KPI VS Metrics: All You Need To Know | DashThis (2024)

The advent of big data makes it possible to measure a lot of things that were previously challenging – if not impossible – to measure accurately. Armed with a greater volume of data, you can derive actionable, data-driven business insights that can help you optimize your operations or remain competitive in increasingly competitive markets. That’s whykey performance indicators(KPIs) andmetricshave become more and more critical to today’s businesses. But what exactly areKPIsandmetrics, and how do they differ?

Key performance indicatorsare data that show you just how good you are at attaining yourbusiness goals. Meanwhile,metricstrack the status of yourbusiness processes. WithKPIs, you will know if you're hitting your overall business targets, whilemetricsfocus on the performance of specificbusiness processes.

Let’s discuss in more detail whatkey performance indicatorsandmetricsare, their differences, and their importance to your business.

• What AreKey Performance Indicators?
• What AreMetrics?
• Choosing yourmetrics
• ​KPIsandmetrics: What's the difference?
• The Relationship BetweenKPIsandMetrics
• 1. Choose the rightmetricsfor yourKPIs.
• 2. Make sure that yourKPIsare measurable.
• 3. Make sure yourKPIsandmetricsare accurate.
• 4.KPIsandmetricsneed to be actionable.
• How to track yourmetricsandKPIs

What AreKey Performance Indicators?

Likemetrics,key performance indicatorsarequantifiable measures. ButKPIsoften focus on longer-termbusinessperformancemore than anything else. Akey performance indicatorshows you how close you are to achieving yourbusiness goals. It can also provide a quantifiable means of defining how you compare with competitors or against industry benchmarks.

Key performance indicatorscan be financial, such as grossprofit margin, current ratio, and revenues after certain costs and expenditures have been deducted.

ButKPIscan also be used to track progress towards other goals – such as employee turnover, employeeretention,conversion rate, foot traffic,website traffic, customer engagement,customer acquisition, and repeat customers. AKPIshould have a defined target orspecificgoalthat yourmarketingteamorsales teamcan work towards.

What AreMetrics?

Metricsare quantitative measures that you can use to assess, track, or compare production or performance.

Metricsare measurements of specific business activities. How many units are sold, how manynew customersyouronline businessgot, newsubscriberson yoursocial mediapages, how many new signups your website gets, or the number of sites linking to a specific website or webpage are just a few of the many examples ofvariousmetrics.

Companies rely on a variety ofdigital marketingtools to gather data and monitor theseimportantmetrics, such asGoogle Analytics, Google Ads, somebacklink analysis tools,website analytics tools, andemail marketing toolswith built-in reporting capabilities. Other examples ofmetricsinclude sales,churn rate, rates of return, gross domestic product, unemployment rate, inflation, price to earnings ratio, cost, and resources used. Anything that’s tied to an outcome (e.g., signups or website visits), quantifiable, and comparable to previous measurements can be ametric.

These differentperformancemetricsare pretty useful numbers. C-suite executives usemetricsto analyze their strategies, stock analysts rely on them for investment recommendations and to create opinions, and project managers use them to effectively oversee projects and monitor performance.

Choosing YourMetrics

There are a vast number ofbusinessmetricsany company could monitor, but just because something is quantifiable doesn’t mean that it should be measured. If ametricisn’t a factor in achievingbusiness objectives, it’s not worth measuring. The bestmetricsfor your business to monitor might not be important to another.

To choose themetricsto monitor, you must first define your goals, and then assess the differentmetricsavailable to you that are related to that goal. For instance, if your objective is to ensure top-notch quality control, you can trackmetricssuch as how many of your products are defective, how many products are created in a week, or how many of these defective items reach customers vs. those that are sorted out by your quality control team.

KPIsandMetrics: What's the Difference?

WhileKPIsandmetricsare both quantitative measurements, they focus on different things. KPIsare tied to business targets, whilemetricsare tied to the processes or activities in your business.

The two often overlap, which is why most people tend to be confused about which is which. AKPItells you how close you are to reaching yourbusiness goals, and it may include severalmetrics.

So, if the goal is to sell 50 percent more products or services in the next quarter, yourkey performance indicatormight be the number of products sold to date. However, thoseimportantKPIswill often include a variety ofmetrics, including:

• The number of website visitors you have
• The availability of your mobile app
• The sales each channel has

Looking at thesemetrics, you get a sense of the progress you’ve made towards yourbusiness objective, but that’s not all. You can also identify which areas are contributing more to the attainment of your overall goals, as well as pinpoint problem areas that are holding you back.

Furthermore,metricsare often owned by one person or department, whileKPIsare often dependent on several departments and individuals within the company. For instance, if a business aims to sell 30 percent more products in the first quarter of 2021, multiple departments might be involved in working towards that goal:

• Marketing'sKPImight be to grow your online store's traffic by 50 percent
• Product development will focus on adding useful and functional features to existing products
• Research and development will add new products into the mix
• Sales might want to offer discounts and promotions that will increase conversions

The Relationship BetweenKPIsandMetrics

As a measure of different areas of your business, ametricdescribes the effects of your daily grind. For example, yourSEOmight monitor how many target keywords your website is ranking for. Meanwhile, your HR department might keep track of the number of employee complaints successfully resolved. Thesemetrics, however, may or may not be aKPI.

KPIscan be viewed as a collection ofmetricsthat have the most impact to your overall business target in order to attainkey results.KPIscommunicate what your business priorities are and allow you to identify what needs to happen to individualmetricsto achieve an overarching goal. In short,KPIsare a good indicator of what matters most to the company at a particular time.

In summary, here’s a breakdown of the key differences betweenKPIsandmetrics:

• Metricslook at the performance of specific processes, whileKPIstrack progress towards your most important goals.
• Metricsusually follow an industry standard, threshold, or benchmark, whereasKPIsare typically set by the business depending on the objectives.
• Metricsare usually owned by an employee, a department, or a team.Metricsprovide a single quantifiable measurement, whileKPIsinvolve a variety of strategies andmetrics.
• KPIsare strategic because they offer insight into how you are succeeding at attaining your goals. Meanwhile,metricsare tactical, in that they look at the activities that take place to allow you to achieve yourKPI.

Best Practices for Identifying & MonitoringKPIsandMetrics

Now that you understandKPIsandmetricsand how they’re different, there are a few best practices you should follow to get the most from your data.

1. Choose the rightmetricsfor yourKPIs.

Chances are, your business will already have themetricsyou need. It's a matter of knowing which of thesemetricsare aligned to yourbusiness goalsso that they can be considered asKPIs.

2. Make sure that yourKPIsare measurable.

KPIsmust be based on data you can obtain. Consider what data points are needed to monitor a particularKPI, if you have the technology or the resources to access the data, and if you can afford the processes, technologies, and resources needed to obtain it.

For example, say one of yourKPIsis to increasecustomer satisfaction. How are you going to get the data for that? It might be impossible to survey everybody that comes into your store or every website visitor. There aretechnologies that can analyze customer sentimentin a variety of ways, but do you have a budget for it?

3. Make sure yourKPIsandmetricsare accurate.

The worst thing you can do is rely on the wrong data or inaccurate data. For instance, if your IT team'sKPIis to reduce your web app's downtime, there are several data points to look at, such as the number of support tickets received related to downtime. But what if your users simply moved on to your competitor and didn't bother to tell you that your app was down?

A more reliable data source would be something like anapplication monitoring tool, which can tell you if there were outages that weren’t reported, as well as detect problems in your web app before they cause it to go offline.

4.KPIsandmetricsneed to be actionable.

It doesn't make sense to measure something that you cannot control. For example, if yourKPIis apercentage increasein sales but you’re not monitoring a variety ofmetricsthat impact your sales, you can’t optimize your processes to improve outcomes. Knowing you’re at risk of falling short of meeting your goal is useful, you can’t implement the right changes if you don’t know why. Your sales might be declining due to supply chain disruptions, shifts in market demand, or high shipping costs or quality control issues that drive your potential customers to your competitors. Tracking the rightmetricsallows you to implement targeted strategies to achieve your goals.

Be flexible with yourlist ofKPIsandmetrics. Don’t just pick any quantifiable measurements because you’re used to using them. Also, yourKPIsshould change when you find a better way to assess your goals or if yourbusiness objectiveschange entirely.

KPIsandmetricsare valuable measurements of your business activities and processes and how they contribute to your overall goals. The main difference is thatKPIsare closely tied to how successful you are at achieving yourbusiness objectives, whilemetricsquantify the result of work done for specific activities. However, both are essential to running your business, formulating opinions and strategies, and to your success.

How to track yourmetricsandKPIs

Now, in order to track all theseKPIsandmetrics, you need a tool that can automatically gather all your differentKPIs, from all your different digital platforms in one report, like DashThis.

You can use presettemplatesthat are already filled with the most common and usefulKPIs, or build your report from scratch.

You choose your preferredperiod of time(monthly, weekly) and allmarketersandsales teamsin your business will be able to see your differentKPIsandmetricsautomatically updated every single day.