important annual objectives.

Step 2: Evaluate the Quality of Your Core Performance Indicators

Select a balance of leading and lagging indicators (which we define later in the article) that are quantifiable and move your organization forward. Always ensure you have relevant KPIs. Having the right key performance indicators makes a world of difference!

Step 3: Assign Ownership

Every key performance indicator needs ownership! It’s just that simple.

Step 4: Monitor and Report with Consistency

Whatever you do, don’t just set and forget your goals. We see it occasionally that people will select measures and not track them, but what’s the point of that? Be consistent. We recommend selecting measures that can be reported upon at least monthly.

The 3 Common Types of KPIs to Reference as You Build Your Metrics

Key performance indicators answer the quantifiable piece of your goals and objectives . They come in three different flavors. Now that you know the components of great key performance indicators, here are some different ones that you might think about as you’re putting your plan together:

Broad Number Measures

The first type of KPI is what we like to call broad number measures. These are the ones that essentially count something. An example is counting the number of products sold or the number of visits to a webpage.

PRO TIP: There is nothing wrong with these, but they don’t tell a story. Great measures help you create a clear picture of what is going on in your organization. So, using only broad ones won’t help create a narrative.

Progress Measures

Progress key performance indicators are used to help measure the progress of outcomes . This is most commonly known as the “percent complete” KPI, which is helpful in measuring the progress of completing a goal or project. These are best when quantifiable outcomes are difficult to track, or you can’t get specific data.

PRO TIP: Progress KPIs are great, but your KPI stack needs to include some easily quantifiable measures. We recommend using a mixture of progress KPIs and other types that have clear targets and data sources.

Change Measures

The final type of KPI is a change indicator. These are used to measure the quantifiable change in a metric or measure. An example would be, “X% increase in sales.” It adds a change measure to a quantifiable target.

The more specific change measures are, the easier they are to understand. A better iteration of the example above would be “22% increase in sales over last year, which represents an xyz lift in net-new business.” More expressive measures are better.

PRO TIP: Change measures are good for helping create a clear narrative . It helps explain where you’re going instead of just a simple target.

Leading KPIs vs Lagging KPIs

Part of creating a holistic picture of your organization’s progress is looking at different types of measures, like a combination of leading and lagging indicators. Using a mixture of both allows you to monitor progress and early warning signs closely when your plan is under or over-performing (leading indicator) and you have a good hold on how that performance will impact your business down the road (lagging indicator). Here’s a deep dive on leading versus lagging indicators:

Leading Indicator

We often refer to these metrics as the measures that tell you how your business might/will perform in the future. They are the warning buoys you put out in the water to let you know when something is going well and when something isn’t.

For example, a leading KPI for an organization might be the cost to deliver a good/service. If the cost of labor increases, it will give you a leading indicator that you will see an impact on net profit or inventory cost.

Another example of a leading indicator might be how well your website is ranking or how well your advertising is performing. If your website is performing well, it might be a leading indicator that your sales team will have an increase in qualified leads and contracts signed.

Lagging Indicator

A lagging indicator refers to past developments and effects. This reflects the past outcomes of your measure. So, it lags behind the performance of your leading indicators.

An example of a lagging indicator is EBITA. It reflects your earnings for a past date. That lagging indicator may have been influenced by leading indicators like the cost of labor/materials.

Balancing Leading and Lagging Indicators

If you want to ensure that you’re on track, you might have a KPI in place telling you whether you will hit that increase, such as your lead pipeline. We don’t want to over-rotate on this, but as part of a holistic, agile plan, we recommend outlining 5-7 key performance metrics or indicators in your plan that show a mix of leading and lagging indicators. .

Having a mixture of both gives you both a look-back and a look-forward as you measure the success of your plan and business health. We also recommend identifying and committing to tracking and managing the same KPIs for about a year, with regular monthly or quarterly reporting cadence, to create consistency in data and reporting.

27 KPI Examples

Sales key performance indicators.

• Number of contracts signed per quarter
• Dollar value for new contracts signed per period
• Number of qualified leads per month
• Number of engaged qualified leads in the sales funnel
• Hours of resources spent on sales follow up
• Average time for conversion

Increase the number of contracts signed by 10% each quarter.

• Measure: Number of contracts signed per quarter
• Target: Increase number of new contracts signed by 10% each quarter
• Data Source: CRM system
• Reporting Frequency: Weekly
• *Owner: Sales Team
• Due Date: Q1, Q2, Q3, Q4

Increase the value of new contracts by $300,000 per quarter this year.

• Measure: Dollar value for new contracts signed per period
• Data Source: Hubspot Sales Funnel
• Reporting Frequency: Monthly
• *Owner: VP of Sales

Increase the close rate to 30% from 20% by the end of the year.

• Measure: Close rate – number of closed contracts/sales qualified leads
• Target: Increase close rate from 20% to 30%
• *Owner: Director of Sales
• Due Date: December 31, 2023

Increase the number of weekly engaged qualified leads in the sales from 50 to 75 by the end of FY23.

• Measure: Number of engaged qualified leads in sales funnel
• Target: 50 to 75 by end of FY2023
• Data Source: Marketing and Sales CRM
• *Owner: Head of Sales

Decrease time to conversion from 60 to 45 days by Q3 2023.

• Measure: Average time for conversion
• Target: 60 days to 45 days
• Due Date: Q3 2023

Increase number of closed contracts by 2 contracts/week in 2023.

• Measure: Number of closed contracts
• Target: Increase closed contracts a week from 4 to 6
• Data Source: Sales Pipeline
• *Owner: Sales and Marketing Team

Examples of KPIs for Financial

• Growth in revenue
• Net profit margin
• Gross profit margin
• Operational cash flow
• Current accounts receivables

Financial KPIs as SMART Annual Goals

Grow top-line revenue by 10% by the end of 2023.

• Measure: Revenue growth
• Target: 10% growt
• Data Source: Quickbooks
• *Owner: Finance and Operations Team
• Due Date: By the end 2023

Increase gross profit margin by 12% by the end of 2023.

• Measure: Percentage growth of net profit margin
• Target: 12% net profit margin increase
• Data Source: Financial statements
• *Owner: Accounting Department

Increase net profit margin from 32% to 40% by the end of 2023.

• Measure: Gross profit margin in percentage
• Target: Increase gross profit margin from 32% to 40% by the end of 2023
• Data Source: CRM and Quickbooks
• *Owner: CFO

Maintain $5M operating cash flow for FY2023.

• Measure: Dollar amount of operational cash flow
• Target: $5M average
• Data Source: P&L
• Due Date: By the end FY2023

Collect 95% of account receivables within 60 days in 2023.

• Measure: Accounts collected within 60 days
• Target: 95% in 2023
• Data Source: Finance
• Due Date: End of 2023

Examples of KPIs for Customers

• Number of customers retained
• Percentage of market share
• Net promotor score
• Average ticket/support resolution time

Customer KPIs as SMART Annual Goals

90% of current customer monthly subscriptions during FY2023.

• Measure: Number of customers retained
• Target: Retain 90% percent of monthly subscription customers in FY2023
• Data Source: CRM software
• *Owner: Director of Client Operations

Increase market share by 5% by the end of 2023.

• Measure: Percentage of market share
• Target: Increase market share from 25%-30% by the end of 2023
• Data Source: Market research reports
• Reporting Frequency: Quarterly
• *Owner: Head of Marketing

Increase NPS score by 9 points in 2023.

• Measure: Net Promoter Score
• Target: Achieve a 9-point NPS increase over FY2023
• Data Source: Customer surveys
• *Owner: COO

Achieve a weekly ticket close rate of 85% by the end of FY2023.

• Measure: Average ticket/support resolution time
• Target: Achieve a weekly ticket close rate of 85%
• Data Source: Customer support data
• *Owner: Customer Support Team

Examples of KPIs for Operations

• Order fulfillment time
• Time to market
• Employee satisfaction rating
• Employee churn rate
• Inventory turnover

Operational KPIs as SMART Annual Goals

Average 3 days maximum order fill time by the end of Q3 2023.

• Measure: Order fulfilment time
• Target: Average maximum of 3 days
• Data Source: Order management software
• *Owner: Shipping Manager

Achieve an average SaaS project time-to-market of 4 weeks per feature in 2023.

• Measure: Average time to market
• Target: 4 weeks per feature
• Data Source: Product development and launch data
• *Owner: Product Development Team

Earn a minimum score of 80% employee satisfaction survey over the next year.

• Measure: Employee satisfaction rating
• Target: Earn a minimum score of 80% employee
• Data Source: Employee satisfaction survey and feedback

Maintain a maximum of 10% employee churn rate over the next year.

• Measure: Employee churn rate
• Target: Maintain a maximum of 10% employee churn rate over the next year
• Data Source: Human resources and payroll data
• *Owner: Human Resources

Achieve a minimum ratio of 5-6 inventory turnover in 2023.

• Measure: Inventory turnover ratio
• Target: Minimum ratio of 5-6
• Data Source: Inventory management software
• *Owner: perations Department

Marketing Key Performance

• Monthly website traffic
• Number of marketing qualified leads
• Conversion rate for call-to-action content
• Keywords in top 10 search engine results
• Blog articles published this month
• E-Books published this month

Marketing KPIs as SMART Annual Goals

Achieve a minimum of 10% increase in monthly website traffic over the next year.

• Measure: Monthly website traffic
• Target: 10% increase in monthly website
• Data Source: Google analytics
• *Owner: Marketing Manager

Generate a minimum of 200 qualified leads per month in 2023.

• Measure: Number of marketing qualified leads
• Target: 200 qualified leads per month
• Data Source: Hubspot

Achieve a minimum of 10% conversion rate for on-page CTAs by end of Q3 2023.

• Measure: Conversion rate on service pages
• Target: 10%
• Due Date: End of Q3, 2023

Achieve a minimum of 20 high-intent keywords in the top 10 search engine results over the next year.

• Measure: Keywords in top 10 search engine results
• Target: 20 keywords
• Data Source: SEM Rush data
• *Owner: SEO Manager

Publish a minimum of 4 blog articles per month to earn new leads in 2023.

• Measure: Blog articles
• Target: 4 per month
• Data Source: CMS
• *Owner: Content Marketing Manager
• Due Date: December 2023

Publish at least 2 e-books per quarter in 2023 to create new marketing-qualified leads.

• Measure: E-Books published
• Target: 2 per quarter
• Data Source: Content management system

Bonus: +40 Extra KPI Examples

Supply chain example key performance indicators.

• Number of On-Time Deliveries
• Inventory Carry Rate
• Months of Supply on Hand
• Inventory-to-Sales Ratio (ISR)
• Carrying Cost of Inventory
• Inventory Turnover Rate
• Perfect Order Rate
• Inventory Accuracy

Healthcare Example Key Performance Indicators

• Bed or Room Turnover
• Average Patient Wait Time
• Average Treatment Charge
• Average Insurance Claim Cost
• Medical Error Rate
• Patient-to-Staff Ratio
• Medication Errors
• Average Emergency Room Wait Times
• Average Insurance Processing Time
• Billing Code Error Rates
• Average Hospital Stay
• Patient Satisfaction Rate

Human Resource Example Key Performance Indicators

• Organization Headcount
• Average Number of Job Vacancies
• Applications Received Per Job Vacancy
• Job Offer Acceptance Rate
• Cost Per New Hire
• Average Salary
• Average Employee Satisfaction
• Employee Turnover Rate
• New Hire Training Effectiveness

Social Media Example Key Performance Indicators

• Average Engagement
• % Growth in Following
• Traffic Conversions
• Social Interactions
• Website Traffic from Social Media
• Number of Post Shares
• Social Visitor Conversion Rates
• Issues Resolved Using Social Channel

Conclusion: Keeping a Pulse on Your Plan

With the foundational knowledge of the KPI anatomy and a few example starting points, it’s important you build out these metrics with detailed and specific data sources so you can truly evaluate if you’re achieving your goals. Remember, these will be the 5-7 core metrics you’ll live by for the next 12 months, so it’s crucial to develop effective KPIs that follow the SMART formula.

A combination of leading and lagging KPIs will paint a clear picture of your organization’s strategic performance and empower you to make agile decisions to impact your team’s success. KPI software allows your business to monitor and analyze performance trends over time by centralizing your data and using relevant data points and calculations. If you’d like more information on building better ones, check out the video above and click here to see why not all KPIs are created equal.

Our Other KPI Resources

We have several other great resources to consider as you build your organization’s Key Performance Indicators! Check out these other helpful posts and guides:

• OKRs vs. KPIs: A Downloadable Guide to Explain the Difference
• How to Identify KPIs in 4 Steps
• KPIs vs Metrics: Tips and Tricks to Performance Measures
• Guide to Establishing Weekly Health Metrics

FAQs on Key Performance Indicators

KPI stands for Key Performance Indicators. KPIs are the elements of your organization’s business or strategic plan that express what outcomes you are seeking and how you will measure their success. They express what you need to achieve by when. KPIs are always quantifiable, outcome-based statements to measure if you’re on track to meet your goals and objectives.

The 4 elements of key performance indicators are:

• A Measure – The best KPIs have more expressive measures.
• A Target – Every KPI needs to have a target that matches your measure and the time period of your goal.
• A Data Source – Every KPI needs to have a clearly defined data source.
• Reporting Frequency – A defined reporting frequency.

No, KPIs (Key Performance Indicators) are different from metrics. Metrics are quantitative measurements used to track and analyze various aspects of business performance, while KPIs are specific metrics chosen as indicators of success in achieving strategic goals.

16 Comments

HI Erica hope your are doing well, Sometime Strategy doesn’t cover all the activities through the company, like maintenance for example may be quality control …. sure they have a contribution in the overall goals achievement but there is no specific new requirement for them unless doing their job, do u think its better to develop a specific KPIs for these department? waiting your recommendation

Thanks for your strategic KPIs

Hello Erica, Could you please clarify how to set KPIs for the Strategic Planning team?

Hi Diana, check out the whitepaper above for more insight!

Hello Erica, Could you please clarify, how to set the KPIs for the Strategic PLanning team?

exampels of empowerment kpis

I found great information in this article. In any case, the characteristics that KPIs must have are: measurability, effectiveness, relevance, utility and feasibility

How to write methodology guidelines for strategy implementation / a company’s review and tracking (process and workflow) for all a company’s divisions

support on strategizing Learning & Development for Automobile dealership

Could you please to clarify how to write the KPIs for the Secretary.

Check out our guide to creating KPIs for more help here: https://onstrategyhq.com/kpi-guide-download/

That’s an amazing article.

Could you please to clarify how to write the KPIs for the office boy supervisor

Could you please clarify how to write KPIs for the editorial assistant in a start up publishing company.

Kindly advice how I would set a kpi for a mattress factory

Comments Cancel

Join 60,000 other leaders engaged in transforming their organizations., subscribe to get the latest agile strategy best practices, free guides, case studies, and videos in your inbox every week..

Leading strategy? Join our FREE community.

Become a member of the chief strategy officer collaborative..

Free monthly sessions and exclusive content.

Do you want to 2x your impact.

• Business Essentials
• Leadership & Management
• Credential of Leadership, Impact, and Management in Business (CLIMB)
• Entrepreneurship & Innovation
• Digital Transformation
• Finance & Accounting
• Business in Society
• For Organizations
• Support Portal
• Media Coverage
• Founding Donors
• Leadership Team

• Harvard Business School →
• HBS Online →
• Business Insights →

Business Insights

Harvard Business School Online's Business Insights Blog provides the career insights you need to achieve your goals and gain confidence in your business skills.

• Career Development
• Communication
• Decision-Making
• Earning Your MBA
• Negotiation
• News & Events
• Productivity
• Staff Spotlight
• Student Profiles
• Work-Life Balance
• AI Essentials for Business
• Alternative Investments
• Business Analytics
• Business Strategy
• Business and Climate Change
• Design Thinking and Innovation
• Digital Marketing Strategy
• Disruptive Strategy
• Economics for Managers
• Entrepreneurship Essentials
• Financial Accounting
• Global Business
• Launching Tech Ventures
• Leadership Principles
• Leadership, Ethics, and Corporate Accountability
• Leading with Finance
• Management Essentials
• Negotiation Mastery
• Organizational Leadership
• Power and Influence for Positive Impact
• Strategy Execution
• Sustainable Business Strategy
• Sustainable Investing
• Winning with Digital Platforms

How to Measure Your Business Performance

• 14 Nov 2023

Measuring your business’s performance is essential to its long-term success. By assessing its operations, you can make informed decisions, find ways to improve, and establish accountability in the workplace .

Despite these benefits, many businesses struggle to use the vast amounts of data they have access to. According to a report by data storage company Seagate , businesses act on just 32 percent of the data available to them—with the remaining 68 percent going unleveraged.

If you want to help your organization achieve its strategic objectives, here’s why it’s vital to measure business performance and how to do it.

Access your free e-book today.

Why Measure Your Business Performance?

Measuring business performance is critical to ensuring effective strategy formulation and implementation . It can also help identify obstacles and setbacks that impact your company’s success—similar to risk management .

According to the online course Strategy Execution , performance measurement comprises the formal, information-based routines and procedures managers use to maintain or alter patterns in organizational activities.

Engaging in performance measurement helps you and organizational leaders , investors, and employees understand how your roles and responsibilities relate to your business’s strategy—creating a culture of accountability and commitment to achieving its goals and objectives .

How to Measure Business Performance

Long-term business success doesn’t just result from effective strategy execution; it also relies on a holistic approach to monitoring, measuring, and evaluating performance. This involves creating objective and subjective measures—often called key performance indicators (KPIs) .

While objective measures—like revenue and profit margin—are crucial to assessing performance, subjective measures are often overlooked.

“If a measure is objective, you can independently verify it,” says Harvard Business School Professor Robert Simons, who teaches Strategy Execution . “You and I could look at the same set of data and draw the same conclusion. A subjective measure, by contrast, requires judgment.”

For example, measuring employee engagement can help gauge the amount of internal support for your business strategy. High employee engagement can also greatly impact your company’s bottom line—increasing profitability by up to 23 percent .

“These measures work well only when there's a high degree of trust between employees and managers,” Simons says in Strategy Execution . “Employees must feel confident that subjective measures are applied fairly.”

Using diagnostic control systems —information systems managers use to monitor organizational outcomes and correct negative performance—you can ensure consistency and standardization when measuring success.

Examples of diagnostic control systems include:

• Performance scorecards
• Project monitoring systems
• Human resources systems
• Standard cost-accounting systems

Before implementing such systems and measuring your business performance, here are three factors to consider.

3 Considerations When Measuring Business Performance

1. financial goals.

Measuring business performance starts with financial goals. This is largely because your company’s financial value is its first indicator of success or failure. Financial goals also help ensure your diagnostic control systems effectively monitor profitability and provide insight into how to fix problems.

To set financial goals, you can use a profit plan —a summary of a specific accounting period’s anticipated revenue inflows and expense outflows—presented in the form of an income statement . Profit plans serve several purposes; their most important is creating control systems that place responsibility on management.

“Individual managers can be held accountable for achieving specific revenue and expense targets and the overall profitability of the business,” Simons says in Strategy Execution .

To confirm that your profit plan holds you and others accountable for your organization’s financial health , Simons suggests asking the following:

• Does the business create enough profit to cover costs and reinvest in future endeavors?
• Does the business generate enough cash to remain solvent through the year?
• Does the business create sufficient financial returns for investors?

“Once managers have completed the profit planning process,” Simons says, “people throughout the organization will be in agreement about the direction of the business and the assumptions that underpin the forecasts.”

Related: 7 Financial Forecasting Methods to Predict Business Performance

2. Non-Financial Goals

While financial metrics are critical to assessing short-term profitability, non-financial goals can impact your business’s long-term success.

Objectives like improving customer satisfaction, boosting employee engagement, and enhancing ethical practices can all drive business performance—even financially.

“An organization that's focused just on financial goals will rarely achieve those goals for a long period of time,” says Tom Polen, CEO and president of medical technology company Becton Dickinson, in Strategy Execution . “It's all the other goals that are going to feed into the financial goals.”

In the course, Polen says he consistently communicates his organization’s strategic objectives to employees and uses an incentivization system to reward those working to support non-financial goals.

“As a health care provider, the most important thing—bar none—is quality,” Polen says. “While we’re focused on financial goals, our quality goals—which cut across manufacturing, regulatory, marketing, and medical—contribute to making sure that we have quality products at the end of the day. And we’ll never sacrifice a quality goal for a financial goal.”

3. Intangible Assets

Your goals aren’t the only thing you can use to measure your company’s performance. Intangible assets—non-physical assets your business significantly values—can also help.

Examples of intangible assets include:

• Research capabilities
• Brand loyalty
• Customer relationships

“These are among the most valuable assets in many of today's businesses,” Simons says in Strategy Execution . “But you won't find them anywhere on an income statement or balance sheet .”

Since you can’t monitor these assets using traditional accounting systems, you can instead use a balanced scorecard —a tool designed to help track and measure non-financial variables.

“The balanced scorecard combines the traditional financial perspective with additional perspectives that focus on customers, internal business processes, and learning and development,” Simons says in Strategy Execution . “These additional perspectives help businesses measure all the activities essential to creating value.”

For example, if your business strategy focuses on improving an intangible asset, like brand loyalty, you can use a balanced scorecard to track customer satisfaction through surveys and reviews.

In this way, the balanced scorecard offers a comprehensive view of business performance, helping you make informed decisions to protect and enhance intangible assets’ value.

Start Measuring Your Business Performance

Measuring business performance doesn’t have to be difficult. By implementing the appropriate metrics and control systems, you can seamlessly track strategic initiatives’ progress.

By enrolling in an online course, such as Strategy Execution , you can be immersed in a dynamic learning experience featuring real-world examples of businesses that have employed performance measurement strategies to secure long-term success.

Do you need help measuring your business performance? Explore Strategy Execution —one of our online strategy courses —and download our e-book to discover how to think like a top strategist.

About the Author

Key performance indicators

Table of Contents

What is a kpi.

KPI stands for key performance indicators. This is a quantifiable measurement of performance over time for a specific activity that is tied to a company objective.

A key performance indicator can help you better understand your business’ financial and operational achievements, so you can see where you’re at and make improvements to your strategy.

Picture Robin Hood aiming for his archery target. Without the target, Robin Hood wouldn’t know where to aim his bow. But, with the target, he can measure exactly how far off he is from his goal, so he can adjust his aim, strength, or his bow.

The same is true for the KPIs in your business. They give you a clear marker of how you’re performing so you can understand if you’re in the right direction, or if you need to make strategic adjustments along the way.

A KPI provides your business with a target to shoot for, milestones to track your performance over time, and insights to help your organization's leaders make better decisions. From marketing to sales to finance and even HR, key performance indicators can help improve productivity, progress, and achievement across every area of your business.

What is KPI reporting?

KPI reporting is the business management practice of measuring, organizing, and analyzing a business’ most important key performance indicators.

KPI reports help business leaders identify strengths and weaknesses, optimize company performance, improve engagement, and reach strategic goals. Managers also use KPI reporting to analyze trends in specific departments or in the business as a whole to improve decision-making.

KPI reporting is typically presented visually in the form of an interactive dashboard. KPI dashboards give managers a quick overview of the essential data points associated with your specific key performance indicators.

KPI dashboards present your KPIs in an easily digestible format so managers can quickly analyze and extract the most crucial information to help them optimize their overall strategy.

How to measure KPI

If you’re going to be successful in your KPI tracking, then you need to build a proper KPI measurement framework, or use a KPI Tree Template . Here are six steps to setting a framework for your KPI measurement:

1. Determine your main goal(s)

The first step to measuring your KPIs is to first identify which KPIs you'll be tracking. To figure out your KPIs, you need to first determine the goal you and your team are working towards. For instance, the goal of a specific marketing campaign could be to generate $50,000 in revenue or bring in 50 leads. No matter what your goal is, we’ll use it to establish KPIs.

2. Establish primary KPIs

Now that you have your overall goal, it’s time to establish your primary KPIs. These are significant KPIs designed to measure the overall results of your campaign and whether it was a success or not. Some primary KPI examples include the amount of revenue generated by specific channels like email marketing or Facebook ads. Or, if your goal is brand awareness, it could be your overall reach or impressions on different social platforms.

3. Establish secondary KPIs

Next up, it’s time to establish secondary key performance indicators to further understand the success of your campaign. These could be three to five additional metrics that are important to your campaign but not necessarily your primary KPI. For instance, if your primary KPI is email revenue generated, secondary KPIs could include average order value or return customer rate.

4. Choose health metrics

Next, we’ll establish metrics that'll help you understand the overall health of your campaign, rather than whether or not you've reached your primary goal. Following our email marketing KPIs, health metrics could include metrics like open rate, click rate, and total email opens.

5. Establish specific KPI targets

Now that you’ve chosen the KPIs that you’ll track, it’s time to determine the exact numerical target for each KPI. The numbers you establish should be realistic and measurable numbers to help you stay on track. Simply stating you want to earn more revenue from email marketing isn’t enough. Get specific. State that you want to generate $50,000 from the campaign, with $20,000 of that coming from email. If your average order value (AOV) is $50, set a goal for your AOV to be $60. Aim for a 40% email open rate if you usually get 35%.

By setting specific, measurable KPIs, you’re much more likely to achieve them or at least come close.

6. Set up benchmarks

Finally, you need to set up benchmarks. Remember to look at past campaign performance to better understand what a typical benchmark for KPIs is. But, don’t stop there. Look at competitors. Look at others in your industry or similar businesses in other industries. By understanding where you’re at relative to your competitors or your own past performance, it'll help you determine whether you’re on the right track or not.

Benefits of tracking KPIs

KPIs are a critical part of any business strategy to ensure you’re staying on track and improving performance. Here are a few reasons why you should be tracking KPIs.

Measure performance

First off, KPIs help you measure your performance. If you’re just “winging it” when you’re working on a project or a campaign, how will you know whether or not you’re a success?

Without KPIs, you’ll be driving blind, not knowing what’s improving or worse yet‌‌ — ‌harming — your organization.

Tracking KPIs can help you measure your progress — or lack thereof — toward crucial business goals.

Improve employee morale and engagement

A business is nothing without people, and a business is almost as good as nothing if people aren’t engaged. One key path to improving engagement at work is by establishing KPIs.

You may think that pressuring your team to hit certain targets will make them dislike their job. But, the opposite is true. People crave growth. Establishing KPIs for individuals and different departments is a great way to get your team engaged.

Remember to align your KPIs with organizational goals and goals for your department. The better you can tie your KPIs to a deeper, purposeful goal, the more engaged your employees will be and the greater company morale will be overall.

Improve decision-making

KPIs provide leaders with key insights into their organization and department. They offer more than just numbers on a page or a screen. They offer valuable information that can help you understand what specific points of action are improving your business and what ones are hurting it.

Instead of just making decisions based on gut feelings, you can use KPIs to make data-informed decisions that will improve your odds of success.

Examples of KPIs

Curious to know what the most commonly tracked KPIs are?

Here are a few examples of KPIs, broken down by different departments that you can use as a baseline to establish your own key performance indicators:

Revenue by channel

Customer satisfaction

Conversion rates

Marketing qualified leads (MQLs)

Return on investment (ROI)

Return on advertising spend (ROAS)

Customer acquisition cost (CAC)

Total sales generated

Sales volume by location

Sales qualified leads (SQLs)

New inbound leads

New qualified opportunities

Total pipeline value

Average order value

Operating profit margin

Gross profit margin

Net profit margin

Operating expense ratio

Working capital ratio

Return on investment

Customer Service

Average response time

First contact resolution rate

Cost per conversation

Customer effort score

Most active support agents

What makes for an effective KPI?

Now that you know a few different types of KPIs you can track broken down by department, it’s time to figure out what makes for an effective KPI so you know how you can craft yours the right way.

First and foremost, the KPIs you track should be relevant to your role, team, department, and business. It should be connected with your team and organization’s overall business goals and mission.

For example, let’s say your company is aiming to increase annual recurring revenue (ARR) by 30% at the end of the year. If you’re on the marketing team, you might consider tracking conversion rates as this directly aligns with revenue.

KPIs need to be measurable. If you don’t know how to measure it, then you need to change it or throw it out. When you set up KPIs, ask yourself, ‘What am I trying to achieve? What is my desired end result?’

You need to make sure you don’t just set a number, but also a date. By setting a deadline, you will have a clear yes or no on whether you hit your KPI goals or not.

Your KPIs can’t be vague, and they can’t be passive. You need to set KPIs that can be achieved by taking specific actions. Once you have your KPI, it should be relatively straightforward to make an action plan broken down into smaller goals to achieve success.

Finally, your KPIs need to be simple. Don’t get too complicated, and don’t track too many. You don’t need to track every single possible KPI. Depending on your overall goals, you should only stick to a few primary KPIs and potentially some secondary ones.

What’s the difference between KPIs and OKRs?

So, how are KPIs different from OKRs? Are they the same? Do you choose one or the other?

Simply put, OKRs and KPIs work together. However, they serve different purposes.

While key performance indicators measure performance against specific targets, you can create OKRs, or objectives and key results, to achieve goals within a specific period of time that align with an organization's vision.

Objectives and Key Results (OKRs)

Objectives and key results are broken down into two parts.

Think of objectives as where you want to go. For example, an organization may decide they want to evolve their brand image from cheap to premium. This is an objective.

Key results are how you’re going to achieve your strategic objectives. These are measurable metrics to track your progress. For instance, if you’re trying to become a more premium brand, one key result may be increasing your average product price from $60 to $100. Another one may be upgrading the materials used to make your products from a $10 manufacturing cost per product to higher quality manufacturing for $20 per product.

Key Performance Indicators (KPIs)

The way KPIs fit into an OKR strategy is one step lower. Think of Objectives as the bird’s eye view. Key results are skyscraper buildings. Key performance indicators are the foundation on which key results lay.

For instance, a key performance indicator aligned with the objective to become a premium brand and increase your average product price might be to track your average order value (AOV). In this example, if you raise your price point, you’ll want to track if the AOV is aligning with it and by how much. Perhaps the average order value isn’t rising even though you’ve raised your prices.

Another KPI you could track is your conversion rate. Since you have started raising your prices, are your conversion rates dropping? They’re likely going to dip down to some degree. If it’s too much, perhaps you moved the price up too high too quickly.

Collaboratively set and track your KPIs

With Miro, teams can collaboratively define, visualize, and monitor KPIs in real-time. Whether you need to track sales targets, project milestones, or customer satisfaction metrics, Miro makes it easy to document your KPIs in one shared space, fostering transparency and accountability. Sign up for free to get started!

Get on board in seconds

Join thousands of teams using Miro to do their best work yet.

• Search Search Please fill out this field.
• Key Performance Indicators (KPIs)
• Understanding KPIs

How to Create a KPI Report

• Limitations

The Bottom Line

• Corporate Finance
• Financial Ratios

KPIs: What Are Key Performance Indicators? Types and Examples

What Are Key Performance Indicators (KPIs)?

Key performance indicators (KPIs) are quantifiable measurements used to gauge a company’s overall long-term performance. KPIs specifically help determine a company’s strategic, financial, and operational achievements, especially compared to those of other businesses within the same sector.

Key Takeaways

• Key performance indicators (KPIs) measure a company’s success vs. a set of targets, objectives, or industry peers.
• KPIs can be financial, including net profit (or the bottom line, net income), revenues minus certain expenses, or the current ratio (liquidity and cash availability).
• Customer-focused KPIs generally center on per-customer efficiency, customer satisfaction, and customer retention.
• Process-focused KPIs aim to measure and monitor operational performance across the organization.
• Businesses generally measure and track KPIs through analytics software and reporting tools.

Jiaqi Zhou / Investopedia

Understanding Key Performance Indicators (KPIs)

Also referred to as key success indicators (KSIs), KPIs vary between companies and between industries, depending on performance criteria. For example, a software company striving to attain the fastest growth in its industry may consider year-over-year (YOY) revenue growth as its chief performance indicator. Conversely, a retail chain might place more value on same-store sales as the best KPI metric for gauging growth.

At the heart of KPIs lie data collection, storage, cleaning, and synthesizing. The information may be financial or nonfinancial and may relate to any department across the company. The goal of KPIs is to communicate results succinctly to allow management to make more informed strategic decisions.

Key performance indicators (KPIs) gauge a company’s output against a set of targets, objectives, or industry peers.

Categories of KPIs

Most KPIs fall into four different categories, with each category having its own characteristics, time frame, and users.

• Strategic KPIs are usually the most high-level. These types of KPIs may indicate how a company is doing, although it doesn’t provide much information beyond a very high-level snapshot. Executives are most likely to use strategic KPIs, and examples of strategic KPIs include return on investment , profit margin , and total company revenue .
• Operational KPIs are focused on a much tighter time frame. These KPIs measure how a company is doing month over month (or even day over day) by analyzing different processes, segments, or geographical locations. These operational KPIs are often used by managing staff and to analyze questions that are derived from analyzing strategic KPIs. For example, if an executive notices that company-wide revenue has decreased, they may investigate which product lines are struggling.
• Functional KPIs hone in on specific departments or functions within a company. For example, the finance department may keep track of how many new vendors they register within their accounting information system each month, while the marketing department measures how many clicks each email distribution receives. These types of KPIs may be strategic or operational but provide the greatest value to one specific set of users.
• Leading/lagging KPIs describe the nature of the data being analyzed and whether it is signaling something to come or something that has already occurred. Consider two different KPIs: the number of overtime hours worked and the profit margin for a flagship product. The number of overtime hours worked may be a leading KPI should the company begin to notice poorer manufacturing quality. Alternatively, profit margins are a result of operations and are considered a lagging indicator.

Types of KPIs

Financial metrics and kpis.

Key performance indicators tied to the financials typically focus on revenue and profit margins. Net profit, the most tried and true of profit-based measurements, represents the amount of revenue that remains, as profit for a given period, after accounting for all of the company’s expenses, taxes, and interest payments for the same period.

Financial metrics may be drawn from a company’s financial statements. However, internal management may find it more useful to analyze different numbers that are more specific to analyzing the problems or aspects of the company that management wants to analyze. For example, a company may leverage variable costing to recalculate certain account balances for internal analysis only.

Examples of financial KPIs include:

• Liquidity ratios (i.e., current ratios , which divide current assets by current liabilities): These types of KPIs measure how well a company will manage short-term debt obligations based on the short-term assets it has on hand.
• Profitability ratios (i.e., net profit margin): These types of KPIs measure how well a company is performing in generating sales while keeping expenses low.
• Solvency ratios (i.e., total debt-to-total-assets ratio ): These types of KPIs measure the long-term financial health of a company by evaluating how well a company will be able to pay long-term debt.
• Turnover ratios (i.e., inventory turnover): These types of KPIs measure how quickly a company can perform a certain task. For example, inventory turnover measures how quickly a company can convert an item from inventory to a sale. Companies strive to increase turnover to generate faster churn of spending cash to later recover that cash through revenue.

Customer Experience Metrics and KPI

Customer -focused KPIs generally center on per-customer efficiency, customer satisfaction, and customer retention. These metrics are used by customer service teams to better understand the service that customers have been receiving.

Examples of customer-centric metrics include:

• Number of new ticket requests : This KPI counts customer service requests and measures how many new and open issues customers are having.
• Number of resolved tickets : This KPI counts the number of requests that have been successfully taken care of . By comparing the number of requests to the number of resolutions, a company can assess its success rate in getting through customer requests.
• Average resolution time : This KPI is the average amount of time needed to help a customer with an issue. Companies may choose to segment average resolution time across different requests (i.e., technical issue requests vs. new account requests).
• Average response time : This KPI is the average amount of time needed for a customer service agent to first connect with a customer after the customer has submitted a request. Though the initial agent may not have the knowledge or expertise to provide a solution, a company may value decreasing the time that a customer is waiting for any help.
• Top customer service agent : This KPI is a combination of any metric above cross-referenced by customer service representatives. For example, in addition to analyzing company-wide average response time, a company can determine the three fastest and slowest responders.
• Type of request : This KPI is a count of the different types of requests. This KPI can help a company better understand the problems a customer may have (i.e., the company’s website gave incorrect or inaccurate directions) that need to be resolved by the company.
• Customer satisfaction rating : This KPI is a vague measurement, though companies may perform surveys or post-interaction questionnaires to gather additional information on the customer’s experience.

KPIs are usually not externally required; they are simply internal measurements used by management to evaluate a company’s performance.

Process Performance Metrics and KPI

Process metrics aim to measure and monitor operational performance across the organization. These KPIs analyze how tasks are performed and whether there are process, quality, or performance issues. These types of metrics are most useful for companies with repetitive processes, such as manufacturing firms or companies in cyclical industries.

Examples of process performance metrics include:

• Production efficiency : This KPI is often measured as the production time for each stage divided by the total processing time. A company may strive to spend only 2% of its time soliciting raw materials; if it discovers it takes 5% of the total process, then the company may strive for solicitation improvements.
• Total cycle time : This KPI is the total amount of time needed to complete a process from start to finish. This may be converted to average cycle time if management wishes to analyze a process over a period of time.
• Throughput : This KPI is the number of units produced divided by the production time per unit, measuring how fast the manufacturing process is.
• Error rate : This KPI is the total number of errors divided by the total number of units produced. A company striving to reduce waste can better understand the number of items that are failing quality control testing.
• Quality rate : This KPI focuses on the positive items produced instead of the negative. By dividing the successful units completed by the total number of units produced, this percentage informs management of its success rate in meeting quality standards.

Marketing KPIs

Marketing KPIs attempt to gain a better understanding of how effective marketing and promotional campaigns have been. These metrics often measure conversation rates on how often prospective customers perform certain actions in response to a given marketing medium. Examples of marketing KPIs include:

• Website traffic : This KPI tracks the number of people who visit certain pages of a company’s website. Management can use this KPI to better understand whether online traffic is being pushed down potential sales channels and if customers are not being funneled appropriately.
• Social media traffic : This KPI tracks the views, follows, likes, retweets, shares, engagement, and other measurable interactions between customers and the company’s social media profiles.
• Conversion rate on call-to-action content : This KPI centers around focused promotional programs that ask customers to perform certain actions. For example, a specific campaign may encourage customers to act before a certain sale date ends. A company can divide the number of successful engagements by the total number of content distributions to understand what percent of customers answered the call to action.
• Blog articles published per month : This KPI simply counts the number of blog posts a company publishes in a given month.
• Click-through rates : This KPI measures the number of specific clicks that are performed on email distributions. For example, certain programs may track how many customers opened an email distribution, clicked on a link, and followed through with a sale.

A company may desire operational excellence; in this case, it may want to track how its internal technology (IT) department is operating. These KPIs may encourage a better understanding of employee satisfaction or whether the IT department is being adequately staffed. Examples of IT KPIs include:

• Total system downtime : This KPI measures the amount of time that various systems must be taken offline for system updates or repairs. While systems are down, customers may be unable to place orders or employees may be unable to perform certain duties (i.e., when the accounting information system is down).
• Number of tickets/resolutions : This KPI is similar to customer service KPIs. However, these tickets and resolutions relate to internal staff requests such as hardware or software needs, network problems, or other internal technology problems.
• Number of developed features : This KPI measures internal product development by quantifying the number of product changes.
• Count of critical bugs : This KPI counts the number of critical problems within systems or programs. A company will need to have its own internal standards for what constitutes a minor vs. major bug.
• Back-up frequency : This KPI counts how often critical data is duplicated and stored in a safe location. In accordance with record retention requirements, management may set different targets for different bits of information.

The ultimate goal of a company is to generate revenue through sales. Though revenue is often measured through financial KPIs, sales KPIs take a more granular approach by leveraging nonfinancial data to better understand the sales process. Examples of sales KPIs include:

• Customer lifetime value (CLV) : This KPI represents the total amount of money that a customer is expected to spend on your products over the entire business relationship.
• Customer acquisition cost (CAC) : This KPI represents the total sales and marketing cost required to land a new customer. By comparing CAC to CLV, businesses can measure the effectiveness of their customer acquisition efforts.
• Average dollar value for new contracts : This KPI measures the average size of new agreements. A company may have a desired threshold for landing larger or smaller customers.
• Average conversion time : This KPI measures the amount of time from first contacting a prospective client to securing a signed contract to perform business.
• Number of engaged leads : This KPI counts how many potential leads have been contacted or met with. This metric can be further divided into mediums such as visits, emails, phone calls, or other contacts with customers.

Management may tie bonuses to KPIs. For salespeople, their commission rate may depend on whether they meet expected conversion rates or engage in an appropriate number of leads.

Human Resource and Staffing KPIs

Companies may also find it beneficial to analyze KPIs specific to their employees. Ranging from turnover to retention to satisfaction, a company may have a wealth of information already available about its staff. Examples of human resource or staffing KPIs include:

• Absenteeism rate : This KPI is a count of how many dates per year or specific period employees are calling in sick or missing shifts. This KPI may be a leading indicator for disengaged or unhappy employees.
• Number of overtime hours worked : This KPI tracks the number of overtime hours worked to gauge whether employees are potentially facing burnout or if staffing levels are appropriate.
• Employee satisfaction : This KPI often requires a company-wide survey to gauge how employees are feeling about various aspects of the company. To get the best value from this KPI, companies should consider hosting the same survey every year to track changes from one year to the next regarding the exact same questions.
• Employee turnover rate : This KPI measures how often and quickly employees are leaving their positions. Companies can further break down this KPI across departments or teams to determine why some positions may be leaving faster than others.
• Number of applicants : This KPI keeps count of how many applications are submitted to open job positions. This KPI helps assess whether job listings are adequately reaching a wide enough audience to capture interest and lure strong candidates.

Examples of KPIs

Let’s take a look at electric vehicle maker Tesla ( TSLA ) for a few examples of KPIs in real life. These numbers are from its fourth quarter (Q4) 2021 earnings release.

Vehicle Production

During the quarter, Tesla produced a record 305,840 vehicles and delivered 308,650 vehicles. Production is a big deal for the company because it has consistently been criticized for being bad at ramping up. Increased manufacturing scale means more market share and profits for Tesla.

Automotive Gross Margin

For the quarter, Tesla’s automotive gross margin expanded to 30.6%. Gross margin is one of the best measures of profitability for Tesla because it isolates its vehicle production costs. Tesla managed to expand its gross margin in Q4 even as sales of lower-priced models outpaced its higher-margin models.

Free Cash Flow

Tesla’s free cash flow clocked in at $2.8 billion during the quarter. That represented a vast improvement from the $1.9 billion free cash flow in the prior year. Tesla’s level of free cash flow production suggested that the company was reaching a scale of profitability without the help of regulatory credits.

Companies can use KPIs across three broad levels:

First, company-wide KPIs focus on the overall business health and performance. These types of KPIs are useful for informing management of how things are going. However, they are often not granular enough to make decisions. Company-wide KPIs often kick off conversations on why certain departments are performing well or poorly.

At this point, companies often begin digging into department-level KPIs. These are more specific than company-wide KPIs. Department-level KPIs are often more informative as to why specific outcomes are occurring. Many of the examples mentioned above are department-level KPIs, as they focus on a very niche aspect of a company.

If a company chooses to dig even deeper, it may engage with project-level or subdepartment-level KPIs. These KPIs are often specifically requested by management as they may require very specific data sets that may not be readily available. For example, management may want to ask very specific questions to a control group about a potential product rollout .

When preparing KPI reports, start by showing the highest level of data (i.e., company-wide revenue). Next, be prepared to show lower levels of data (i.e., revenue by department, then revenue by department and product).

With companies seemingly collecting more data every day, it can become overwhelming to sort through the information and determine what KPIs are most useful and impactful for decision-making. When beginning the process of pulling together KPI dashboards or reports, consider the following steps:

• Discuss goals and intentions with business partners . KPIs are only as useful as the users make them. Before pulling together any KPI reports, understand what you or your business partner are attempting to achieve.
• Draft SMART KPI requirements . KPIs should have restrictions and be tied to SMART (specific, measurable, attainable, realistic, and time-bound) metrics. Vague, hard-to-ascertain, and unrealistic KPIs serve little to no value. Instead, focus on what information you have that is available and meeting the SMART acronym requirements.
• Be adaptable . As you pull together KPI reports, be prepared for new business problems to appear and for further attention to be given to other areas. As business and customer needs change, KPIs should also adapt with certain numbers, metrics, and goals changing in line with operational evolutions.
• Avoid overwhelming users . It may be tempting to overload report users with as many KPIs as you can fit on a report. At a certain point, KPIs start to become difficult to comprehend, and it may become more difficult to determine which metrics are important to focus on.

Advantages of KPIs

A company may wish to analyze KPIs for several reasons. KPIs help inform management of specific problems; the data-driven approach provides quantifiable information useful in strategic planning and ensuring operational excellence.

KPIs help hold employees accountable. Instead of relying on feelings or emotions, KPIs are statistically supported and cannot discriminate across employees. When used appropriately, KPIs may help encourage employees as they realize their numbers are being closely monitored.

KPIs are also the bridge that connects actual business operations and goals. A company may set targets, but without the ability to track progress toward those goals, there is little to no purpose in those plans. Instead, KPIs allow companies to set objectives, and then monitor progress toward those objectives.

Limitations of KPIs

There are some downsides to consider when working with KPIs. There may be a long time frame required for KPIs to provide meaningful data. For example, a company may need to collect annual data from employees for years to better understand trends in satisfaction rates over long periods of time.

KPIs require constant monitoring and close follow-up to be useful. A KPI report that is prepared but never analyzed serves no purpose. In addition, KPIs that are not continuously monitored for accuracy and reasonableness do not encourage beneficial decision making.

KPIs open up the possibility for managers to “game” KPIs. Instead of focusing on actually improving processes or results, managers may feel incentivized to focus on improving KPIs tied to performance bonuses . In addition, quality may decrease if managers are hyper-focused on productivity KPIs, and employees may feel pushed too hard to meet specific KPI measurements that may simply not be reasonable.

Informs management of how a company is performing in countless ways

Helps hold employees accountable for their actions (or lack of)

Can motivate employees who feel positively challenged to meet targets

Allows a company to set goals and measure progress toward those objectives

Results in potential time commitment to consistently gather data over long periods of time

Requires ongoing monitoring for accuracy and reasonableness in data

May encourage managers to focus on KPIs instead of broader strategies

May discourage employees if KPI targets are unreasonable

What Does KPI Mean?

KPI is an abbreviation for key performance indicator: data that has been collected, analyzed, and summarized to help decision-making. KPIs may be a single calculation or value that summarizes a period of activity, such as “450 sales in October.” By themselves, KPIs do not add any value to a company. However, a company can use this information to make more informed decisions about business operations and strategies.

What Is an example of a KPI?

One of the most basic examples of a KPI is revenue per client (RPC). For example, if you generate $100,000 in revenue annually and have 100 clients, then your RPC is $1,000. A company can use this KPI to track its RPC over time.

What Are 5 of the Most Common KPIs?

KPIs vary from business to business, and some KPIs are more suitable for certain companies compared to others. In general, five of the most commonly used KPIs are:

• Revenue growth
• Revenue per client
• Profit margin
• Client retention rate
• Customer satisfaction

How Do You Measure KPIs?

It depends on the actual KPI being measured. Generally speaking, businesses measure and track KPIs through business analytics software and reporting tools. This includes everything from the collection of data via reliable sources, the safe storage of information, the cleaning of data to standardize its format for analysis, and the actual number crunching. Finally, KPIs are often reported using visualization or reporting software.

What Makes a KPI Good?

A good KPI provides objective and clear information on progress toward an end goal. It tracks and measures factors such as efficiency, quality, timeliness, and performance while providing a way to measure performance over time. The ultimate goal of a KPI is to help management make more informed decisions.

KPIs offer an effective way to measure and track a company’s performance on a variety of different metrics. By understanding exactly what KPIs are and how to implement them properly, managers are better able to optimize the business for long-term success.

Tesla Investor Relations. “ Q4 and FY 2021 Update ,” Page 7.

Tesla Investor Relations. “ Q4 and FY 2021 Update ,” Page 4.

Tesla Investor Relations. “ Q4 and FY 2021 Update ,” Page 5.

• Terms of Service
• Editorial Policy
• Privacy Policy
• Your Privacy Choices

• Customer Support
• Product Documentation
• Corporate Social Responsibility
• Diversity, Equality, Inclusion, and Belonging
• Academic Program
• Global Offices
• Support Portal
• Qlik Continuous Classroom
• Partner Portal
• Talend Cloud
• Talend Academy

Integrate, transform, analyze, and act on data

Qlik Staige

Bring your AI strategy to life with a trusted data foundation and actionable predictions

Integrations & Connectors

Connect and combine data from hundreds of sources

Featured Technology Partners

Data Integration and Quality

Build a trusted data foundation

Core Capabilities

• Data Streaming
• Application and API Integration
• Data Lake Creation
• Application Automation
• Data Warehouse Automation
• SAP Solutions
• Data Quality and Governance
• Stitch Data Loader

Guided Tour

Data Sources and Targets

Access and integrate the data you need to deliver greater business outcomes

Data Integration Buyer's Guide: What to Look for in a Data Integration Solution

Take action with AI-powered insight

Embedded Analytics

• Augmented Analytics
• Visualizations and Dashboards

Try for Free

Data Sources

Connect and combine data from hundreds of sources to fuel your ever-evolving analytics needs

Qlik Platform Services for Analytics

Maximize the value of your data with AI

• Integration and Connectors
• Qlik Staige - Artificial Intelligence Built-in

Generative AI Benchmark Report

All Data Integration and Quality Products

Qlik Cloud® Data Integration

Get a trusted data foundation to power your AI, ML, and analytics

Qlik Application Automation®

Automatically trigger informed action on most SaaS applications

Qlik Replicate®

Accelerate data replication, ingestion, and streaming.

Talend Data Fabric

Unify, integrate, and govern disparate data environments

Qlik Compose® for Data Lakes

Automate your data pipelines to create analytics-ready data sets

Talend Data Inventory

Find and improve data in a shared, collaborative workspace

Qlik Compose® for Data Warehouses

Automate the entire data warehouse lifecycle

Talend Data Preparation

Identify errors, and apply and share rules across massive datasets

Qlik Enterprise Manager®

Centrally configure, execute, and monitor replication and transformation

Talend Data Catalog

Understand the data flowing through your analytics pipelines

Qlik Gold Client®

Improve data management in your non-production SAP environments

Talend Data Stewardship

Define priorities and track progress on data projects

All Analytics Products

Qlik Cloud Analytics

All the power of Qlik analytics solutions in a cloud-based SaaS deployment.

Qlik Sense® - Client Managed

The on-premises solution for highly regulated industries.

All AI/ML Products

Bring machine learning to your analytics teams

Financial Services

Manufacturing

Consumer Products

Public Sector

Energy Utilities

US Government

Life Sciences

Communications

Product Intelligence

HR & People

Find a partner

Get the help you need to make your data work harder

Global System Integrators

Transform IT services, solution development, and delivery

• Data Integration and Quality Pricing Rapidly deliver trusted data to drive smarter decisions with the right data integration plan.
• Analytics Pricing Deliver better insights and outcomes with the right analytics plan.
• AI/ML Pricing Build and deploy predictive AI apps with a no-code experience.

NASA scientists and data scientists have more in common than you might think. See why — and learn how you can chart your own path to data-driven discovery at Qlik Connect.​

Revealing The New Qlik Brand

Hitting the Ground Running with Generative AI

Enter Qlik Staige – Helping customers unleash the full potential of Artificial Intelligence

Artificial Intelligence

Act on insights with AI-powered analytics

Data Management

Collect, store, organize, and maintain data

Bring automated machine learning to analytics teams

Data Quality

Discover, manage, enhance, and regulate data

Data Fabric

Data Visualization

Make it easier to see trends and relationships in your data

Data Catalog

Find the data you need and evaluate its fitness for your use case

Integrate applications and data sources

Data Governance

Ensure data is trustworthy and consistent

Predictive Analytics

Predict future outcomes based on historical and current data

Data Literacy

Read, work with, analyze, and communicate with data.

Domino's Radically Improves Efficiency, Customer Service — and Sales with Real-time Data and Analytics

Urban Outfitters Reduces Store Level Reporting from Hours to Minutes

Data Research Went From Thousands of Hours to Near Real Time at Georgia-Pacific

The Economic Impact of Cloud Analytics

Gartner DA Summit - Mumbai

Customer Stories

More than 40,000 customers find answers with Qlik.

Analyst Reports

Read analyst reports for data integration and analytics.

Whitepapers and eBooks

Visit the Qlik Resource Library.

Visit the Qlik Webinar Library.

Visit the Qlik Video Library.

Datasheets & Brochures

Visit the Qlik Datasheet and Brochure Library.

AI analytics refers to the use of machine learning to automate processes, analyze data, derive insights, and make predictions or recommendations.

Business Intelligence

Data Analytics

Data Mining

Data Warehouse

Predictive Modeling

Community Overview

Welcome to the Qlik Community

Qlik Gallery

Get inspired by recent Qlik apps and discuss impacts with peers

Get support directly from a community of experts

Plot your path of engagement with Qlik

Vote for your favorite product ideas and suggest your own

Training Overview

World-class resources to adopt Qlik products and improve data literacy.

Instructor-Led Learning

Get interactive, hands-on learning with Qlik experts

Free Training

FREE courses and help, from basic to advanced

Literacy Program

Understand, analyze, and use data with confidence.

Self-Paced Learning

Get hundreds of self-paced training courses

Validate Your Skills

Validate knowledge and skills in Qlik products, analytics, and data literacy

• Why Qlik Turn your data into real business outcomes
• Technology Partners and Integrations Extend the value of Qlik data integration and analytics
• Data Integration
• All Products
• By Industry
• Solution Partners

Data Integration and Quality Pricing

Rapidly deliver trusted data to drive smarter decisions with the right data integration plan.

Analytics Pricing

Deliver better insights and outcomes with the right analytics plan.

AI/ML Pricing

Build and deploy predictive AI apps with a no-code experience.

• Topics and Trends
• Resource Library

KPI Examples and Templates

Find the right KPIs for your business. This guide provides examples, templates and practical advice to help you define the key performance indicators that matter most for your organization and teams.

KPI EXAMPLES GUIDE

What is a kpi.

Let’s start with the basics. A key performance indicator (KPI) is a quantifiable measure of performance over time for a specific strategic objective. Business leaders and senior executives use KPIs to judge the effectiveness of their efforts and make better informed decisions.

KPIs vs Metrics

What’s the difference between a KPI and a metric?

KPIs represent how you’re performing against strategic goals. And by goals, we mean specific business outcomes, such as targeted quarterly revenue or targeted new customers per month.

Metrics support KPIs by representing the tactical processes or actions necessary to achieve the KPIs. Metrics track and measure the success against targets for specific actions such as monthly brochure downloads or store visits.

More resources:

Dive deeper on the question, “ What is a KPI? ”

Design your own interactive KPI Dashboard

Don’t just measure. Measure what matters.

Download the KPI Planning Guide to learn:

10 steps to strong KPIs

Which questions help you define your KPIs

170 KPI examples and templates

170 KPI Examples And Templates

In this guide, we’ve identified and prioritized the most impactful key performance indicators examples for each department. Use the table of contents below to find the KPI examples most relevant to your organization and teams.

Project Management

Customer Service

Human Resources

Social Media

Sales KPI Examples

Sales leaders and their teams need to track the key performance indicators that help them close more orders. Below are the 15 essential sales KPI examples:

New Inbound Leads

Lead Response Time

Lead Conversion %

New Qualified Opportunities

Total Pipeline Value

Lead-to-Opportunity %

Opportunity-to-Order %

Average Order Value

Average Sales Cycle Time

Cross-Sell %

Sales Volume by Location

Sales Change (YoY, QoQ. MoM)

Sales Target %

Learn more about Sales Dashboards

KPIs for Managers

Executives and managers need KPIs that reflect their organization’s strategic priorities. Below are the 15 key management KPI examples:

Customer Acquisition Cost

Customer Lifetime Value

Customer Satisfaction Score

Sales Target % (Actual/Forecast)

Sales by Product or Service

Revenue per FTE

Revenue per Customer

Operating Margin

Gross Margin

ROE (Return on Equity)

ROA (Return on Assets)

Current Ratio (Assets/Liabilities)

Debt to Equity Ratio

Working Capital

Employee Satisfaction Rating

Learn more about Executive Dashboards

Project Management KPIs

Project managers need to keep projects on time and on budget while also ensuring a high quality outcome. That’s why the 15 key performance indicators examples below focus on timeliness, budget and quality.

On-Time Completion %

Milestones on Time %

Estimate to Project Completion

Adjustments To Schedule

Planned vs. Actual Hours

Resource Capacity %

Budget Variance (Planned vs Actual)

Budget Iterations

Planned Value

Net Promoter Score

Number of Errors

Customer Complaints

Change Requests

Billable Utilization

Return On Investment (ROI)

Explore dashboard demos

Inspire Action With Your KPIs

10 ways to take your data visualizations to the next level. Learn how to choose the right ones to highlight your KPIs and metrics.

Marketing KPIs

Marketing leaders need to track KPIs which enable them to measure their progress against clearly defined goals. The 15 marketing KPI examples below cover all phases of the customer funnel and can be accurately tracked using  modern marketing analytics .

Marketing Qualified Leads (MQLs)

Sales Qualified Leads (SQLs)

Cost per Lead

New Customers

Cost per Acquisition

Upsell & Cross-Sell Rates

Conversion Rates (For Specific Goals)

Social Program ROI (By Platform)

Organic Traffic & Leads

Return on Ad Spend (ROAS)

Total Revenue

Revenue by Product or Service

Customer Lifetime Value (CLV)

Net Promoter Score (NPS)

Learn more about  Marketing KPIs and Marketing Dashboards

Operations KPIs

Operations managers need to track KPIs around efficiency, effectiveness and quality as covered in the 15 key performance indicators examples below.

Labor Utilization

Employee Turnover Rate

Employee Absence Rate

Employee Training Rate

ROI of Outsourcing

Labor Materials

Operating Margins

Processes and Procedures Developed

Project Schedule Variance

Order Fulfilment Cycle Time

Delivery In Full On Time Rate

Rework Rate

Learn more about KPI Dashboards

Customer Service KPIs

Service and support teams should focus on KPIs that measure response times. But, like the 15 key performance indicators examples below, they should also have a clear view of the customer base and longer term, preventative KPIs such as employee engagement and knowledge base articles.

Number of Issues (By Type)

First Response Time (FRT)

First Contact Resolution Rate

Average Response Time

Average Resolution Time

Most Active Support Agents

Cost Per Conversation

Customer Satisfaction Score (CSAT)

Positive Customer Reviews

Customer Effort Score

Customer Retention Rate

Support Costs / Revenue Ratio

Knowledge Base Articles

Employee Engagement

Explore more dashboard examples

Finance KPIs

Financial teams have no shortage of ratios and metrics to track. Finance managers and CFO’s should use a  financial analytics  tool to focus on margin, expense, revenue and cash management as shown in the 15 key finance KPI examples below.

Gross Profit Margin (and %)

Operating Profit Margin (and %)

Net Profit Margin (and %)

Operating Expense Ratio

Working Capital Ratio

Debt-To-Equity Ratio

Quick Ratio (Acid Test)

Current Ratio

Berry Ratio

Return on Assets

Cash Conversion Cycle

Accounts Payable Turnover Ratio

Accounts Receivable Turnover Ratio

Budget Variance

Payroll Headcount Ratio

Learn more about Financial Dashboards

Human Resources KPIs

HR managers are primarily concerned with 3 main areas: workforce management, compensation and recruitment. You can use a  people analytics  tool to track and analyze the 35 key performance indicators examples below:

Workforce Management KPIs:

Absenteeism rate

ROI of outsourcing

Succession planning rate

Open/closed grievances

Promotion rate

Time to productivity

Successor gap rate

Worker composition by gender, experience, and tenure

Internal mobility

Manager quality index

HR effectiveness

Employee satisfaction rates

Training ROI

Compensation KPIs:

HR functional operating expense rate

Labor cost per FTE

Labor cost revenue percent

Labor cost revenue expense percent

Total benefits as percentage of labor costs

Profit vs. compensation per FTE

Human capital ROI

HR functional cost per employee

Recruitment KPIs:

Quality of hire

Vacancy rate

Turnover rate

Resignation/retirement rate

External hire rate

Time-to-fill

Diversity, experience, and gender hire ratio

Recruiting funnel metrics

Talent import/export ratio

Voluntary turnover rate

Retention rate

Recruiting expense per new hire

Retirement rate forecast

Learn more about HR Dashboards

IT managers should track the on-going stream of support tickets and downtime. They should also track the projects and the team that will proactively reduce the number of these tickets in the future as shown in the top-15 IT KPI examples below.

Total Support Tickets

Open Support Tickets

Ticket Resolution Time

Reopened Tickets

Average Time Between Failures

Average Time to Repair

Server Downtime

Security Related Downtime

Total Projects

Projects on Budget

Critical Bugs

IT Support Employees Per End Users

IT Costs vs Revenue

IT Team Turnover

Social Media KPIs

Social media managers should have KPIs that represent reach, engagement, and conversion to revenue. The 15 social media key performance indicators examples below should be applied both as totals and for each social media platform that your organization is active on.

Social Share of Voice (SSoV)

Total Reach

Total Impressions

Followers or Fans or Subscribers

Audience Growth Rate

Share Rate (Shares or ReTweets)

Interest Rate (Likes, Reactions, Favorites)

Response Rate (Comments, Replies)

Key Post or Hashtag Reach

Link Clicks

Site Traffic From Social (By Platform)

Conversions From Social

Conversion Rate From Social

Revenue From Social

Social Program ROI

Learn more about Marketing Dashboards

How to Define the Right KPIs

Who, what, how. Be clear about who the audience is, what they want, and how they’re going to use the KPIs. This means working with your stakeholders to identify the core KPIs that map directly to their goals and strategy.

Be SMART. This popular acronym stands for Specific, Measurable, Attainable, Realistic, and Time-bound. This is a useful touchstone whenever you’re considering whether a metric should be a key performance indicator. SMART KPI examples are KPIs such as “revenue per region per month” or “new customers per quarter”.

Iterate and evolve. Over time, see how you or your audience are using the set of KPIs and if you find that certain ones aren’t relevant, remove or replace them.

See KPI Dashboards in Action

What Is a Key Performance Indicator (KPI)? The Ultimate Guide

Key performance indicators (KPIs) are important metrics that track a company’s progress toward achieving its strategic and operational goals. Monitoring KPIs over time helps organizations make better, data-driven decisions. Rewarding employees and teams for progress on KPIs that are aligned with company objectives can create a virtuous cycle that sets a company up for success.

This guide to KPIs provides comprehensive information about the different types of KPIs, how to choose them and how to use them. Whether you’re a C-suite executive or line-of-business manager, a customer-facing employee or working in the back office, there’s much to learn.

What Are Key Performance Indicators (KPIs)?

A KPI is a quantifiable measurement of progress toward a business goal. High-level KPIs reflect overall business operations. Lower-level KPIs report on a particular department or operation within a company, such as sales, marketing, inventory management or human resources. KPIs are calculated using data relevant to the targeted goal, such as a specific click-through rate on web ads for marketing or the number of sales closed per salesperson. Financial KPIs focus on metrics derived from accounting data, such as revenue growth and net cash flow. Examples of other KPIs include employee turnover and inventory carrying costs.

Key Takeaways

• KPIs are quantifiable measurements that gauge a company’s performance toward its goals.
• KPIs can be created at the strategic and operational organizational level, as well as for specific teams, projects and individuals.
• Best practices for selecting KPIs include alignment with business goals, active monitoring and accurate reporting and timelines.
• Automation of KPI reports and dashboards keeps all stakeholders aligned.

Key Performance Indicators (KPIs) Explained

Companies capture a lot of data, but not every metric is considered a KPI. The distinguishing characteristic of KPIs is that they measure performance toward a specific goal that’s critical to the business. For example, the amount of retail space square footage is an important metric, but monthly sales per square foot of retail space is a KPI.

By monitoring KPIs over time, organizations can track trends, highlight opportunities and identify potential trouble spots.

Why Are KPIs Important for Businesses?

KPIs are important management tools. They provide focus and clarity and guide behavior, productivity and decision making. KPIs also offer transparency and accountability. The way a company communicates its KPIs across the organization conveys its mission and values and sets the tone for the work environment.

Therefore, it’s essential to select appropriate KPIs that align with the company’s goals. While a KPI can provide a useful snapshot at a specific point in time, KPIs are even more powerful when used to analyze progress over longer periods. Their value expands further when businesses consider them in combination with other meaningful KPIs in a dashboard, creating a more complete view of a company’s core operations.

Types of Key Performance Indicators (KPIs)

While there are many KPIs to choose from, most can be grouped into broad categories based on their purpose. One common method for categorizing KPIs is the “balanced scorecard” framework of perspectives, which includes:

• Customer perspective or outcome focus: KPIs that focus on customer interactions and their views on product quality and performance. They may include customer satisfaction, acquisition and retention, brand awareness indexes or average handle time within a call center.
• Financial perspective: KPIs that examine profitability, liquidity, risk and financial efficiency. For example, days sales outstanding (DSO) and current ratio.
• Growth perspective: KPIs that measure returns on investment in equipment, research and staff to achieve the desired medium- and long-term growth. Return on marketing investment and customer acquisition cost are examples.
• Process perspective: KPIs that focus on the efficiency of specific processes. These can be units produced per hour in a manufacturing plant or billable hours in a professional services company.

Many industries commonly measure human resource management (HRM) KPIs. They typically measure employees’ output and work efficiency. Examples include closed sales per salesperson and accounts payable processing cost per invoice. Other HRM KPIs measure absenteeism, turnover and recruiting time .

Lastly, some KPIs can be project-specific. These typically measure progress toward milestones, dates or key deliverables.

What Are Leading and Lagging KPIs?

When analyzing KPIs in any category, it’s important to consider whether they are a leading or lagging indicator. These filters provide context that can influence decision-making, especially regarding timing issues.

• Leading KPIs are predictive, pointing to possible future events or outcomes. They are useful for planning purposes. Take, for example, a sudden increase in the number of returned products. This might signal an issue with quality or expectations that were poorly communicated — and indicate that revenue will be lower going forward.
• Lagging KPIs measure what has already happened. They highlight patterns or trends over time. By monitoring those trends, companies can determine if they need to rework their plans. For example, if the KPI for inventory turnover has been decreasing over the past three quarters, the company may want to put a new go-to-market plan in place to reverse the trend.

It’s a best practice to consider a combination of leading and lagging KPIs for the same goal. Lagging indicators are more easily and accurately calculated, but are backward-looking. Leading indicators are often subject to interpretation but can provide time to change course if accurately interpreted.

What Are Organizational and Operational KPIs?

Another way to categorize KPIs is based on whether they are organizational or operational in nature. These categories are mutually exclusive but require precise alignment.

• Organizational KPIs measure strategic, long-term goals that are tied to a company’s mission or values. Examples include market share gains, customer acquisition increases, global expansion and revenue growth. Companies sometimes focus on a single all-important metric during each phase of a product’s life cycle, an approach known as one metric that matters (OMTM).
• Operational KPIs monitor day-to-day business performance in terms of tactical, operational processes and efficiency. Operational KPIs can be applied to processes, teams and individuals. Examples include sales by region and cost per click for a digital marketing campaign.

How Are KPIs Used?

KPIs are used to track progress toward a business goal. In practice, KPIs are created, communicated and then tracked over a period that coincides with the underlying objective.

Organizations typically analyze KPIs at intervals to determine whether course corrections are needed. They may reevaluate their choice of KPIs during this process. Some KPIs may be discontinued, revised or renewed once a goal has been reached. KPIs are often used for employee recognition, development and financial rewards.

How Many KPIs Do You Need?

There is no right answer to this question, though conventional wisdom suggests “less is more.” A selective approach helps keep the team focused on clear goals. Different teams will have unique KPIs aligned to their group’s goals. Most KPI dashboards display three to five KPIs for a given functional area, such as accounts payable KPIs .

When choosing KPIs to use for a particular goal, it’s helpful to have a mix of leading and lagging KPIs. Keep in mind that too many organizational KPIs can signal strategy confusion, and too many operational KPIs can spread effort thinly across competing targets.

KPI Best Practices

It can be challenging to select and manage the right KPIs for a business, and choosing incorrectly can be costly. Following industry standards can ease this risk somewhat, as can adherence to a few KPI best practices. These best KPI practices include:

• Aligning KPIs closely with the goals they are measuring.
• Ensuring the KPI is measurable in a specific, consistent and accurate way.
• Setting a KPI that’s attainable in a reasonably finite period of time.
• Choosing clear, relevant KPIs that encourage the right actions to achieve the goal.
• Challenging and re-evaluating the usefulness of the KPI for the purpose intended.

How to Create KPIs in 5 Steps

When creating KPIs, it’s important to “keep your eyes on the prize,” i.e. the specific goals you are aiming to achieve. Avoid mission creep and don’t go overboard. KPIs naturally flow out of an organization’s vision and cascade through all levels in the organization, ultimately creating individual KPIs for each employee. Follow these five steps for creating KPIs:

• Establish an objective. Clearly define the strategic objective or operational goal the KPI will measure.
• Outline the criteria. Identify the data that will be used for the KPI and ensure its integrity. Outline objective sources of information.
• Collect data. Establish how data will be collected and how often it will be updated.
• Build a KPI formula. Ideally, the KPI formula should be easy to understand and applied consistently.
• Present KPIs. Determine how to communicate and visually present the KPIs in dashboards or other tools. This should be done in a way that achieves buy-in from all stakeholders, especially those whose actions are critical to achieving the objective.

KPI Examples

Organizations have hundreds of KPIs at their disposal. Selecting the right ones depends on the goal being measured, the industry and the company. Typical examples of KPIs include:

• Sales target: Compares new wins to targets or other periods.
• Sell-through rate: The percentage of available inventory sold during a given period.
• Sales conversion time: How long it takes for the sales team to convert the average lead into a sale.
• Days sales outstanding (DSO): The average amount of time it takes to collect cash from sales made on credit.
• Gross profit margin: The percentage of revenue retained after deducting the direct costs of producing a product or delivering a service.
• Current ratio: Compares a company’s current assets to its current liabilities to measure its ability to meet short-term debts.
• Customer lifetime value: How much revenue a company makes from each customer over the course of the business relationship.
• Customer churn rate: The percentage of active customers who stop purchasing in a set period of time.
• Call center pick-up rate: The percentage of customer calls that are answered within the first minute they are received.
• Defective unit rate: Compares the number of defective units manufactured to the total number of units manufactured.
• Perfect order rate: A ratio of the number of error-free orders compared to the total number of orders processed.
• Incremental sales: Looks at additional revenue generated by marketing initiatives over baseline sales to determine the effectiveness of marketing campaigns.
• First-visit metric: Tracks how many first-time visitors come to a company’s website and their level of engagement during their first visit.
• Return on marketing investment (ROMI): Measures how much additional revenue a marketing campaign generates compared to its cost.

KPI Reporting and KPI Dashboards

KPIs should be monitored on a regular basis, using the most current information available. Automated reports and dashboards can replace the need for time-consuming manual processes.

• KPI reports: Recurring reports should include KPIs to facilitate continual analysis. Many software offerings let businesses customize reports, run them automatically at specified intervals and send them to key stakeholders.
• KPI dashboards: Graphic interfaces that display KPIs and other important information, are populated with real-time data. Customization is key here, too. Dashboards can be customized for specific roles, like a CFO dashboard , departments or the organization as a whole.

The following is an example of a sales manager’s dashboard. It shows four KPIs and KPI meters as well as other trends, graphs and tables of important information to help manage daily activities that will help the company reach its larger goals.

Free KPI Template

This free downloadable spreadsheet template takes you through each step of the KPI development process using the example of days sales outstanding, a typical accounts receivable KPI. The process begins with establishing objectives and source data. The template also includes an example formula and KPI graphic presentation.

Download the template to start building out and tracking your KPIs today.

Tracking KPIs With an ERP System

KPIs signal whether a company is on track to achieve its business goals, but companies that try to build and monitor KPIs manually often find the additional work very labor-intensive. This work can overshadow the analysis and decision-making part of the process. Further, reporting lag time can impair the company’s ability to act in a timely way.

A more effective approach to KPI management is via automation and integration with a company’s Enterprise Resource Planning (ERP) system that stores all the information the organization would need to calculate any metric. ERP with built-in analytics that present data, charts and KPIs in dashboards and reports provide quick access to real-time, actionable KPIs.

KPIs provide an objective way to measure progress toward a company’s goals. They can be set at the strategic or organizational level and aligned with operational KPIs for teams and individuals. They help create a culture of accountability and data-driven decision-making. Integration with an ERP system can make KPI creation and tracking processes more efficient.

#1 Cloud ERP Software

What is a KPI in simple terms?

A KPI, or key performance indicator, measures how successful a company is in meeting its targets, objectives or industry benchmarks.

What are the five key performance indicators?

Companies have numerous KPIs at their disposal. The ones they choose depend on their goals and operational processes. Some KPIs are used by a wide variety of companies in different industries, like operating and net profit margin, sales growth and accounts receivable turnover. Companies also choose industry-specific KPIs. For example, manufacturers may track KPIs that measure how quickly and efficiently they convert their investment in fixed assets and inventory into cash.

What are some examples of KPIs?

Organizational KPIs measure strategic goals, like global expansion. Operational KPIs track day-to-day business activities. Examples of organizational KPIs are revenue growth or the cost and rate of customer acquisition. Examples of operational KPIs include days sales outstanding and defective unit rate.

What is a KPI and why is it important?

A KPI measures a company’s progress toward a set of objectives. Tracked over a set period of time, KPIs help an organization make better, data-driven decisions. They also can guide behavior, productivity and decision-making, and provide transparency and accountability.

Key Order Fulfillment KPIs Explained

Order fulfillment is the process of fulfilling a sales order to the customer’s specifications and delivering goods as promised. As consumers increasingly move online to shop, it’s more important than ever to get order fulfillment…

More On This

Trending Articles

Learn How NetSuite Can Streamline Your Business

NetSuite has packaged the experience gained from tens of thousands of worldwide deployments over two decades into a set of leading practices that pave a clear path to success and are proven to deliver rapid business value. With NetSuite, you go live in a predictable timeframe — smart, stepped implementations begin with sales and span the entire customer lifecycle, so there’s continuity from sales to services to support.

Before you go...

Discover the products that 37,000+ customers depend on to fuel their growth.

Before you go. Talk with our team or check out these resources.

Want to set up a chat later? Let us do the lifting.

NetSuite ERP

Explore what NetSuite ERP can do for you.

Business Guide

Complete Guide to Cloud ERP Implementation

Filter by Keywords

51 Key Performance Indicator (KPI) Examples & Templates

Erica Golightly

Senior Writer

March 24, 2023

How do you encourage your team to think about and achieve organizational goals? The first step is to take a deep inventory of your key performance indicators (KPIs). 

The thing is, KPIs will get the team motivated for the first few months, then lost in long email threads, and revisited the day before an important meeting with senior leadership. 

Well-designed KPIs will empower teams to solve inefficiencies, eliminate time-sucking requests, and align tasks and projects with company-wide goals . This is what we want for you and your team, so we’ve put together a catalog of KPI examples and templates to answer your questions: 

In what condition does a metric become a KPI? Who is part of the KPI development process? Where do I track KPI progress? How do I drive action and motivate my team toward the outcome?

We’ll cover all of the above—and then some—because KPIs are the secret sauce of modern business strategy. And everyone is qualified for the task. 

What Is a KPI or Key Performance Indicator?

Sales kpi examples, operations kpi examples, finance kpi examples, marketing kpi examples, website kpi examples, design kpi examples, startup kpi examples, product kpi examples, saas kpi examples, human resources kpi examples, how to measure kpis in clickup .

A Key Performance Indicator or KPI is a quantifiable metric used to monitor progress in achieving business objectives. More specifically, a KPI gives performance insight into an organization’s most important asset: the people.

Businesses invest time, effort, and money to hire problem solvers—people who have strengths in analyzing and interpreting data to make decisions. And this investment isn’t limited to staffing the IT and Finance departments. It’s been said that a workforce with data literacy skills helps improve the company’s overall health and performance. 

Meaning everyone—front-line employees, managers, and senior leadership—has an influence on organizational goals. So as a team leader, you have the responsibility to give the people thoughtful, specific, and measurable KPIs . 

If you’re more of a visual learner, check out this vlog about setting KPIs!

How to Define KPIs

If you take one thing away from this guide, let it be this: effective key performance indicators allow people to make accurate and fast decisions . 

The first mistake businesses make when they’re brainstorming KPIs is sending an email to all department leaders with the subject line: What Are You Going To Do About All Of These Really Bad Metrics? 

Instead, businesses should target the metrics which have the most impact on their sustainability. When you focus on needle-moving projects, tools, and systems, you are building a business roadmap to maximize your speed towards revenue growth. 

So here is a step-by-step checklist to help you start your KPIs the right way: 

1. Identify business metrics directly related to business goals

Let’s start with the basics that Sales KPIs look different from Product KPIs , which are different from Finance KPIs . Ask your area direct performance indicator questions to understand what they want to achieve and their criteria for success . This group will use these business metrics as a guide for the next month, quarter, or year. If a key performance indicator does not contribute to a business goal , it’s gotta go! 

• What’s the problem you want to solve in your process/team/organization? 
• What’s the outcome you want to achieve?
• How will you measure success?
• How will you know if you’ve achieved your outcome? 

Bonus: Product requirements document templates

2. Write out clear and specific key performance indicators

Once you have their insights, organize the metrics into two categories: leading and lagging indicators. 

• Leading indicators will let them know if they need to pivot or adjust their strategy to get back on track toward achieving their desired outcome
• Lagging indicators are the opposite. These key performance indicators determine how well processes and updates are performed over a longer period of time

Pro Tip : It might be tempting to use corporate shorthand or fluffy words, but remember these KPIs are shared company-wide, so it has to be clear to everyone.

3. Get KPIs into a remote-first tool to record and monitor progress

We’ll say it: KPI reports are not the most thrilling to build.

It’s an (almost) everyday task requiring time to turn raw data into actionable insights. So much so, KPI reports typically have a short life span after it reaches an inbox for a few reasons:

• Reports are outdated by the end of the day because data changes by the hour
• Reports in a PDF or Excel format look different on various screens
• Reports sent through email are not secure

Getting the right information at the right time is a necessity for data-driven businesses. People want to access KPIs on their smartphones, desktops, and even on the big screen at the office. If you’re looking for a free dashboard tool to meet these needs, try ClickUp!

51 KPI Examples and Templates to Measure Progress

Here at ClickUp, we’re super fans of KPIs and you , so our team got to work and pulled together a list of key performance indicators and free templates sorted by the department or industry. 

1. Customer Acquisition Cost : The total cost of acquiring a customer (includes costs spent on the sales process and through marketing efforts) 2. Sales Activities Per Rep : The total number of tasks completed in a given time period 3 . Lead to Client Conversation Rate : The percentage of leads converted in your sales process 4. Total Sales Revenue : The total revenue generated from your products over a defined period 5. Sales Cycle Length : The average time it takes between initial contact through closing

Try ClickUp’s Commission Tracking template  

6. Overtime Hours : The number of hours worked by an employee beyond their normally scheduled working hours 7. Processes Developed : The number of improvements made to current operational  8. Inventory Costs : The total amount of all expenses related to storing unsold goods 9. Office Space Utilization : The percentage of the office space used by employees 10. Company Perks Usage : The percentage of perks used by employees

ClickUp’s Project Request and Approval template

11. Return on Equity : The measure of financial performance based on net income divided by shareholder equity 12. Net Profit Margin : The amount of money your company has after all expenses (interest, taxes, operating expenses, etc.) have been deducted from your total revenue 13. Cost of Goods Sold : The total cost of manufacturing the products a business sells (excludes sales, administration, and marketing expenses) 14. Debt to Equity Ratio : The ratio of company’s total liabilities against shareholder equity 15. Free Cash Flow : The amount of money remaining after capital expenditures

ClickUp’s Finance templates 

16. Return on Marketing Investment : The return from a marketing investment divided by the costs of the marketing investment 17. Bounce Rate : The percentage of emails that bounced. This happens when the email address is no longer active 18. Click-through Rate : The number of people who clicked a link in your email vs. the total number of people who received your email 19. Organic Impressions : The number of times a piece of content is shown on a person’s newsfeed 20. Subscriber Count : The number of people who subscribed to your email marketing campaigns

Dive into more marketing KPIs and learn the best approach to set your goals!

ClickUp’s Campaign Tracking and Analytics template  

21. Traffic to MQL (Marketing Qualified Lead) Ratio : The ratio of the total traffic platform generated vs. the number of marketing qualified leads coming from that traffic 22. Crawl Errors : The number of URLs that are inaccessible to Googlebot when it scans your pages 23. Bounce Rate : The number of people who exited your site within just a few seconds of arriving 24. Mobile Usability : The speed and performance of your landing page on phones and tabs 25. Referral Traffic : The number of people who visit your website from your social media

ClickUp’s Website Development template

26. Customer Satisfaction Rate : The responses let you know which customers are unhappy, and need some extra attention from your product management teams 27. Standard Compliance : The average number of issues related to not following brand guidelines , processes, or procedures 28. Response Time : The average time it takes for project reviewers and project contributors to respond back to questions, comments, and requests   29. Production Cycle Time : The average time it takes to complete a project from start to finish 30. Revision Time : The average number of rounds or time it takes to reach the final design

ClickUp’s Graphic Design template 

31. Customer Lifetime Value : The revenue your company can expect from individual customer accounts 32. Activation Rate : The percentage of users who complete any major event in the onboarding process 33. Runway : The number of months the company can operate before running out of money 34. Average Sales Cycle Length : The number of days it takes to close a deal on average 35. Monthly Burn : The amount of cash spent per month

ClickUp’s Task Management template

36. Net Promoter Score (NPS) : The number indicating whether your users are ready to recommend your product to their friends, colleagues, etc. 37. Support Ticket Escalations : The number of tickets moved to a higher-level Customer Support Manager to resolve  38. Customer Satisfaction Rate (CSAT) : The scale rate of a customer’s overall experience with a company’s product, service, or employee  39. Velocity : The total number of manual and automated tests performed 40. Daily Active User : The number of active users per day

ClickUp’s Bug and Issue Tracking template

41. Net Promoter Score (NPS) : The number indicating whether your users are ready to recommend your product to their friends, colleagues, etc. 42. Month Over Month (MoM) Monthly Recurring Revenue (MRR) Growth Rate : The percentage increase or decrease month over month in net MRR 43. Annual Recurring Revenue (ARR) : The predicted amount of yearly revenue earned from customers 44. Churn Rate : The percentage rate at which customers leave a business over a given period of time  45. Processes Developed : The number of improvements made to current operational processes 46. Lead Velocity Rate : The total number of manual and automated tests performed

ClickUp’s Customer Support template

47. Recruiting Conversion Rate : The percentage of applicants who were hired vs. total number of applicants you processed ( track with ATS !) 48. Cost Per Hire : The total cost of hiring each employee (including hiring, training, or onboarding costs and other HR KPIs ) 49. Average Training Costs : The amount of money spent on employee training and development 50. Absenteeism Rate : The percentage of employees who are absent over a given time period 51. Employee Turnover Rate : The percentage of employees who left the company

ClickUp’s Hiring Candidates template

Once you’ve collected and measured your data, you’ll need to present them in an easy-to-understand format. This is where an all-in-one solution like ClickUp comes in clutch to provide the best visualization tools!

With your key performance indicators and templates ready to track, the next step is to compile them into a digital solution like ClickUp!

ClickUp is an all-in-one productivity platform where teams come together to plan, organize, and collaborate on work using tasks, Docs, Chat, Goals, Whiteboards, and more. Easily customized with just a few clicks, ClickUp lets teams of all types and sizes deliver work more effectively, boosting productivity to new heights!

Here’s a closer look at why teams love using ClickUp as their goal-tracking hub and KPI Dashboard:

Align KPI-related tasks and activities with Goals in ClickUp 

Goals in ClickUp are high-level containers broken into smaller Targets. Once you take action on a Target, click the Target name to update your progress. Depending on which type you use, your Target will have different tracking options:

• Number : Create a range of numbers and track increases or decreases between them
• True/False : Use a Done/Not Done checkbox to mark your Target complete
• Currency : Set a monetary Goal and track any increases or decreases
• Task : Track the completion of a single task, or an entire List. (A badge appears in a task’s details with the name of the attached Goal!)

Leverage KPI reporting with ClickUp Dashboards

Dashboards in ClickUp will replace the weekly reports piling up in your manager’s inbox. Build, display, and interact from a single source of truth with all the KPIs front and center. 

And you don’t need to be a data scientist or graphic designer to create Dashboards in ClickUp! With a drag-and-drop action, you can organize your Dashboards to visualize how work is happening in your Workspace in any way you want. 

What are the benefits of tracking KPIs as a team?

KPIs help define clear and measurable criteria for success, allowing teams to work towards specific goals while continuously measuring their progress. This provides teams with a sense of direction, focus and purpose, which can lead to increased engagement and motivation.

How do you select KPIs for a team?

The selection of appropriate KPIs will depend on the team’s purpose, goals and objectives. While there is no one-size-fits-all approach, a team can identify KPIs by considering their goals and objectives, analyzing past performance, and considering external factors that may impact their performance.

What should I do if my team isn’t meeting KPI targets?

If your team is not meeting KPI targets, you should first try to identify the root cause of the issue . This may involve providing additional training, resources and support to members of the team. Additionally, you should review and revise the KPIs to make sure they are achievable, relevant and realistic.

Track Your Numbers With Confidence in ClickUp

Where is the team meeting, exceeding, or not making progress on KPIs? With KPI software , KPI timelines and reporting exist in a centralized location, so anyone can quickly retrieve the data and understand where they are and where they need to be. 

It’s easy to get lost in the data for hours to generate a one-page KPI report. That’s the old way of productivity. 

The right KPI software will simplify the reporting process and give you more time to focus on strategic discussions and activities. 

Keep riding the growth wave, and if you need a fail-proof navigation tool, ClickUp’s got your back! 

Questions? Comments? Visit our Help Center for support.

Receive the latest WriteClick Newsletter updates.

Thanks for subscribing to our blog!

Please enter a valid email

• Free training & 24-hour support
• Serious about security & privacy
• 99.99% uptime the last 12 months

.css-s5s6ko{margin-right:42px;color:#F5F4F3;}@media (max-width: 1120px){.css-s5s6ko{margin-right:12px;}} Discover how today’s most successful IT leaders stand out from the rest. .css-1ixh9fn{display:inline-block;}@media (max-width: 480px){.css-1ixh9fn{display:block;margin-top:12px;}} .css-1uaoevr-heading-6{font-size:14px;line-height:24px;font-weight:500;-webkit-text-decoration:underline;text-decoration:underline;color:#F5F4F3;}.css-1uaoevr-heading-6:hover{color:#F5F4F3;} .css-ora5nu-heading-6{display:-webkit-box;display:-webkit-flex;display:-ms-flexbox;display:flex;-webkit-align-items:center;-webkit-box-align:center;-ms-flex-align:center;align-items:center;-webkit-box-pack:start;-ms-flex-pack:start;-webkit-justify-content:flex-start;justify-content:flex-start;color:#0D0E10;-webkit-transition:all 0.3s;transition:all 0.3s;position:relative;font-size:16px;line-height:28px;padding:0;font-size:14px;line-height:24px;font-weight:500;-webkit-text-decoration:underline;text-decoration:underline;color:#F5F4F3;}.css-ora5nu-heading-6:hover{border-bottom:0;color:#CD4848;}.css-ora5nu-heading-6:hover path{fill:#CD4848;}.css-ora5nu-heading-6:hover div{border-color:#CD4848;}.css-ora5nu-heading-6:hover div:before{border-left-color:#CD4848;}.css-ora5nu-heading-6:active{border-bottom:0;background-color:#EBE8E8;color:#0D0E10;}.css-ora5nu-heading-6:active path{fill:#0D0E10;}.css-ora5nu-heading-6:active div{border-color:#0D0E10;}.css-ora5nu-heading-6:active div:before{border-left-color:#0D0E10;}.css-ora5nu-heading-6:hover{color:#F5F4F3;} Read the report .css-1k6cidy{width:11px;height:11px;margin-left:8px;}.css-1k6cidy path{fill:currentColor;}

• The ABCs of KPIs: Defining Key Performa ...

The ABCs of KPIs: Defining Key Performance Indicators

KPIs, or key performance indicators, are metrics that measure the progress of a specific project toward your defined goals. KPIs need to be quantifiable and relevant, and should provide concrete evidence to make project decisions going forward.

A key performance indicator (KPI) is a quantitative metric of how your team or organization is progressing toward important business objectives. Organizations use KPIs at multiple levels—you can set an organization-wide, team-specific, or even individual KPIs, depending on which metrics you want to track. A good KPI can give you a sense of whether you’re on track to achieve your strategic goals. 

If this is your first time choosing key performance indicators, this article will walk you through how KPIs differ from other goal-setting methodologies, how to identify key metrics for your KPIs, and how to choose great key performance indicators.

What are KPIs?

Every project will have a list of KPIs that you can track. A social media manager could measure impressions, shares, likes, follows, replies, mentions, and comments, but they shouldn’t try to track all of the KPIs available to them. Tracking every KPI available is like highlighting every sentence in a textbook—it defeats the purpose, since the important things get buried in the clutter of less useful information. After you’ve set your goal, you’ll want to select three to five KPIs that will be most effective in measuring progress.

Why are key performance indicators important?

Key performance indicators are important because they keep teams focused on what matters most to an organization's success. They act like a report card showing how well a team is doing in key areas, which helps everyone understand where they stand. If things are going well, you keep going. If not, you know it's time to change things up.

For example, a customer service team might use KPIs to track how fast they respond to support tickets. By setting a target response time and monitoring their actual performance, they might find that quick responses lead to happier customers. With this insight, they could focus on improving response times and, as a result, see better customer satisfaction scores. This kind of focus can really make a difference in how a team performs.

Types of KPIs

When it comes to measuring success, not all key performance indicators are the same. Each type of KPI plays a unique role in how it sheds light on performance and success. Understanding the differences will help any organization use key performance indicators effectively.

Quantitative indicators

Quantitative indicators are the hard numbers. They are measurable and can be expressed in figures. Think of them as numerical evidence of performance. For example, a common quantitative KPI is monthly sales revenue. It's a straightforward metric that shows exactly how much money was brought in from sales in a month. A sales team might use other similar indicators to help paint a more complete portrait of its operations.

Monthly sales growth: Measures the month-over-month percentage increase in sales.

Average profit margin: Calculates the average profit made from each sale.

Annual recurring revenue: The predictable revenue generated each year, which is especially relevant for businesses with subscription models.

Revenue per customer: Shows the average revenue earned from each customer, which can help in understanding customer value.

Qualitative indicators

Qualitative indicators are more about the quality of something and are often subjective. They're not always represented by numbers, and sometimes they're captured through observations, surveys, and feedback. 

A good example is customer satisfaction. This can be measured through customer surveys asking how happy people are with your service, giving you a qualitative view of how you're doing. Here are a few KPIs that also show how customers view a brand:

Brand reputation: Measures how likely customers are to recommend your brand, gained through customer reviews or social media sentiment analysis.

Customer satisfaction index: This can be derived from surveys that ask customers to rate their satisfaction with your products or services.

Customer complaints and resolution rates: Tracks the number of complaints received and how effectively they are resolved.

Customer loyalty and retention rates: Measure how often customers return to make additional purchases and how long they stay with the brand.

Leading indicators

Leading indicators are a bit like a weather forecast for your business—they give you a heads-up on future performance. They can predict changes and trends before they happen, allowing companies to adjust their strategies proactively.

For example, let’s say you’re choosing KPIs for a blog marketing project. Some leading KPIs you might consider include:

Number of relevant keywords per post

Number of hours logged per asset created

Number of links within each post to other content on your site

Number of links to each post from other content on your site

These are all metrics that can predict how each post will perform. Articles that hit your minimum number of relevant keywords and link to and from other content on the site are more likely to be successful. On the other hand, a design asset that only took half the normal amount of time to create is likely to be below average quality and not perform as well as a result. Leading KPIs provide guidance ahead of time that maximize the project's likelihood of success after it's published.

Lagging indicators

Lagging indicators confirm what has already happened. They’re like looking in the rearview mirror to understand past performance. They can be financial, such as quarterly profits, which tell you how much money was made after all sales are done and expenses are paid.

When choosing your KPIs, you should make sure you have a good balance between leading and lagging indicators. For that same blog marketing campaign above, some lagging KPIs you might consider include:

Search engine rankings

Traffic to each post

Value of traffic to each post

Bounce rate (how quickly readers leave your site)

Conversions (how many readers end up purchasing your product)

These KPIs measure metrics that come after the post is published—or, put another way, they “lag” behind the project’s launch. Whereas leading KPIs help predict likely success, lagging KPIs measure actual success. Comparing the data from each will give you information about how accurate your predictions were and why actual performance may have deviated from predicted performance.

What makes a good KPI?

There are a ton of KPI options for almost every project, but not every measurable metric is a high-quality KPI. For example, tracking the number of words per post in your blog campaign wouldn’t be very useful, since the “best” post length for an article changes from topic to topic.

Similarly, some KPIs are great in one context but not in another. For example, financial KPIs, like labor cost per design project, are very helpful to the accounting department, but not very useful for design managers.

A good KPI:

Is quantifiable

Provides evidence of progress (or lack thereof)

Tracks something that is responsive to changes

Offers useful data for decision-making

Tracks something you can control and influence

Is easy to understand and work with

Can be reliably verified

How to set up effective KPIs

Choosing the best KPIs for the job is a process with specific (but simple!) steps. Follow these four steps to get started.

1. Define your business objective

You can’t choose KPIs unless you know what you’re trying to measure. Start the process by defining your business objective . Make sure that your project is in alignment with the rest of your organization by consulting with company leaders and referring to other company-wide documents like your organization’s mission, overarching strategic plan , and department-wide goals.

Depending on what level you’re working from—team manager, department head, director, VP, or company leader—you may be in a position to set both short-term and long-term KPIs. When planning at the executive level, you can set KPIs by the month, quarter, or year.

2. Identify important business metrics

Once you’ve defined your business objective, you need to decide which metrics are relevant to that objective. The metrics you choose for your KPIs should be indicators that directly relate to whether or not you achieve your objective.

Remember: KPI stands for key performance indicators. There may be a variety of metrics or indicators that impact your ultimate goal. Creating the right KPI is about capturing the most important details and making sure you’re tracking those metrics. Not every task or project needs to have an associated KPI. 

If you’re not sure where to start, check out some relevant metrics for each department in your organization.

Example financial metrics

Annual recurring revenue (ARR)

Net revenue retention (NRR)

Net profit margin (NPM)

Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA)

Operating capital

Example customer metrics

Net promoter score (NPS)

Customer acquisition cost (CAC)

Customer satisfaction (CSAT)

Customer retention

Customer churn

Number of total paying customers

Number of new customers

Example process and operations metrics

Throughput time, or total lead time

Number of complaint or bug tickets filed

Supply chain metrics, like days sales outstanding (DSO)

Example people or human resources metrics

Employee retention rate

Employee satisfaction

Salary competitiveness ratio (SCR)

Example sales metrics

Revenue growth

Market penetration

Customer lifetime value

Gross profit margin

Example marketing metrics

Number of qualified leads

Lead conversion rate

Social media followers 

Content downloads

Email click-through rate (CTR)

3. Set up a tracking system

When you’re working on more than one project with more than one team, the number of KPIs you’re tracking can start to add up quickly. It’s important to have a tracking system in place that ensures your data is recorded consistently and at regular intervals. You won’t be able to draw accurate conclusions if you forgot to track some weeks or if you lost the data in a messy file folder.

A KPI dashboard is the best place to keep track of all of your KPIs. Having a central shared dashboard:

Ensures everyone is looking at the same information

Makes KPI data accessible to the entire team, no matter where they are

Eliminates the need to manually notify stakeholders every time something is updated

Can track metrics automatically, so there’s no chance of forgetting

Reduces the likelihood of human error

4. Track and share real-time progress

KPI data isn’t something you neglect until it’s time for your quarterly report. Rather, stakeholders should use KPI reports to make minor and major decisions throughout a project’s lifecycle. That’s why it’s important to keep your KPI data up to date and make it accessible to everyone at any time .

The best way to keep your data up to date is to use a dashboard that tracks and updates in real time. That way, stakeholders won’t need to wait until the next update to get the most recent information—they can just check the dashboard.

If you do track your KPIs manually, make sure you update at regular intervals that make sense for your project. For fast-moving projects, consider sharing updates weekly so everyone is tuned in to any changes. For longer-term, slower-moving projects, consider reporting biweekly or monthly to ensure each update includes enough information to be useful.

If possible, track and share progress in the same place you manage work so your team understands how their individual work contributes to the KPI and, as a result, to your broader company goals. At Asana, we use goal management software to connect our company goals to the work that supports them. With Goals, team members can prioritize projects to get their highest-impact work done.

Examples of KPIs

Key performance indicators are the compass that guides organizations towards their goals. Here are some typical examples of KPIs for different areas.

Financial KPI examples

When it comes to the financial health of a business, key performance indicators act as vital signs. For example, return on investment (ROI) is a common financial KPI. It measures the profitability of an initiative against its cost. To put it simply, if a company spends $1,000 on a marketing campaign and generates $5,000 in sales, the ROI KPI indicates a successful outcome.

When exploring financial metrics, you'll frequently find these examples of KPIs in use.

Net profit margin: Shows what percentage of your sales is actual profit.

Gross profit margin: Tells you how much you're making after covering the cost to make or buy your products.

Operating cash flow: Measures the cash your business makes from normal business operations.

Customer KPI examples

Customer-related KPIs show how well a company is performing from the standpoint of its clientele. Support tickets are a common key performance indicator here. They reflect the number of queries or issues customers report. If a new product launch sees a spike in support tickets within a short period of time, this KPI might signal the need for product improvements or better customer education.

It’s not uncommon for those working in the customer service industry to see the following examples of KPIs.

Customer satisfaction score: A quick way to see how happy people are with what you sell.

Net promoter score: Tells you if your customers like your product enough to tell their friends.

Customer retention rate: Measures how well you're keeping your customers over time.

Process KPI examples

To streamline operations, organizations can track process KPIs. An example is the employee turnover rate. This helps teams understand how often they have to replace staff. A high turnover rate over a six-month period of time could point to deeper issues within the work environment that need addressing.

Here are a few other common examples of KPIs you'll see in process tracking.

Efficiency ratio: Used to check if you're making good use of what you own to make money.

Cycle time: Measures how long it takes to get something done from start to finish.

First-time right: Shows how often you get things right the first time without any do-overs.

Marketing KPI examples

Marketing efforts can be gauged using website traffic as a key performance indicator. This metric helps businesses optimize their online presence. For example, if a new blog post aimed at explaining the different types of KPIs sees a 50% increase in visitors, the content can be considered effective in attracting more interest.

In the marketing department, it's common to come across the following examples of KPIs.

Cost per lead: Helps you figure out how much you're spending to get someone interested in what you're selling.

Conversion rate: Tells you what percentage of your website visitors are doing what you want them to do.

Click-through rate: Shows how often people click on a link you've given them.

Project management KPI examples

Project managers often use a "balanced scorecard," a strategic KPI framework that evaluates initiatives from various perspectives—financial, customer, process, and growth. 

Let's say a sales team is tasked with improving customer outreach. Their scorecard may reflect how well they're meeting this organizational goal across different performance measures, like sales KPIs, over a quarterly time frame.

For a closer look at project management metrics, consider these other examples of KPIs.

Return on investment: Measures whether the money you put into something is worth what you're getting out of it.

Earned value: Helps you see how much of your project you've gotten done at any point.

Critical path length: Measures the total time your project will take, based on the things you can't skip.

Keeping an eye on these key performance indicators helps you figure out how close you are to hitting your goals and what you might need to tweak to get there.

Pros and cons: Key performance indicators

Key performance indicators can be extremely useful, but they also have their drawbacks. Let's take a closer look at both sides.

Benefits of KPIs

They help managers see specific issues through clear data, which is great for making plans and improving an organization.

They use hard numbers to show how employees are doing, which keeps everyone on the same page and removes guesswork.

They can actually motivate employees to do better when they see their performance is being analyzed.

They link day-to-day work with the company's bigger targets and show if the company is really getting to where it wants to go.

Disadvantages of KPIs

It can take a lot of time to collect KPI data, especially if you're looking at how things change over several years.

You have to keep an eye on your indicators and update them to make sure they're still useful.

There's a risk that managers might just focus on hitting KPI numbers instead of truly improving the business.

If the specific goals aren't set right, they can be too tough to meet, which can stress out team members.

KPIs vs. OKRs

KPIs aren’t the only way to track project performance. OKRs , or objectives and key results, are another type of measurement tool that functions in a similar way to KPIs. In fact, in many cases, the KPIs and OKRs for a project could overlap.

Here are the differences and commonalities between KPIs and OKRs:

Key performance indicator (KPI): Designed to measure performance over time, a good KPI should track one measurable value that can indicate the rate of progress toward a goal.

Objectives and key results (OKRs): OKRs use the template “ I will [objective] as measured by [key result]. ”The objective is the goal you want to achieve and the key results are the metrics used to track progress toward that objective. You can have more than one key result for each objective.

KPIs often overlap with OKRs, but the difference is that OKRs don’t have to be quantifiable measures. For example, you could set an OKR to “Improve the workplace environment as measured by employee morale,” even though your OKR, employee morale, is intangible. If you wanted to set a KPI for the same objective, you’d have to find a way to quantify employee morale—say, number of HR complaints received or new hire turnover rate.

OKR vs KPI examples

Here’s another example of potential OKRs and KPIs for a customer experience team.

Example KPI: Increase net promoter score (NPS) by 2 points in FY21.

Example OKRs: 

Objective: Surprise and delight our customers to increase customer satisfaction and loyalty.

Key result: Generate positive buzz through social media and virtual events.

Key result: Reduce churn to less than 2% per month.

Key result: Increase net promoter score (NPS) by 2 points in FY21.

What does KPI stand for?

KPI is an acronym that stands for "key performance indicator." It's a term used widely across various industries to describe measurable values that organizations can track to gauge how effectively they are achieving key objectives.

What is the most important KPI?

The most important KPI often depends on the specific goals of an organization. For many, it could be related to financial performance, like net profit margin, which shows the amount of profit made as a percentage of revenue. However, what's most important is that the KPIs a team chooses should directly support their specific goals, ensuring that they are relevant and provide actionable insights.

What is a KPI in marketing?

A key performance indicator in marketing refers to a measurable metric that marketing teams use to assess the effectiveness of their campaigns and specific goals. For example, a marketing team may track the conversion rate of a campaign to determine how effectively it turns prospects into customers.

What is a KPI in business?

In a broader business context, a KPI serves as a numerical indicator that organizations use to measure their performance against their strategic goals. Teams can automate the collection and reporting of these metrics, thanks to integrations with business intelligence tools, which allows for real-time monitoring and more informed decision-making.

KPIs, OKRs, SMART goals, oh my!

KPIs are a great way to set quantifiable goals that connect to your strategic objectives. But if KPIs don’t feel right for you, th ere are a variety of other goal-setting methodologies you can try.

To get started, read our articles about how to set OKRs , write better SMART goals , or create great short-term goals .

Related resources

What are objectives and key results (OKRs)?

Fix these common onboarding challenges to boost productivity

How Asana uses work management to optimize resource planning

How Asana uses work management for organizational planning

0  comments

What Is A Key Performance Indicator (KPI)? Best Practices And Examples In Business

By   Hanson Cheng

June 30, 2023

• minute read

KPI stands for key performance indicators. A key performance indicator is a metric that helps you understand how well your business is doing in relation to a specific goal and strategy. While knowing the KPI meaning is a helpful process for all types of businesses, it's also essential to understand how to use KPIs and make the most out of them.

As such, the relationship between knowing what a KPI is and using it effectively when  measuring online success is essential for any business.

In this article, I'll dive deep into what KPI is in terms of business performance measurement, and I'll also provide some examples of KPIs that you can use to track your business progress.

Let's get right into it.

What Are KPI Metrics? Different Types Of KPI Examples

While knowing about various past KPI examples can be helpful for an individual to running a business, it's also essential to understand how to use KPIs to make the most of them.

There are two types of KPI metrics: financial and non-financial. Financial KPIs focus on revenue, profit margins, and return on investment (ROI). Non-financial KPIs, on the other hand, focus on measures such as customer satisfaction, employee turnover, and safety incidents.

The real KPI meaning in business ultimately comes down to how the business owner uses the chosen metrics to improve performance.

Image credit: https://pmstudycircle.com/

Understanding why KPI is important will help you set better goals and objectives for your business.

Let's look at some KPI examples to help you understand how the KPI definition can help with the chosen KPI goals.

What Is KPI In Revenue Growth?

Having KPI goals related to revenue growth is essential for any business. After all, revenue is the lifeblood of any business.

An excellent way to measure revenue growth is to track year-over-year (YOY) sales. This will give you a good idea of whether your business is growing (or not).

What Is A KPI In Net Profit Margin?

Your net profit margin is a good indicator of your business's efficiency. It measures how much profit your business makes after all expenses have been paid.

A high net profit margin means that your business is doing well, while a low net profit margin means that your business needs to improve its efficiency.

Return On Investment (ROI)

Another KPI analysis example is ROI. This is a measure of how much profit you're making in relation to the amount of money you're investing in your business.

Let's say that you're in the process of  creating a website , and you've invested $10,000 in the project.

If your website generates $100,000 in sales over the next year, then your ROI would be 1,000%.

Depending on the industry you’re in, this might be considered either a good or lousy ROI.

Customer Satisfaction Rating

It's essential to keep your customers happy if you want them to keep doing business with you. As a result, various  KPI software dashboards can track this type of KPI.

One way to measure customer satisfaction is to use these dashboards to send out surveys after a set number of transactions and ask customers to rate their experience on a scale of 1 to 10.

You can also track customer satisfaction by monitoring the number of customer complaints you receive.

Employee Turnover Rate

Knowing what the KPI metrics are based on the industry you're in is also essential, especially when it comes to employees.

This particular example is vital for businesses that have a lot of employees.

Image credit: https://www.talentlyft.com/

If you have a high employee turnover rate, it means that your business is having a hard time retaining employees. This can signify various problems, such as poor working conditions or low pay.

Safety Incidents Per Million Hours Worked

Various KPI dashboards exist to measure safety aspects.

The KPI definition can be applied to safety in different ways but is usually defined as a way to measure how often accidents happen in the workplace.

This particular metric is essential for businesses that have employees working in dangerous conditions.

You can track the number of safety incidents by keeping a record of all the accidents that occur in your workplace, while also putting better measures in place that reduce this number to as close to zero as possible.

How To Measure KPIs

Whether you want to track your  email marketing KPIs , social media KPIs, or any other type of KPI, there are specific methods you can use to measure them.

Here are some general tips on how to do this.

Use Data From Multiple Sources

It’s good to realize that KPI metrics meaning might be different than one expects in a specific industry.

This is why it's essential to use data from multiple sources when measuring KPIs. This will give you a more accurate picture of what's going on.

What Is KPI Reporting And How Do You Use The Right Tools?

Defining what a KPI report is and how it applies to your business is essential, but it's also important to have the right tools to measure your KPIs. Various software programs can help you track and measure KPIs accurately.

When it comes to marketing KPI examples or any other type of KPI, it's essential to set goals.

This will give you something to strive for and help you track your progress. Goals can be short-term or long-term (or both), depending on what you're trying to achieve.

Monitor Progress

Once you've set your goals, monitoring your progress is essential. This will help you see how well you're doing and make necessary changes along the way.

While a dashboard KPI can be helpful, it's also essential to create a KPI chart.

This will provide you with a visual representation of your KPIs and help you track your progress over time.

Image credit: https://www.simplekpi.com/

The right KPI measurement can be more easily obtained with charts since they make it easier to see patterns and trends.

This also helps with the question of how to determine KPI targets, as being able to visually see where you've been and where you want to go is very helpful.

How To Use KPI In Real-Life

If you are  starting an online business and want to know if you're on the right track regarding your KPIs, you can do a few things.

Let's consider various types of industries that can make use of KPIs to help them use KPIs in their daily operations.

eCommerce Businesses

One type of business that can make use of KPIs is an e-commerce business.

There are various KPIs that an e-commerce business can track, such as conversion rate, bounce rate, and average order value.

These KPIs will help the business owner determine if they’re on the right track and can simplify the question of  how to make money online with eCommerce.

Therefore, having the right knowledge when it comes to how to calculate KPI in eCommerce is critical.

Another type of business that can make use of KPIs is a startup. Startups need to track their progress closely to ensure they are on the right track.

Various startup KPIs can be tracked, such as customer acquisition costs and churn rate (the annual rate at which customers stop being so).

KPI analytics can help startups determine if they are on the right track and make necessary changes along the way.

SaaS Businesses

A KPI business that can benefit from focusing on the right metrics is a SaaS business.

Offering software as a service can be a great way to make money, but it's important to track your progress.

Various SaaS KPIs can be used to monitor different aspects of your business' performance.

Some SaaS companies focus on getting customers in at a price point that is profitable for them, while others focus on customer churn rates.

Marketing Agencies

One type of business that must use KPIs is a marketing agency.

Marketing KPIs that should be considered include website traffic, lead generation, and conversion rate.

Monitoring these KPIs will help you determine if your marketing campaigns are successful and where you need to make improvements.

KPI Analytics And KPI Management: Manual Or Automatic?

Tracking the right metrics for your specific business can help with your KPIs' analytics and management.

Various software programs include KPI templates that can be customized for your business.

This is great for businesses with a lot of data that want to ensure they make the most efficient use of their resources.

As such, there are times when going down the manual route can be best.

For businesses that do not want to spend much money on software or want more control over their data, manually tracking KPIs can be the way to go.

Doing things manually is also great when starting, as it can help you understand what data is essential and how to track it effectively.

Once you have a good understanding of your KPIs, you can then start looking at ways of automating the process.

What Is A Key Performance Indicator - FAQ

What is the importance of kpi in business.

Knowing why KPIs are important will help you select the right ones to track in your business.

KPIs are important because they:

• Help you track progress towards your goals
• Provide insights into what's working and what's not
• Help you make data-driven decisions
• Can be used to improve processes and performance
• Can help motivate employees
• Can help you identify areas for improvement

What Are KPI Examples?

It’s difficult to consider one example of a KPI by itself as KPIs usually work together to form a clearer picture. That said, a few examples of common KPIs are:

• Website traffic
• Sales revenue
• Number of new leads/customer
• User engagement (time spent on site, number of page views)
• Social media metrics (shares, likes, comments)

Knowing What Are KPI Goals For Business

Various KPI concepts will apply to different businesses, so choosing KPIs relevant to your company's goals is essential.

For example, if you're a B2B company, website traffic might not be as important as the number of new leads. If you're an eCommerce site, sales revenue will be one of your most important KPIs.

User engagement is essential for all businesses, as it can give you an idea of how people use your site or product. Social media metrics can also be helpful, especially if you're trying to increase brand awareness or reach a new audience.

What Is A KPI Report?

A KPI report is a document that contains information about your company's KPIs.This report can be used to track progress, identify areas for improvement, and make data-driven decisions.

What Is A Specific Definition Of KPI For Business?

A specific definition of KPI for business can be difficult to pin down as there are so many different types of businesses.

What Is An Example Of A KPI That Affects Employee Morale?

A few examples of KPIs that can affect employee morale are:

• Number of sick days taken
• Number of accidents/injuries
• Turnover rate
• Employee satisfaction score

Key performance indicators are essential for any business.

They help you track progress, identify areas for improvement, and aid in making data-driven decisions.

There are many different types of KPIs, so choosing ones relevant to your company's goals is essential.

Whichever route you choose, using the proper KPIs can help you understand your data better and ultimately take your business to the next level.

Last Updated on June 30, 2023 by Hanson Cheng

Thanks For Reading!

You can get more actionable ideas in my newsletter.

 I'll give you info on actionable ideas to grow and cool things that are getting me excited.  Enter your email and join us!

Hanson Cheng

About the author

Living in Portugal with my wife and puppies. Scaling online businesses and sharing lessons learned on this website and in our email newsletter. Always happy to hear from you, so find me on Instagram if you want to say hi!

Session expired

Please log in again. The login page will open in a new tab. After logging in you can close it and return to this page.

2000 Regency Parkway Suite 420

(919) 460-8180   |  [email protected]

What is a Key Performance Indicator (KPI)?

Peter Drucker famously said, “What gets measured gets done.” Measurement is an essential management tool, as it helps us determine if our work is making an impact, demonstrate value, manage resources, and focus improvement efforts.

Key Performance Indicators (KPIs) are the critical (key) quantifiable indicators of progress toward an intended result. KPIs provide a focus for strategic and operational improvement, create an analytical basis for decision making and help focus attention on what matters most.

Managing with the use of KPIs includes setting targets (the desired level of performance) and tracking progress against those targets.

Managing with KPIs often means working to improve performance using leading indicators , which are precursors of future success, that will later drive desired impacts indicated with lagging measures .

• Provide objective evidence of progress towards achieving a desired result
• Measure what is intended to be measured to help inform better decision making
• Offer a comparison that gauges the degree of performance change over time
• Can track efficiency, effectiveness, quality, timeliness, governance, compliance, behaviors, economics, project performance, personnel performance or resource utilization
• Are balanced between leading and lagging indicators

Terminology Examples

Let’s say my business provides coffee for catered events. Some inputs include the coffee (suppliers, quality, storage, etc.), the water, and time (in hours or employee costs) that my business invests. My process measures could relate to coffee making procedure or equipment efficiency or consistency. Outputs would focus on the coffee itself (taste, temperature, strength, style, presentation, accessories, etc.). And desired outcomes would likely focus on customer satisfaction and sales. Project measures would focus on the deliverables from any major improvement projects or initiatives, such as a new marketing campaign.

Let’s say someone wants to use KPIs to help them lose weight. Their actual weight is a lagging indicator, as it indicates past success, and the number of calories they eat per day is a leading indicator , as it predicts future success. If the person weighs 250 lbs / 113 kg (a historical trend is called a baseline ), and a person they would like to emulate is 185 lbs / 84 kg (comparison research is called benchmarking ), they might set an 1,700 calorie-per-day target (desired level of performance) for the leading KPI in order to reach their lagging KPI target of 185 lbs / 84 kg by the end of a year.

The Logic of Different Types of Measures

The relative business intelligence value of a set of measurements is greatly improved when the organization understands how various metrics are used and how different types of measures contribute to the picture of how the organization is doing. KPIs can be categorized into several different types:

• Inputs   measure attributes (amount, type, quality) of resources consumed in processes that produce outputs
• Process   or activity measures focus on how the efficiency, quality, or consistency of specific processes used to produce a specific output; they can also measure controls on that process, such as the tools/equipment used or process training
• Outputs   are result measures that indicate how much work is done and define what is produced
• Outcomes   focus on accomplishments or impacts, and are classified as Intermediate Outcomes, such as customer brand awareness (a direct result of, say, marketing or communications outputs), or End Outcomes, such as customer retention or sales (that are driven by the increased brand awareness)
• Project   measures answer questions about the status of deliverables and milestone progress related to important projects or initiatives

Every organization needs both strategic and operational measures, and some typically already exist. An entire family of measures can be developed to help understand how effective strategy or operations is being executed, from various categories:

• Strategic Measures   track progress toward strategic goals, focusing on intended/desired results of the End Outcome or Intermediate Outcome. When using a balanced scorecard, these strategic measures are used to evaluate the organization’s progress in achieving its Strategic Objectives depicted in each of the following four balanced scorecard perspectives:
• Customer/Stakeholder
• Internal Processes
• Organizational Capacity
• Operational Measures,   which are focused on operations and tactics, and designed to inform better decisions around day-to-day product / service delivery or other operational functions
• Project Measures,   which are focused on project progress and effectiveness
• Risk Measures,   which are focused on the risk factors that can threaten our success
• Employee Measures , which are focused on the human behavior, skills, or performance needed to execute strategy

• SUGGESTED TOPICS
• The Magazine
• Newsletters
• Managing Yourself
• Managing Teams
• Work-life Balance
• The Big Idea
• Data & Visuals
• Reading Lists
• Case Selections
• HBR Learning
• Topic Feeds
• Account Settings
• Email Preferences

What Are Your KPIs Really Measuring?

• Graham Kenny

Performance is about more than just numbers.

Management teams often switch off when reviewing KPIs. This may be because they’re overwhelmed by the slicing and dicing of the measures. They need to remind themselves that KPIs are about stakeholder relationships, how what you do affects what the other does to you, and that the metrics will not always be the same.

No CEO doubts the importance of measuring their company’s performance properly. Yet the executive teams I’ve assisted over more than 25 years generally struggle to engage with the challenge. As one CEO put it to me, “when we get to corporate KPIs their eyes glaze over.” Or, as another said “they [the managers] start looking for the exits.”

• Graham Kenny is the CEO of Strategic Factors and author of Strategy Discovery . He is a recognized expert in strategy and performance measurement who helps managers, executives, and boards create successful organizations in the private, public, and not-for-profit sectors. He has been a professor of management in universities in the U.S. and Canada.

Partner Center

15 Key Performance Indicators to Help Improve Your Marketing

Updated: June 10, 2021

Published: September 15, 2020

When I was cooking steak the other day, I had to use a meat thermometer to check and see if the meat was cooked all the way through.

In other words, I had to look for an indicator to see how the cooking process was coming along.

Marketing is fairly similar.

As a marketer, instead of a meat thermometer, you're going to use key performance indicators (KPI) to measure success.

Below, let's learn more about KPIs and review some examples of marketing KPIs that can help you improve your marketing.

What is a KPI?

A KPI is a key performance indicator that measures how your company is performing at achieving a certain goal or objective. There are KPIs for every aspect of business, whether it's financial, marketing, sales, or operational.

Essentially, KPIs are measurable metrics that gauge overall performance over time. A great way to analyze and report on your KPIs is to create custom dashboards in your automation software.

So, now that we understand what a KPI is, let's look at some examples.

For today's purposes, we'll focus on marketing KPIs, but to learn more about sales metrics, check out our ultimate guide .

KPI Examples

• Customer Acquisition Cost (CAC)
• Lifetime Value of a Customer (LTV)
• Return on Investment (ROI)
• Return on Ad Spend (ROAS)
• Marketing Qualified Leads (MQL)
• Sales Qualified Leads (SQL)
• Follower Growth
• Conversion Rate
• Website Visitors
• Social Media Engagement
• Referral Traffic
• Net Promoter Score (NPS)
• Organic Traffic
• Event Attendance
• Customer Retention

8 Free Marketing Budget Templates

Free templates to manage your marketing spend across channels.

• Product marketing budget template
• Paid advertising budget template
• PR budget template

You're all set!

Click this link to access this resource at any time.

1. Customer Acquisition Cost (CAC)

Customer acquisition cost (CAC) measures the amount of money it takes to convert a potential lead into a customer.

This metric can be used to improve your marketing because it helps you make important budgetary decisions.

For example, you don't want to spend too much money acquiring a customer if it won't result in a profit. Basically, this helps businesses decide how much money to spend on attracting customers.

2. Lifetime Value of a Customer (LTV)

Another metric that can help determine how much money to spend on marketing is the lifetime value of a customer . This metric indicates the total amount of revenue a business can expect to make from a single customer.

This is a useful metric to compare to CAC. For example, if your CAC is higher than your LTV, then you're probably spending too much money acquiring your customers.

3. Return on Investment (ROI)

Return on investment in marketing refers to the amount of money you gain compared to the marketing cost.

To calculate this, you'll subtract marketing expenses from sales growth and then divide that by marketing cost to get the return on your investment.

In marketing, keep in mind that it can be hard to directly attribute sales growth to a marketing campaign. If that's the case, you can subtract your average organic sales growth and marketing cost from your sales growth and then divide it by your marketing cost.

4. Return on Ad Spend (ROAS)

Return on ad spend is a more specific KPI that you can use to determine the success of your ad campaigns.

This metric measures the revenue that's generated compared to every dollar you spend on an advertising campaign. It's usually a ratio.

For example, let's say you made $10 for every $1 spent on an advertising campaign. That means your ROAS for that campaign is 10:1.

5. Marketing Qualified Leads (MQL)

An MQL is a lead that has engaged with your company and could become a more serious prospect if you nurture that relationship.

This is a great KPI to measure because it helps your marketing team understand how many leads they're bringing in.

Additionally, when compared to sales qualified leads ( see below ), your marketing team can measure how many MQLs become SQLs and then customers.

6. Sales Qualified Leads (SQL)

If an MQL is nurtured correctly, then eventually they become a sales qualified lead . An SQL is a prospective customer that's ready to talk to someone on your sales team.

Usually, these leads have been researched and vetted by your marketing department.

Again, this KPI is helpful because it can help your marketing team understand how many of their leads are talking to your sales team.

7. Follower Growth

As a marketer, one of your duties might be to manage social media accounts for your company. If you work on the social team, a helpful KPI to track is follower growth.

Most likely one of the goals of your social media team is to increase brand awareness and interact with your audience. Increasing your followers is a great way to measure success for those goals.

To grow your follower base, you might consider running sponsored campaigns. One brand added 36X its typical number of followers each day during the 4 days it ran a set of sponsored posts on Instagram, increasing its follower count by 18.15% .

8. Conversion Rate

Conversion rate is the percentage of visitors who complete a desired action. The desired action could be anything from completing an online form to signing up for a service or purchasing a product.

This is a helpful KPI to track because it can let you know how successful you are at attracting leads.

For example, if the desired action was filling out a web form, measuring your conversion rate could let you know that your web page isn't converting many leads. If that's the case, then you could start to rethink your strategy.

9. Website Visitors

As a marketer, attracting people to your company is the main goal. A great way to do that is to attract website visitors.

Website visitors is an important KPI because it could track the success of several campaigns.

For instance, if you're tracking organic web traffic, then you'll be measuring the effectiveness of your SEO team.

On the other hand, if you're tracking web visitors from social media, then you could use web visitors to see how many referrals your social team sends to your site.

10. Social Media Engagement

Not to reiterate, but a major role in marketing is social media. One of the main KPIs for social media is engagement.

You could track likes, shares, comments, messages, tags, or mentions. Any way that a customer or lead is interacting with you, you can count as engagement.

Measuring engagement can help you analyze the success of your social media posts.

11. Referral Traffic

Referral traffic is a KPI that can help you understand where your web visitors are coming from.

This is a great KPI to track because it helps you understand how most people find your company. This could be useful information when building your overall marketing strategy.

12. Net Promoter Score (NPS)

Net Promoter Score is a way to measure customer satisfaction. This KPI measures how likely your customers are to recommend your business to a friend.

When you calculate your NPS, you'll most likely leave additional space for comments. This metric can give you direct, actionable feedback and insights from your customers.

As a marketer, it's important to listen to your customers and truly understand them. This KPI will help you do that.

13. Organic Traffic

It's important to measure the success of your SEO efforts. To do that, you'll likely track the KPI of organic traffic and keyword performance.

With an SEO tool, you can see how well your company is ranking on search engines for certain keywords.

This KPI will inform your overall organic and SEO strategy.

14. Event Attendance

As a marketer, you'll have KPIs for every campaign you're operating.

If you're running an event, for example, then you'll most likely track event attendance. This KPI will let you know how well your marketing team did at attracting people to your event.

15. Customer Retention

While you might think customer retention isn't a marketing KPI, it actually is important to consider.

Customer retention is a great KPI to track for marketers because you can use the information in your messaging for your marketing campaigns.

Additionally, this metric helps you better understand your customers, so you can market to them better.

Ultimately, KPIs are important because they're how you measure success as a marketer. You'll use KPIs in almost every situation because you're going to need to track success for short and long term campaigns.

Don't forget to share this post!

Related articles.

Did Companies See Summer Slumps in 2021? We Analyzed 103,000 Businesses to Find Out

18 Top Marketing Attribution Software Tools for 2024

Marketing Reporting Examples: How to Build and Analyze Marketing Reports

What Is Marketing Attribution & How Do You Report on It?

Heat Maps: Everything Marketers Need to Know

The Ultimate Guide to Google Data Studio in 2020

KPI Dashboards & How to Use Them in Your Marketing

How to Calculate Marketing ROI [+Free Excel Templates]

Waterfall Charts: The Marketing Graph You Need to Hit Your Goals

How to Create a Funnel Report [Quick Guide]

8 templates to help you track and manage your marketing spend this year.

Marketing software that helps you drive revenue, save time and resources, and measure and optimize your investments — all on one easy-to-use platform

We use third-party analytics cookies to understand how you use our website so we can build better products.

What is a KPI?

KPI stands for key performance indicator . It's a quantifiable metric used to track progress towards a specific business objective. KPIs help businesses set goals (targets), monitor their achievement (milestones), and identify areas for improvement. By analyzing KPIs, companies can make data-driven decisions to optimize performance and achieve strategic goals.

KPIs provide teams with targets to aim for, milestones to gauge progress, and insights to help guide decision-making throughout an organization. By monitoring KPIs, organizations can identify areas of strength and weakness, make data-driven decisions, and take actions to optimize performance.

Example of a KPI

In simple terms, key performance indicators are a goal that you work towards achieving. For the sake of simplicity, let’s look at this example: you own an apple stand, and to be profitable this month, you have to sell 1,000 apples.

So, you set your KPI: sell 1,000 apples this month. Whether that’s 250 apples per week or you sell all 1,000 in the first three days, your KPI is to reach that 1K mark. When it’s the second week of September, and you’ve sold 550 apples, you can look at your KPI and know that you’re on track to achieve your goal.

In businesses, key performance indicators can either be high-level or drill down to a specific department or individual. High-level KPIs typically look at the performance of your business as a whole, like achieving $1M in annual recurring revenue this fiscal year. When you drill down into processes that are specific to departments, teams, or individuals, those are low-level KPIs. 

What are the benefits of KPIs?

The benefits of implementing KPIs are vast and well-documented. They include enhancing employee engagement, aligning your team with your organization's mission, and improving accountability. 

Aside from performance tracking and control, KPIs can provide your business with the following benefits:

Improves employee engagement

We've already mentioned it, but it's worth noting one more time: KPIs unify employees to work towards a common goal . Employee engagement, a topic that many organizations struggle with, can directly impact your bottom line. But KPIs can help. These indicators, whether individual or organizational, are a helpful mechanism to measure performance, which has a direct tie to employee engagement.

In fact, organizations with an engaged workforce see higher customer engagement, productivity, and 21% higher profitability. On the flip side, disengaged employees cite the same issues: poor communication about strategy between management and individual contributors. KPIs help solve this problem.

Connects your purpose and your culture

Your KPIs should be connected to your organization's mission. “Making money” isn't a mission, and it's not something that employees will connect with on a deeper level, either. Your purpose should encourage employees to show up to work with a renewed sense of excitement every day. There should be a direct link between your mission and your KPIs so that employees feel like their work is purposeful in achieving both. 

Remove any ambiguity: ensure your KPIs work towards your end goal and employees clearly understand how and why they're working towards that.

Makes everyone accountable for performance

Traditionally, individual performance management frameworks are about setting objectives, measuring performance, and managing related activities. So why not incorporate KPIs into performance management, too?

Performance KPIs will help employees measure their impact and how their daily activities, arguably the foundation of their role, play into the success of larger organizational goals. KPIs set everyone off in the same direction, making everyone a happy contributor to your success.

What are the different types of KPI?

There are various types of KPI that you can use to measure your organization’s performance. Let’s discuss the ones you should be tracking.

Sales KPIs are used to track the performance of your sales. They can include metrics such as revenue, customer acquisition cost, average purchase value, retention/churn rates, and more.

Marketing KPIs

As implied, Marketing KPIs focus more on assessing the effectiveness of your marketing campaigns. They can include metrics such as website visitors, conversion rate, social media engagement, and more. Insights gathered from Marketing KPIs are usually paired with those gathered from sales.

Financial KPIs

Financial KPIs focus on financial metrics such as revenue growth, profitability, return on investment (ROI), and cash flow. They provide insights into the financial well-being and stability of your organization.

Operational KPIs

Operational KPIs measure the efficiency of your operations and operational processes. They can include metrics related to production output, quality control, and inventory management.

Customer KPIs

Customer-centric KPIs focus on measuring your success in meeting your customer’s needs, expectations, and preferences. Some examples of customer performance indicators include customer retention rate, average customer lifetime value, and customer satisfaction index.

What makes a good KPI?

To drive meaningful insights and support data-driven decision-making, it is important to identify and define the right KPIs. So, what makes a KPI good? Below are some tips.

• Business-aligned: KPIs should be aligned with your overall business strategy and outcomes. For example, let's say your business has a goal to increase  monthly recurring revenue (MRR)  by 20% by the end of the fiscal year (a high-level KPI). If you’re on the sales team, your KPI might be to increase inbound leads by 50% by the end of Q3 (a low-level KPI). Your performance indicator contributes to the overall business goal because new leads = revenue potential. 
• Actionable : KPIs should be actionable. Once you’ve set your KPI, you need to outline the steps you’ll take to reach it and the metrics you’ll measure along the way. What good is a KPI if you have no way to meet it? If your goal is to increase inbound leads, you should have a plan in place to do that—like moving more prospects from the  MQL to SQL stage . Actionable steps will set you up for success in reaching your KPIs. It’s also worth noting that KPIs shouldn’t spur additional questions, they should do just the opposite: inspire action.
• Realistic : KPIs should be realistic. Good advice is to start small. Big, lofty KPIs—while they might look good on paper—aren’t doing you or your team any favors if they’re unrealistic from the get-go.
• Measurable : KPIs should be measurable. When you set KPIs, ask yourself: What are you trying to achieve? What is the desired end result? What’s the timeline? Remember to add: How am I going to measure my KPIs?  Oftentimes, a BI or analytics tool is a great way to track your progress against your KPIs. This way, you can build a metric (like  leads ) and easily and quickly see your progress in data visualization (and share it with others on your team or across your organization, too! We love a data-driven team!).

How to set a good KPI

Now that we have the definition of a KPI, let’s take a look at the basics of setting KPIs. While you can take inspiration from industry-recognized KPIs, the ones you set should be unique to your business and your goals. 

Let’s take a look at a  KPI example  of a bad one versus a good one. 

Here’s an example of a  bad KPI : Make a lot of money this year.

Why is this a bad KPI? To start, it’s incredibly vague. Is “a lot of money” $10K or $1M? There are no definitive actions that you can tie to your KPI if you don’t have a specific amount you’re working towards, there’s no ‘goal post’ (i.e. a defined amount) to know you’ve hit your target, and there’s no metric to attribute to it so you can track your progress. 

On the flip side, here’s an example of a  good KPI : Increase monthly recurring revenue by $25K this month.

Why is this a good performance indicator? It’s specific in more ways than one: it outlines the dollar amount  and  the timeframe in which you hope to achieve it. With a detailed KPI like this, you have an associated metric (MRR) that you can track against your progress, and you can hone in on what specific action(s) you’re going to take to achieve your KPI, like going after expansion MRR for existing customers. 

It's important to remember that KPIs are a form of communication. When you write a KPI, keep in mind the basic rules of communication: be sure it is succinct, clear, and relevant.

How to define your KPIs

It can be easy to confuse KPIs with business metrics.  Key  performance indicators, should relate to a specific business outcome with a performance measure. 

Let’s look at an example of how to set a KPI. Consider how your business objective is to increase your   monthly recurring revenue , so your team sets a sales growth KPI. 

Here's how you might define the KPI for that:

What is the best way to measure KPI?

You might be asking yourself: “How do I measure my company KPIs?” Well, the best way to do so is by using the SMART framework.

What is the SMART framework?

SMART refers to the five requirements your KPIs need to be good. It’s an acronym for  S pecific,  M easure,  A ttainable,  R elevant, and  T imeframe.

Let's break this down into specific questions you need to answer:

• Is your objective  specific ? The KPI should have a clear and well-defined focus area. It should directly address a specific aspect of your operations, like sales, customer satisfaction, or website traffic.
• Can you  measure  progress toward your goal? The KPI should be quantifiable using objective data, like percentages.
• Is the goal realistically  attainable ? The KPI has to be a parameter that you know you can realistically strive for in a given timeframe. Don’t shoot for impossible numbers.
• How  relevant  is the goal to your organization? The KPI should directly align with your business objectives and reflect an area that is critical to your success.
• What is the  timeframe  for achieving this goal? Is it for the month, quarter, or year? Setting a timeframe for your KPI can help you do comparisons between periods, which allows you to track your performance and growth.

If you want to expand the SMART framework, you can make it SMARTER by adding  evaluate  and  re-evaluate  to your measurement steps. KPIs shouldn't be one-and-done—constantly evaluate them to ensure they are attainable and on track.

What is the difference between a key performance indicator and a metric?

While the terms “KPI” and “business metric” are often used interchangeably, they are distinct concepts. A business metric is a quantifiable measure used to track and assess the status of a specific business process. For example, website traffic is a common business metric. 

On the other hand, KPIs are a type of performance measurement that helps you understand how your organization, department, or individual is performing against their strategic goals. 

In short, every KPI is a business metric, but not every business metric is a KPI.

The  difference between a KPI and a metric  is nuanced. It is worth noting, though, that despite their subtle differences, you often need one to have the other. Here’s a side-by-side comparison of a KPI and a metric:

To develop a strategy for writing KPIs, start with the basics: understand what your organizational objectives are, how you plan to achieve them, and who can act on the information. As you iterate and develop, you will gain a better understanding of which business processes can be on a KPI dashboard and who you should share that dashboard with.

What are KPI reports?

Now that you know what a key performance indicator is, you might have also stumbled upon the term “KPI report.” KPI reports, or KPI reporting, is a summary of all key KPIs you have for a project, campaign, or general operations. It’s usually created using interactive dashboards and/or reporting software that users can edit and share. 

Ultimately, KPI reports serve as a strategic tracking method, providing a comprehensive view of essential business activities and its performance in each aspect.

What are the benefits of using KPI software?

At some point, you might be asking yourself, “Why do I need software when I can use a spreadsheet?” And while it’s true,  spreadsheets have their limitations . They offer limited data visualizations (pie charts, bar charts, etc.), and there is a lot of time and manual effort required to get your report set up. 

Spreadsheets require regular, manual maintenance to keep your data up to date, too. 

Meanwhile, dashboard and reporting tools automate your data retrieval right from your data source so, right away, there is minimal manual effort. These tools are ideal for creating specialized dashboards, such as  executive dashboards  for high-level performance monitoring,  marketing dashboards  for tracking campaign results,  social media dashboards  for analyzing engagement, and  sales dashboards  for monitoring sales performance. 

In fact, no matter how big or small your organization is, there are a ton of benefits KPI software can give you. Below are the ones you absolutely need to know about.

Has a library of visualization options

Dashboard and reporting tools often have data visualization customization and advanced capabilities, offering a large selection of visualization options. Klipfolio lets you create real-time data visualizations of your KPIs. When you’re tracking your KPIs, you’re likely pulling in data from different data sources, like HubSpot or Google Analytics. 

In an analytics tool, you can  bring all of that data together  in just a few clicks, turn it into  stunning data visualizations , and  put them on a dashboard . From there, you can segment your data to look at channel types or countries, add dimensions, combine metrics, and share customizable and insightful reports with your team.

Centralizes your data 

KPI software provides a structured and organized repository where KPIs can be defined, tracked, and updated. This eliminates the need for manual tracking (like spreadsheets), ensuring that your data will always be accurate, consistent, and accessible.

For example, your sales team can use KPI software to store and track key sales performance metrics such as revenue and conversion rates. All relevant data points and calculations are stored and refreshed in one place, allowing your business to monitor and analyze performance trends over time.

Supports real-time monitoring

KPI software enables real-time performance monitoring. It retrieves data from various sources, updates metric values automatically, and presents them in shared dashboards for easy access. This provides instant visibility into performance trends, allowing for timely decision-making and response to changing circumstances.

KPI software can also generate automated alerts and notifications based on predefined rules or thresholds. This way, teams are promptly informed when their KPIs deviate from expected targets, enabling them to take immediate action and address any pressing concerns. 

Easy to scale

KPI software offers scalability, allowing organizations to accommodate growing data volumes and expanding performance measurement needs. It’s designed to handle large volumes of data and accommodate growing companies. 

For example, you may start off by just tracking basic sales and revenue. But over time, you may find that metrics such as customer retention rates, average order value, and inventory turnover can give you a more accurate reading into the performance of your company. As you collect and analyze more data, your KPI software can scale accordingly. 

Integrates with existing sources

KPI software can leverage data from multiple sources. In retail, for example, you have data sources such as point of sales data, loyalty card data, and market data. KPI software integrates with all these systems/data to generate comprehensive insights and maximize the value of your KPIs.

How to create a KPI Dashboard

Creating a KPI dashboard involves a systematic approach to ensure its effectiveness in monitoring and analyzing critical metrics.

• Define the objective of your dashboard : Is it to share insights with people who find raw data challenging to read? To convince management to take action?
• Identify who the dashboard will be for : Is it stakeholders? Marketing? Knowing what exactly your dashboard will be used for helps determine what KPIs you’ll be using, how you’ll be presenting them when it will be monitored, and more.
• Select the right KPIs : Focus on a concise set of metrics that provide a clear and meaningful picture of your organization's progress. You don’t need all of them to make a comprehensive report.
• Choose the proper visuals : What visuals will help you effectively convey the information you have with a glance? Some examples include charts, graphs, gauges, and tables.
• Design your layout : Organize the KPIs in a logical manner, considering factors such as hierarchy, grouping, and visual flow. Keep the design clean, uncluttered, and easy to navigate.
• Gather feedback : Before sharing your KPI dashboard with the rest of your team, test its usability and functionality with a small group of users. Make the necessary adjustments based on user insights to improve the overall user experience.

Knowing what exactly your dashboard will be used for helps determine what KPIs you will be using, how you will be presenting them, when it will be monitored, and more. Remember to  regularly maintain and update your dashboard  as well to ensure real-time or near-real-time monitoring.

What are the best KPIs to use?

We've said it a lot throughout this article: your key performance indicators should directly tie into your organizational goals and mission. This alignment ensures that everyone in the organization is working towards the same objectives.

For example, if your strategic goal is to improve customer service, a potential KPI might be to "Reduce customer complaint resolution time by 30% over the next 6 months." If you fail to meet this requirement, you need to know why it happened and take corrective action as soon as possible.

However, we also understand that defining the best KPIs to start with can be a challenge. To start your journey into performance tracking, we’ll list down some of the basic KPIs you should be tracking across different business functions, such as sales, finance, and marketing.

Get started  creating your KPI dashboard  with the following metrics:

Best Executive KPIs

Net Profit Margin

Net Profit Margin shows net profit as a percentage of total revenue. To calculate the Net Profit Margin, divide your net profit (after deducting all expenses) by the total revenue. 

Debt to Equity Ratio

The Debt to Equity Ratio measures how your organization is funding its growth and how effectively you are using shareholder investments. For example, if a company has a debt of $1 million and a shareholders' equity of $500,000, the Debt to Equity Ratio would be 2. This means that the company has twice as much debt as equity.

Lifetime Value to Cost of Acquisition Ratio

This KPI tells you if the theoretical lifetime revenue you get from a customer is higher or lower than the sales and marketing costs needed to acquire that customer. It is calculated by dividing the Lifetime Value (LTV) of a customer by the Cost of Acquisition (CAC).

CAC Payback Period

CAC Payback Period is the time it takes for a company to earn back its customer acquisition costs. A shorter payback period indicates a quicker return on investment.

Best Marketing KPIs

• Customer Acquisition Cost

Customer Acquisition Cost (CAC) is the cost a business incurs to acquire a new customer. It is calculated by dividing the costs associated with acquiring customers, such as marketing, by the number of new customers acquired within a specific timeframe.

• Lead Conversion Rate

The Lead Conversion Rate is the percentage of visitors who come to your website and are captured as leads. The lead conversion rate provides insights into the effectiveness of your sales and marketing efforts in converting leads into paying customers.

Marketing Qualified Leads

A Marketing Qualified Lead (MQL) is a universal metric used by marketing teams to measure the quality of leads they generate and pass to sales. Marketing teams often have different set targets for MQLs.

Return on Marketing Investment

The Return On Marketing Investment (ROMI) metric measures how much revenue a marketing campaign is generating compared to the cost of running that campaign. It’s computed by first subtracting the amount spent on marketing from the revenue generated by marketing efforts. Then, divide this result by the marketing investment and multiply by 100 (to get a percentage).

Best Sales KPIs

Lead to Win Rate

Lead To Win Rate is the percentage of Leads who entered the sales funnel and are now "Closed Won" customers. The process is more lengthy, but it is commonly computed by dividing the number of leads converted into wins by the total number of leads generated.

A Lead is an individual who has shown an interest in your product or service. They don’t have to be people who buy your offerings.

MRR Growth Rate

Monthly Recurring Revenue (MRR) Growth Rate is the velocity at which MRR is being added to the business, expressed as a percentage. MRR is determined by comparing the Net MRR of the current period with the Net MRR of the previous period.

Average Selling Price

Average Selling Price (ASP) is the average price a given product is sold for. To calculate the ASP, simply divide the total revenue earned from selling the product by the total number of units sold. For example, let's say your company earns a total revenue of $100,000 from selling 1,000 units of a product. By dividing the total revenue by the total number of units sold, the ASP would be $100.

Best Finance KPIs

Gross Margin

Gross Margin is a profitability ratio that measures Gross Profit as a percentage of total revenue. It is calculated by subtracting the cost of producing goods or services from the revenue generated by selling them.

Net Burn, often referred to as Burn Rate, is the amount a company is losing per month as they burn through its cash reserves. There are two common ways to calculate net Burn. The first involves subtracting the Gross Margin from the Operating Expenses. The second method compares the starting and ending cash balances over a specific period. Both methods provide valuable insights into your cash flow and financial health. This way, you'll know if your business is spending more cash than it is generating and if it can sustain its current spending levels.

Net profit is the value that remains after all expenses are subtracted from the company’s total income. It’s computed by subtracting all expenses from your gross income.

Revenue is all income you’ve earned through all channels—be it sales or subscriptions. This KPI lets you know how much your business is earning.

Frequently Asked Questions

What are the five main kpis.

If we’re talking about the  commonly  used KPIs, they have to be: 

• Profit Margin/Sales and/or Annual Sales Growth
• Client/Customer Retention Rate
• Customer Satisfaction

However, remember that different organizations have different objectives. Choose the indicators that you think will best track your company’s growth. KPIs serve as quantifiable metrics that reflect the critical areas of your business and provide a clear view of its progress and success. By tracking your performance indicators, you can lay the groundwork for effective management and gain valuable insights into your organization's progress towards its goals.

What does KPI stand for in sales?

Key performance indicators (KPIs) are measurable and quantifiable metrics used to evaluate and assess the performance of your company or organization’s activities. It’s commonly used in sales and marketing to track revenue generation, customer acquisition, conversion rates, and more.

By tracking and analyzing sales KPIs, you can closely monitor your progress towards your targets, pinpoint areas for enhancement, and make informed, data-driven decisions to optimize sales performance. 

What is the difference between a dashboard and a KPI?

Sometimes we see the words “dashboard” and “KPI” used interchangeably—which is simply untrue. A dashboard is a visual representation of data that provides a consolidated view of various metrics and other relevant information in a single interface. It offers a comprehensive overview of an organization's performance across different areas and enables businesses to monitor trends, patterns, and insights at a glance. 

While a dashboard may include KPIs,  it often encompasses a broader range of metrics and data points —not just key performance indicators!   Dashboards typically present data through charts, graphs, tables, and other visual elements, allowing users to quickly assess performance and make data-driven decisions. Dashboards are usually set up using a KPI software or reporting tool.

• Starting a Business

Our Top Picks

• Best Small Business Loans
• Best Business Internet Service
• Best Online Payroll Service
• Best Business Phone Systems

Our In-Depth Reviews

• OnPay Payroll Review
• ADP Payroll Review
• Ooma Office Review
• RingCentral Review

Explore More

• Business Solutions
• Entrepreneurship
• Franchising
• Best Accounting Software
• Best Merchant Services Providers
• Best Credit Card Processors
• Best Mobile Credit Card Processors
• Clover Review
• Merchant One Review
• QuickBooks Online Review
• Xero Accounting Review
• Financial Solutions

Human Resources

• Best Human Resources Outsourcing Services
• Best Time and Attendance Software
• Best PEO Services
• Best Business Employee Retirement Plans
• Bambee Review
• Rippling HR Software Review
• TriNet Review
• Gusto Payroll Review
• HR Solutions

Marketing and Sales

• Best Text Message Marketing Services
• Best CRM Software
• Best Email Marketing Services
• Best Website Builders
• Textedly Review
• Salesforce Review
• EZ Texting Review
• Textline Review
• Business Intelligence
• Marketing Solutions
• Marketing Strategy
• Public Relations
• Social Media
• Best GPS Fleet Management Software
• Best POS Systems
• Best Employee Monitoring Software
• Best Document Management Software
• Verizon Connect Fleet GPS Review
• Zoom Review
• Samsara Review
• Zoho CRM Review
• Technology Solutions

Business Basics

• 4 Simple Steps to Valuing Your Small Business
• How to Write a Business Growth Plan
• 12 Business Skills You Need to Master
• How to Start a One-Person Business
• FreshBooks vs. QuickBooks Comparison
• Salesforce CRM vs. Zoho CRM
• RingCentral vs. Zoom Comparison
• 10 Ways to Generate More Sales Leads

Tips for Setting Better Business Goals

Table of Contents

If you want to take your business to the next level, setting the right goals could be the key. While creating the right goals for your company can be challenging, the best ones can make all the difference in your growth.

Hard work is required to build your business, but you also need direction. Setting solid and attainable goals is an excellent place to start. Read on to learn about different business goals and how to set them.

What is a business goal?

A business goal differs significantly from a New Year’s resolution and has way more money riding on it than a gym membership fee. Business goals are objectives tied to your vision for your company and the achievements you want to accomplish. 

Business goals may pertain to the whole company, certain departments, specific groups of employees or other areas of the business. Depending on your purpose, the goals you set to help your company progress can be daily, quarterly or yearly objectives. If you’ve created a business plan , you may have already mapped out your goals as action strategies.

What are SMART goals?

When setting business goals, it helps to be SMART, as in the goal-setting acronym that stands for “specific, measurable, achievable, relevant and time-bound.” SMART business goals can be highly effective.

A SMART goal should follow the elements in the framework, which we elaborate on below. By setting a SMART goal, a person plans out their goal to track and execute their specific target. Here are some pointers on what it means to set SMART goals.

When setting a goal, knowing precisely what you hope to accomplish and what actions you must take to reach your objective is essential. Let’s say you want to expand your revenue . These are some of the specifics you would want to decide as you set your goal:

• The dollar amount or percentage of revenue growth you want to achieve
• A deadline for when you expect to reach the objective
• Which department or individuals would drive this process
• What steps they would take to work toward this goal
• What resources you would need to allocate to help your staff meet this objective

Measurable goals use metrics such as dates and numerical values to track your progress. This approach not only encourages you to focus on the end goal, but also helps you evaluate how your efforts are helping you accomplish your objectives, which can help you stay motivated. In the above example, your measurable goal might be to increase your sales by $5,000. You might decide this should happen in a month, and then ask each sales team member to follow five extra leads per week in hopes of meeting this objective.

For a goal to be achievable, it must be realistic. For example, a goal to make $1 million in one day probably isn’t attainable for most of us, and setting such a goal would be setting yourself up to fail. Even though your goals should require you to expend extra effort, they should be reachable.

Teams can benefit from collaboration-based goals. Strengthen groups by creating interconnected objectives. Offer professional communication channels like Slack to facilitate coordination and celebrate achievements.

A relevant goal matters to your business; it should make sense and meet your company’s needs. Referring to the example above, would increasing your revenue make a difference to your business? Of course! However, not every business goal needs to be about revenue.

“If one of your big values is to serve others to the best of your abilities, then merely setting a revenue-based goal isn’t going to be enough to motivate you,” Heather Moulder, leadership and business coach at Course Correction Coaching, told business.com.

A time-bound goal has a deadline for the work you intend to do. When there isn’t any time limit, measuring your progress is hard. Deadlines can push you to action and help you work toward your goals efficiently.

What are examples of business goals?

Understanding a good goal can help you model your own goals for your small business. 

Let’s say you want to increase revenue by introducing a new service or product. Moulder said this goal is purposeful and beneficial to your company because it would help you better serve your clients and improve customer satisfaction. It would also mean taking on more responsibility for creating your new product or service, so you would need to prepare for the time and resources that entails.

Business goals can also be about your employees. If your objective is, for example, to improve or grow your team members’ skill sets, you can do so through actionable items, like creating a committee to hire a professional instructor for employee training courses . Then, the objective would be to have this instructor train your staffers for the next six months. When they complete the course, you can measure their skills by assigning tasks based on their learning. 

How do you write a business goal?

It’s one thing to have general goals in mind, but you need to put pen to paper. Writing your goals down is very effective.  “The physical act of writing down a goal makes it real and tangible,” said Angela Civitella, a certified business coach and founder of Intinde. “You have no excuse for forgetting about it.”

Here are two tips to help you write effective business goals.

1. Write in an active style.

The language you use when writing your goals impacts how you perceive them and whether you get them done.

“As you write, use the word ‘will’ instead of ‘would like to’ or ‘might,’” Civitella said. “For example, ‘I will reduce my operating expenses by 10 percent this year,’ not ‘I would like to reduce my operating expenses by 10 percent this year.’ The first goal statement has power, and you can ‘see’ yourself reducing expenses. The second lacks passion and gives you an excuse if you get sidetracked.”

Writing down your goals creates self-accountability. The goal is no longer simply in your mind but tangible. Whether you look at your goal in writing daily or revisit it months later, this extra step can signal intent and motivate you to achieve your objectives.

2. Narrow down what’s important.

Make sure your goals are important to you and your company. Ask yourself, “Does this goal motivate me?”

“If you have little interest in the outcome, or they are irrelevant given the larger picture, then the chances of you putting in the work to make them happen are slim,” Civitella said. “Motivation is key to achieving goals.”

There is such a thing as too many goals. Ensure you write down only extremely valuable objectives. A long to-do list with only two items crossed off can cause feelings of disappointment and frustration, which can add to demotivation and be incredibly destructive, Civitella said.

“Ask yourself, ‘If I were to share my goal with others, what would I tell them to convince them it was a worthwhile goal?’” she said. “You can use this motivating value statement to help you if you start to doubt yourself or lose confidence in your ability to actually make the goal happen.”

What are the different types of business goals?

Four types of goals are beneficial in the business world. Read on to learn more about each of them.

Activity-based goals

Activity-based goals require you to perform specific tasks or activities. For example, you might set a goal to make 20 weekly client phone calls.

Process-based goals

Process-based goals require you to focus on internal processes, strategies and behaviors. “Some examples would be resetting business policies for better efficiency or developing a new training program for staff to help their communication with customers,” Moulder said. 

Outcome-based goals

Outcome-based goals focus on the results of your efforts. You may have less control over these results if they’re based on consumer or client behavior. 

“An example of this would be to get 10 referrals from existing customers,” said James Pollard, owner of The Advisor Coach. “You can’t directly control whether or not they give you any referrals, but you can influence the process by asking.”

Some goals are a hybrid of process and outcome goals, explained Moulder. For instance, a service-based business might set a goal to implement a new staff training program to improve customer service. The process portion of the goal is implementing the training program. The outcome is improving customer service, which you could gauge by a reduction in service cancellations or an increase in repeat customers . 

Personal goals

Personal goals are those that business owners set for themselves. These may be related to maintaining or improving your health, work-life balance , or professional development. Knowing what you want for yourself is as essential as understanding what you want for your business because your personal goals affect how you run your company. 

Celebrate reaching both your short-term and long-term goals. Choose rewards that give you time away from your business to unwind, like an outing with friends or a family vacation.

Why is setting goals important in business?

We set small goals in our everyday lives, such as making it home in time for dinner or eating salad for lunch. Goals are vital because they give you and your business direction. With them, you may perform at your best.

Without goals, however, it’s hard to measure your business’s success, which makes it challenging to recognize what aspects of your company are doing well and where growth is needed. Objectives and a mission statement also keep you and your team aligned. When everyone knows the company’s purpose and how their roles contribute to the mission, it improves morale and increases productivity.

Julie Thompson contributed to this article. Source interviews were conducted for a previous version of this article. 

Get Weekly 5-Minute Business Advice

B. newsletter is your digest of bite-sized news, thought & brand leadership, and entertainment. All in one email.

Our mission is to help you take your team, your business and your career to the next level. Whether you're here for product recommendations, research or career advice, we're happy you're here!

• Implementing Project Financial Management and Grants Management

What's the difference between key performance indicator and performance measure?

Key performance indicators (KPIs) measure how well an organization or individual performs an operational, tactical, or strategic activity that's critical for the current and future success of the organization.

Examples are: Period-to-Date (PTD) Actual Spent Labor Effort Percentage, PTD Actual Spent Equipment Effort Percentage, and PTD Actual Margin Percentage.

Performance measures are singular data elements defined by a specific account, scenario, and time dimension combination. For example, the performance measure, Quarter-to-Date (QTD) Forecast Labor Effort, references the account of labor hours, in the scenario of primary forecast, and the quarter-to-date time dimension.

A KPI is created based on a performance measure, and specifies how a performance measure value is interpreted using threshold levels. For example, the KPI PTD Actual Spent Equipment Effort is based on the measure actual spent equipment effort.