What Is a KPI?
KPI stands for Key Performance Indicator. Learn what makes a metric a KPI — and which ones actually matter.
Key Takeaways
- A KPI is a metric that is directly tied to a business goal.
- Not every metric is a KPI — only the ones that tell you whether you're winning or losing.
- Good KPIs are specific, measurable, and reviewed regularly.
KPI in plain English
A Key Performance Indicator is a number that tells you how well you're doing on something that matters. The word 'key' is important: a KPI is not just any metric. It's the metric that is most directly linked to one of your business goals.
KPI vs metric
All KPIs are metrics, but not all metrics are KPIs. The number of support tickets raised is a metric. If your goal is to improve customer satisfaction, and you believe reducing tickets drives that goal, then tickets becomes a KPI. Context and intention are what separate the two.
Examples by business type
For an eCommerce seller: revenue, average order value, and refund rate. For a SaaS company: monthly recurring revenue, churn rate, and trial-to-paid conversion. For a service business: billable hours, client retention rate, and project margin. Choose three to five KPIs maximum — anything more and the word 'key' loses its meaning.
How often should you check KPIs?
It depends on how quickly they change. Revenue and orders: daily. Customer retention and margin: weekly or monthly. Annual targets: quarterly. AskBiz surfaces your most important KPIs in the Daily Brief so you never have to go looking for them.