Any business is organized around an objective. For example, Apple may want to sell more iPhones and a local coffee shop may want to ensure its customers are happy with their orders. Regardless of size or industry, businesses have intermediary steps to reach these objectives. Take, for instance, the coffee shop we just mentioned.
Thankfully, there is a helpful framework for setting expectations and tracking progress. Objective and key results are used to measure performance against monthly, quarterly, or annual goals. At its core, business OKRs are designed to organize a business team around a single objective (the "O" in OKR).
To effectively run a coffee shop, a set of standards need to be met. Baristas should be friendly, the coffee should be hot, and the place should be kept clean. The same applies to the business. You can think of business KPIs as the standards that a business should maintain or improve.
Ideally, managers and team leaders are selective with their business KPIs. It's better to have a handful of impactful KPIs, rather than dozens of metrics that you are trying to keep track of.
In summary, a business KPI is an important measure of business health.
Now let's dig into the specifics. Here's a list of key performance indicators that are useful to manage different departments.
Sales KPI Examples
Marketing KPI Examples
Customer Support KPI Examples
Finance & Accounting KPI Examples
Management KPI Examples
But then a question comes up: Out of all the metrics that you could track and follow, which ones are important? We have a specific criteria for picking business KPIs.
First, it's better to have less rather than more. After all, KPI standards for "key" performance indicators. You want to have a small enough set of KPIs that you can keep them in your head at all times.
Second, avoid vanity metrics. A vanity metric is any metric that artificially makes people feel good without driving any real business value. Number of app downloads is a vanity metric because it can only ever go up!
Number of current app downloads (downloads minus deletions) or number of app downloads this week are better because they fluctuate up and down.
Third, a business KPI should be tied to a legitimate business outcome. If you want to increase your revenue, there are 2 main ways of doing that: (1) getting more sales or (2) increasing your average sale price.
Instead of tracking an intermediary step (e.g., number of people who came to your website), you want to focus business KPIs on results (e.g., net new sales).
Put simply, a lagging KPI is backwards-looking while a leading KPI is forward-looking.
Surprisingly, revenue is a lagging indicator because it falls at the end of the sales cycle. In addition, revenue must be recognized according to either GAAP or IFRS accounting standards.
When looking at growth of a digital product, particularly one with a free trial, it may be more helpful to look at new account signups. Account signups do not generate revenue but they are a leading indicator of what revenue may look like in 15, 30, or 45 days.
Lagging Business KPI Examples (Outputs)
Leading Business KPI Examples (Inputs)
Track metrics like the top performing ecommerce stores.