Key Performance Indicator (KPI)

A key performance indicator (KPI) is a main measurement of performance used to track goals and quantify outcomes. KPIs are key indicators of progress toward an intended result. They 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 that target. Managing with KPIs often means working to improve leading indicators that will later drive lagging benefits. Leading indicators are precursors of future success; lagging indicators show how successful the organization was at achieving results in the past. 

Examples of Good KPIs

  • 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. 

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.

How to Effectively Measure KPIs

If you don’t know whether your marketing efforts are working or not, it is difficult to improve. But there are some easy ways to measure your success. 

Here’s what you need to do: 

  • Set goals. What is your plan to measure your performance? Define your business objectives. Do you want to increase brand awareness? Increase your social media presence? What are you wanting to do? Getting your thoughts down on paper will make achieving your business goals more realistic. 
  • Decide on a marketing strategy. KPIs are what you need to figure out to determine whether your marketing strategy is viable or not. 
  • Select your KPIs. Pick a certain number of KPIs to keep track of and report back on. Make sure they align with your business goals. This will help you see whether you’re meeting your objectives or not. 
  • Organize and segment your data. Use analytical tools to segment data and make it easier to gauge changes in KPIs. 
  • Provide targets for KPIs. Pick numbers for the goals you want to hit. 
About the Author
With over 15 years in content marketing, Werner founded Influencer Marketing Hub in 2016. He successfully grew the platform to attract 5 million monthly visitors, making it a key site for brand marketers globally. His efforts led to the company's acquisition in 2020. Additionally, Werner's expertise has been recognized by major marketing and tech publications, including Forbes, TechCrunch, BBC and Wired.