What Are Key Performance Indicators (KPIs)?

Key performance indicators (KPIs) are metrics used to track how close you are to achieving specific objectives within businesses, projects, or processes. They help companies evaluate their progress towards predetermined goals.

KPIs vary widely depending on the industry and specific goals of the entity using them. For example, a customer service team aiming to improve customer satisfaction might use customer satisfaction scores (CSAT) or average response time as indicators of success. For a website, if the goal is to grow audience engagement, relevant KPIs could include website traffic, bounce rate, or conversion rates.

To be effective, KPIs should be well-defined, quantifiable, and directly tied to strategic objectives. For instance, if a marketing team’s objective is to increase brand awareness, tracking social media engagement and impressions would be a useful KPI.

KPIs vs. objectives

Objectives are the targets or goals that a company aims to achieve. For example, a business might set an objective to enter a new market within the next year.

KPIs, in contrast, are the measurable values used to track progress toward these objectives. If the objective is to enter a new market, a KPI could be the number of new customers acquired in that market.

KPIs vs. metrics

Key Performance Indicators (KPIs) are metrics selected to specifically track how well a company is doing in reaching its most important goals. For instance, if a business’s key goal is to increase sales, a KPI might be the percentage increase in sales over the last quarter.

On the other hand, metrics are any numbers measured by a business that give insights into how it’s doing, but they might not directly show how close the business is to achieving its big-picture goals. A common metric is the number of daily website visitors—it shows traffic but not necessarily success in terms of sales or customer engagement.