Key Performance Indicator (KPI)
A key performance indicator, or KPI, is a measurement selected to show progress toward an important objective.
A KPI is a metric, but not every metric is a KPI.
What It Means in Practice
A website can produce hundreds of metrics.
Examples include:
- Page views
- Sessions
- Form submissions
- Revenue
- Engagement rate
- Downloads
- Purchases
- Search impressions
Only a small number should usually be treated as key performance indicators.
The distinction comes from the decision the measurement supports.
KPI vs. Metric
A metric is a measurable value.
A KPI is a metric considered important enough to represent progress toward a defined goal.
For example:
Metric: Contact-page views KPI: Qualified enquiries
Contact-page views may provide useful supporting context, but they do not necessarily represent the outcome the organization is trying to achieve.
Why It Matters
Calling every visible number a KPI makes prioritization difficult.
A useful KPI directs attention toward the outcomes that matter.
Supporting metrics can then help explain why that KPI changed.
Common Problems
Common KPI problems include:
- Too many KPIs
- Choosing measurements because they are easy to collect
- Using traffic as a universal success measure
- Selecting metrics disconnected from business outcomes
- Changing definitions between reports
- Treating a target as the KPI itself
- Reporting a KPI without enough dimensions to interpret it
How to Improve
Start with the objective.
Ask:
What observable result would tell us that this goal is actually progressing?
Choose the smallest number of indicators that meaningfully answer that question.
Then use supporting metrics and dimensions to investigate the results.