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KPI stands for key performance indicator, a quantifiable measure of

performance over time for a specific objective. KPIs provide targets for
teams to shoot for, milestones to gauge progress, and insights that help
people across the organization make better decisions. From finance and
HR to marketing and sales, key performance indicators help every area
of the business move forward at the strategic level.

While key performance indicators and metrics are related, theyʼre not the same.
Hereʼs a quick explanation:

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KPIs are the key targets you should track to make the most impact on your
strategic business outcomes. KPIs support your strategy and help your teams
focus on whatʼs important. An example of a key performance indicator is,
“targeted new customers per month”.

Metrics measure the success of everyday business activities that support

your KPIs. While they impact your outcomes, theyʼre not the most critical
measures. Some examples include “monthly store visits” or “white paper
downloads”.

Download the KPI Planning Guide to learn:

10 steps to strong KPIs

Which questions help you define your KPIs

170 KPI examples and templates

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KPIs are an important way to ensure your teams are supporting the overall goals
of the organization. Here are some of the biggest reasons why you need key
performance indicators.

Whether measuring project success or employee

performance, KPIs keep teams moving in the same direction.

Key performance indicators give you a realistic look

at the health of your organization, from risk factors to financial indicators.

KPIs help you clearly see your successes and failures so

you can do more of whatʼs working, and less of whatʼs not.

Make sure everyone provides value with key

performance indicators that help employees track their progress and help
managers move things along.

Key performance indicators come in many flavors. While some are used to
measure monthly progress against a goal, others have a longer-term focus. The
one thing all KPIs have in common is that theyʼre tied to strategic goals. Hereʼs an
overview of some of the most common types of KPIs.

These big-picture key performance indicators monitor

organizational goals. Executives typically look to one or two strategic KPIs to
find out how the organization is doing at any given time. Examples include
return on investment, revenue and market share.

These KPIs typically measure performance in a shorter time

frame, and are focused on organizational processes and efficiencies. Some
examples include sales by region, average monthly transportation costs and
cost per acquisition �CPA�.

Many key performance indicators are tied to specific

functions, such finance or IT. While IT might track time to resolution or
average uptime, finance KPIs track gross profit margin or return on assets.
These functional KPIs can also be classified as strategic or operational.

Regardless of the type of key performance indicator you

define, you should know the difference between leading indicators and
lagging indicators. While leading KPIs can help predict outcomes, lagging
KPIs track what has already happened. Organizations use a mix of both to
ensure theyʼre tracking whatʼs most important.

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With so much data, it can be tempting to measure everything—or at least things

that are easiest to measure. However, you need to be sure youʼre measuring only
the key performance indicators that will help you reach your business goals. The
strategic focus is one of the most important aspects of the KPI definition. Here are
some best practices for developing the right KPIs.

Talk to people who will be using the KPI report

to find out what they want to achieve and how theyʼll use them. This will help
you define KPIs that are relevant and valuable to business users.

If your KPIs donʼt relate to what youʼre trying to

achieve in your business, youʼre wasting time. While they may be related to a
specific business function like HR or marketing, every key performance
indicator should tie directly back to your overall business goals.

The most effective KPIs follow the proven SMART

formula. Make sure theyʼre Specific, Measurable, Attainable, Realistic and
Time-Bound. Some examples include “Grow sales by 5% per quarter” or
“Increase Net Promoter Score 25% over the next three years.”

Everyone in the organization should understand your

KPIs so they can act on them. This is why data literacy is so important. When
people understand how to work with data, they can make decisions that will
move the needle in the right direction.

As your business and customers change, you may need to

revise your key performance indicators. Perhaps certain ones are no longer
relevant, or you need to adjust based on performance. Be sure you have a
plan in place to evaluate and make changes to key performance indicators
when necessary.

Business intelligence has given organizations access to

mounds of data and interactive data visualization, making it easy to measure
anything and everything. Keep in mind that the key performance indicator
definition refers to the most important targets. Steer clear of KPI overload by
focusing on the most impactful measures.

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

If your key performance indicators arenʼt delivering the results you expect, itʼs
time to adjust your strategy. Here are three things you can do to ensure that
people across the organization know what your KPIs mean, and how to use them
to make data-driven decisions that impact your business.

To be sure youʼre measuring what matters, you

should include a balance of leading and lagging indicators. Lagging indicators
help you understand results over a period of time such as sales over the last
30 days. Leading indicators help you predict what might happen based on
data, allowing you to make adjustments to improve outcomes.

Key performance indicators donʼt mean much if

people donʼt understand what they are and how to use them (including what
the KPI acronym means). Increase data literacy in your organization so
everyone works toward strategic targets. Educate employees, assign them
relevant KPIs, and use a best-in-class BI platform to keep everyone making
decisions that move your business forward.

Keep your key performance indicators current by revising them based

on market, customer and organizational changes. Meet regularly to review
them, take a close look at performance to see if adjustments need to be made,
and publish any changes you make so teams are always up to date.

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Every business unit has unique key performance indicators that help them track
progress. Many organizations use KPI dashboards to help them visualize, review
and analyze their performance metrics all in one place. Here are a few KPI
examples by department, including a dashboard view of each.

Finance

Sales

Marketing

IT

Customer Service

From expense and revenue to margin and cash management, finance managers
have lots of choices when it comes to tracking financial progress. Here are a few
examples to consider as you define your own key performance indicators.

Gross Profit Margin (and %)

Operating Profit Margin (and %)

Net Profit Margin (and %)

Operating Expense Ratio

Working Capital Ratio

Explore a Finance Dashboard Demo

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Ensure your teams are meeting sales targets by tracking and regularly reviewing
sales key performance indicators, including those for leads, opportunities, closed
sales and volume. Here are some examples of KPIs for sales teams:

New Inbound Leads

New Qualified Opportunities

Total Pipeline Value

Sales Volume by Location

Average Order Value

Learn More About Sales Dashboards

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Get a handle on marketing spend, conversion rates and other indicators of

marketing success by clearly defining key performance indicators and aligning
them with your organizationʼs strategic goals. Here are a few marketing KPIs to
get you started.

Marketing Qualified Leads �MQLs�

Sales Qualified Leads �SQLs�

Conversion Rates �For Specific Goals)

Social Program ROI �By Platform)

Return on Ad Spend �ROAS�

Learn More About Marketing KPIs and Marketing Dashboards

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From support tickets to server downtime, IT key performance indicators can help
keep teams accountable and alert them to any potential issues coming down the
line. KPIs for IT teams could include targets like the following:

Total Support Tickets

Open Support Tickets

Ticket Resolution Time

Security Related Downtime

IT Costs vs Revenue

Reopened Tickets

Explore Dashboard Examples

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Customer service leaders should track progress related to customers, employees

and finances. In addition, key performance indicators should cover both short-
and long-term targets, including support response times, customer satisfaction
and others that help reach service objectives.

First Contact Resolution Rate

Average Response Time

Most Active Support Agents

Cost Per Conversation

Customer Effort Score

Explore Dashboard Examples

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KPI stands for key performance indicator.

Key performance indicators �KPIs� are targets that help you measure progress
against your most strategic objectives. While organizations can have many types
of metrics, KPIs are targets that are “key” to the success of your business.

Key performance indicators can be either strategic or operational, and apply to

specific business units. For example, finance tracks revenue growth rate and net
profit margin, sales measures net sales and sales by region, customer service
tracks Net Promoter Score and average resolution time, and marketing might
measure traffic-to-lead ratio and cost per lead. Operational key performance
indicators could include order fulfillment time and time to market.

There are many factors to consider as you develop your key performance
indicators �KPIs�. Here are some to keep in mind: Define how they will be used, tie
them to strategic goals, keep them SMART (specific, measurable, attainable and
time-bound), make them understandable, adjust them as needed, and take care
only to measure the most important things.

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While every organization is different, there are a few ways to create high-
performing key performance indicators: include a balance of leading and lagging
indicators, create a KPI-driven culture by increasing data literacy, and regularly
review and adjust your key performance indicators as your audience, market and
business change.

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