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.
If you’re building business intelligence, you need to track both strategic KPIs and tactical metrics. Because to understand the performance of a KPI, you’ll need to know the supporting metrics.
The vast majority of enterprises rely on KPIs. But now that business intelligence has brought access to massive quantities of data and data visualization, there’s a new problem: KPI overload. It’s easier than ever to fall into the trap of measurement for measurement’s sake. Managers everywhere are learning the hard way that just because they can measure something doesn’t mean that they should.
This guide provides examples, templates and practical advice to help you identify the KPIs that matter most for your organization.