What is a KPI?
A key performance indicator (KPI) is a measurement that reflects how effectively an organization, department, campaign or individual is meeting its intended objectives. There are high-level KPIs that reflect the overall performance or growth of the business and low-level KPIs that can act as performance targets for individual workers.
KPIs are a management tool. A manager may hold employees responsible for hitting specified KPI targets, or they may use KPI measurements as inputs for the decision-making process. On an organizational level, KPIs can be applied to every area of the business, including sales, marketing, customer service and even back-office functions like accounting and data entry.
From a marketing perspective, there are many types of KPIs that are appropriate for monitoring the success of marketing campaigns. How those KPIs are chosen and prioritized will depend on the specific goals and desired outcomes of the campaign. In digital marketing, a capability called event tracking allows marketers to monitor metrics and KPIs that serve as indicators of project success and outcomes.
Metrics vs KPIs - What's the Difference?
On the surface, metrics and KPIs share a lot of similarities. They are both measurements of business activities and outcomes that can drive decision-making and tell a story about employee and customer behaviors – so what’s the difference between metrics and KPIs?
For starters, a metric is anything in your business that you can measure. You might be tracking your daily number of ad impressions, total ad spending, organic inbound website traffic, total outgoing sales calls or any number of other items. These all provide valuable information, but that doesn’t make them KPIs.
As an organization, you choose which metrics will act as your key performance indicators. KPIs reflect the metrics that your business feels are the most important for measuring the overall success of a marketing campaign, a person in a particular role, or even a whole department. Your objective when choosing KPIs is to identify the metrics that best correlate with goal attainment as defined by your business strategy.