Key Performance Indicator (KPI)

A key performance indicator (KPI) is a measurable value that shows how effectively your organization is achieving its most important objectives. Think of KPIs like the gauges on your car dashboard—each one gives you real-time feedback to help you maintain your engine and stay on course.

In depth

Key performance indicators sit at the core of business decision making. They take strategic goals—like growing revenue or improving customer satisfaction—and translate them into clear, quantifiable targets. By focusing on KPIs, teams can align daily activities with long-term vision.

Well-designed KPIs follow these SMART guidelines:

  • Specific: They measure a distinct aspect of performance (for example, monthly sales growth).

  • Measurable: They include trustworthy data that’s designed to track progress.

  • Achievable: They strike the right balance between challenging and realistic.

  • Relevant: They tie directly to your strategic priorities.

  • Time-bound: They include a clear deadline or review period.

There are two main types of KPIs:

  1. Leading KPIs predict future performance—like website signups can predict new customers.

  2. Lagging KPIs reflect past outcomes—like quarterly revenue or customer churn rate.

Pro tip

Limit your KPI set to the top 3–5 metrics that truly move the needle. Too many KPIs can overwhelm teams and dilute focus. Assign clear ownership so someone is accountable for each indicator.

Regularly review and refine your KPIs to keep them fresh. KPIs should evolve alongside your business, to help you track new goals, markets, and data sources.

Why KPIs matters

KPIs give everyone a shared view of success. When you measure the right things:

  • Teams stay aligned around strategic goals.

  • Decisions become more data-driven and timely.

  • You spot issues earlier, from sales slumps to rising churn.

  • You demonstrate impact and build trust with stakeholders.

KPIs - In practice

Here are a few real-world examples of KPIs in action:

  • Marketing: Lead conversion rate, cost per acquisition, social media engagement.

  • Sales: Monthly recurring revenue (MRR), average deal size, sales cycle length.

  • Customer success: Net promoter score (NPS), first response time, renewal rate.

  • Operations: Churn rate, on-time delivery, inventory turnover.

In a self-serve analytics platform like PowerMetrics, you can pin these KPIs to dashboards, set targets, and get automatic alerts when numbers stray off course.

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KPIs and PowerMetrics

In PowerMetrics, you can:

  • Explore 300+ KPI definitions at MetricHQ, then add them to your metric catalog for exploration and analysis.

  • Build custom metrics and define goals to track KPI progress in real time.

  • Use PowerMetrics AI and Explorer to uncover patterns, forecast future KPI trends, and share insights across teams.

  • Set up notifications to get alerted when KPIs hit critical thresholds, keeping everyone aware of crucial data changes.

Related terms

Measure

A measure, in the context of data, is a quantifiable numeric value used to track and analyze data. It represents a calculation—like sum, average or count—that’s performed on raw data points.

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Objectives and Key Results (OKRs)

Objectives and Key Results (OKRs) are a goal-setting framework that helps teams align on ambitious goals and measure progress with specific, quantifiable results. Objectives define the destination on the roadmap, while 2–5 Key Results act as milestones that track success. Objectives inspire and guide teams, and Key Results keep everyone accountable by focusing on measurable outcomes.

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Metric Catalog

A metric catalog is a centralized library of standardized metrics and KPIs, each with a clear name, formula, and description. Think of it as a reference guide that ensures everyone in your organisation measures progress the same way.

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Metric

A metric, in the context of analytics, is a calculated value that tracks performance for a business activity. Think of it as a consistent math formula applied to your data over time, like revenue, conversion rate, or churn rate. A metric includes a clear formula, time frame, and rules for how to slice the data. It turns raw numbers into a repeatable signal you can compare across periods, products, regions, or segments.

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