What is a KPI? (Key Performance Indicator)
A Key Performance Indicator (KPI) is a measurable value demonstrating how effectively a company, team, or individual achieves key business objectives. KPIs are selected from a much larger set of metrics because they directly link to strategic outcomes and drive decision-making.
In more detail
Not every metric is a KPI. A KPI should be tied to a strategic objective, be measurable, have a target, have an owner, and be reviewed regularly. Sales teams track KPIs like pipeline coverage and win rate. Customer success tracks NRR and churn. Engineering teams track deployment frequency and change failure rate.
The most common framework for choosing KPIs is SMART (Specific, Measurable, Achievable, Relevant, Time-bound). KPIs cascade: a company-level KPI like revenue growth breaks into team KPIs which break into individual KPIs.
How it works
- Identify the strategic objective the KPI supports.
- Ensure the metric is quantitative and auditable.
- Set a target and time frame.
- Assign a single owner responsible for the number.
- Choose a reporting cadence (weekly, monthly, quarterly).
- Review, adjust, and retire KPIs as strategy evolves.
Related terms
Mini FAQ
Most experts recommend 3 to 7 KPIs per team. More than that dilutes focus.
All KPIs are metrics, but not all metrics are KPIs. KPIs are the subset tied to strategic outcomes.
Operational KPIs are reviewed weekly or monthly. Strategic KPIs are reviewed quarterly.