What matters to you: KPI VS METRICS

In the global business world, the use of data is not a recent phenomenon. Data has always been a fundamental ingredient in shaping the decision-making process in any organization. The evolution in technology has led to an increased interest in data-driven decisions leading to an increased interest in using data to make better business decisions.

With this shift, organizations have started investing more time and resources into collecting and analyzing different types of data such as social media sentiment, customer feedback, and product reviews. Businesses need Business Intelligence tools in order to help them make decisions. Business Intelligence tools provide insights into important metrics for a company and help them understand the business KPIs.

The Business Intelligence tools allow analysts and business professionals to identify trends in their data and predict future events. It is no surprise that such a tool has become so necessary in the market today.

Businesses can be measured by different metrics. A useful measure of a company's success is the achievement of the strategic objectives. The more successful these goals are, the better it is for the business and its investors. To measure this success, one must know what KPIs to use; not only on the company level but also for each department within it.

So, what are key performance indicators (KPIs) and how do they differ from business metrics?

Examples of KPI vs Metrics

An example of a great KPI is increasing new customer trials by 15% in 2019, so we'll have 18 trials per week instead of 15. That will help us grow our company.

A KPI is a key performance indicator - data that measures how well an organization is performing. The best KPIs are specific, measurable, and actionable. This example should be more than just words so I would use numbers instead of words to show the value of what the goal is.

An example of a metric would be organic inbound website traffic. They are data points that are used to help with the development of your strategy but they're not directly related to any specific measurable results.

Metrics are quantitative measures that may be used to evaluate the performance of something. An example of a metric would be organic inbound website traffic. They are data points that are used to help with the development of your strategy but they're not directly related to any specific measure of success. 

Business Metric

Business metrics are any quantifiable components of your business. They are usually measured by counting or calculating an amount (for example, the number of website visitors or the click-through rate). 

Business metrics are used to measure the performance of your business. They are made up of quantitative measurements that are pieces of data that are used to calculate objective indicators. Businesses often use metrics to evaluate their success or failure in achieving their goals.

Businesses are often faced with the challenge of limited metrics. For example, social media metrics such as the number of your Instagram followers cannot indicate anything about your earned revenues or customer conversions.

There are many metrics out there that businesses can use to measure their success. Some of these metrics are more informative than others, but most will only give you one piece of the puzzle. For example, if your social media metric is the number of Facebook followers for your business, this does not give you any indication about your earned revenues or customer conversions.

KPI

A Key Performance Indicator, or KPI, is a company's measure for success that is aligned to specific organizational goals. For example, increased sales may be a related KPI because it contributes to financial performance. This is why metrics like "number of sales made per employee" are typically used in order to link the two. These KPIs are often used by management to determine how well their employees are performing and may also be used in achieving business goals

In business, every Key Performance Indicator (KPI) is an indicator that supports a key objective that helps the company achieve its goal.

How can you differentiate between KPIs & business metrics?

Tracking and measuring your company's metrics and key performance indicators (KPIs) is one of the best ways to gauge both its success and future direction. Metrics are the building blocks of key performance indicators, while KPIs are often used to evaluate past performance in order to predict future success.

Every company does not necessarily make use of the same set of key performance indicators. For example, companies that concern themselves with earning profits may look at earned profits as a key performance indicator, while those focused on cash flow or net income might view these differently.

Metrics and KPIs are different. A KPI can certainly be a metric, but a metric does not have to be a KPI. A KPI is only a metric when it performs a given key business objective. If a KPI can't consistently meet these goals then it is just simply a KPI.

Metrics and Key Performance indicators have become a staple part of the business with the growth of the digital age. They are now more important than ever due to their ability to gather relevant data from your business and plan for the future.

Why it matters?

It's all about motivation. KPIs act as a driving force for performance which will help achieve business goals.

Key Performance Indicators (KPIs) are a way of measuring success and performance. They can also help predict future outcomes and provide valuable insights on how to improve company efficiency. KPIs should be set according to the business goals that need to be achieved.

In contrast, you should track metrics at a regular rate. For example, daily or weekly will map to your department or project performance. The additional logic I'm going for is that if a metric indicates better business outcomes, then it should be considered a key metric to track.

Metrics are the core of any data-driven organization. If you're not tracking metrics, then it's impossible to know what's going on and where to go. For example, if you want to know whether or not your new marketing campaign is successful, you should be measuring the number of eyes on your website daily. It's important to track metrics at a regular rate so that you can get an accurate record.

How to weed out KPIs from the Metrics?

It's worth thinking about the metrics that matter to you and your business. This could be anything like revenue, visits, conversions, etc. When evaluating past performance, metrics can be useful for forecasting future success. But there are no insights on how your business is performing, help allocate resources or identify strategic goals. There should be. It's also worth noting that while you can effectively track a multitude of metrics, Too many KPIs and the importance of each individual KPI decreases. Be judicious when choosing what data to track as key performance indicators so you don't overwhelm yourself with too much data!

"There are so many KPIs these days, it’s hard to know what to focus on. But the downside is that the more you have, the less each individual KPI matters."

Conclusion

Businesses have a lot of data to manage, and it can be overwhelming. KPIs and business metrics are different things, but they're often confused for one another. If you're looking to build a business with data-driven analytics, the first step is identifying the right set of KPIs from your existing metrics. These numbers should be tied to the strategic objectives of your company, so don't just throw everything into one big pile! To help you get started, check out blogs on what KPIs are and how they differ from business metrics. 

Example: KPI vs Metrics

An example of a great KPI is to increase new customer trials by 15% in 2019, representing a growth of 15 trials per week to 18 trials per week. This KPI supports a specific strategic outcome–an increase in net-new revenue and helps clearly outline an outcome.

An example of a metric would be organic inbound website traffic. It's important to track this metric as it helps feed your strategy outcome, but it's not a clearly defined KPI related to an outcome. It's just a valuable metric.