KPIs vs. Metrics: Understanding the Differences in 2023

Author's avatar Marketing Nov 27, 2023 19 minutes read

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    Peter Caputa

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    “KPIs, metrics, data points, targets, measures… how am I supposed to understand all of these things? Are these just some buzzwords that businesses throw around?

    Do you ever feel like this?

    We understand. Grasping all these different variations of data and understanding what they mean can feel like differentiating Japanese, Chinese, and Korean.

    But if you run a business, not knowing the difference between them can be costly.

    That’s why in this report, we’ll go over what KPIs and metrics are, how they differentiate, cover examples, explain the best way to track them, and include some of the best practices you can implement when measuring them.

    google-analytics-kpi-dashboard-template-databox

    Let’s dive in.

    What Are KPIs?

    A KPI (Key Performance Indicator) is a quantifiable value that organizations use to track progress against individual, team, or company goals.

    KPIs provide direction toward achieving the desired results and play a crucial role in performance management and decision-making, helping organizations focus on what matters most for their success.

    Depending on their specific industries, businesses can have different KPIs for different objectives.

    Key characteristics of KPIs include:

    • Relevant: KPIs should be directly related to the organization’s objectives.
    • Measurable: They must be quantifiable, so the organization can measure them properly.
    • Achievable: KPIs should be realistic and attainable within a given time frame.
    • Time-bound: KPIs are often associated with a specific timeframe, whether it’s daily, weekly, monthly, or annually.
    • Clarity: It’s important that KPIs are easily understood by all stakeholders, so everyone has a common understanding of performance expectations.

    What Are Metrics?

    Metrics are standardized measures that organizations use to track, monitor, and assess various aspects of their performance.

    Similar to KPIs, metrics are used to track progress and performance in certain areas that are critical to the health of a business, such as revenue, customers, employees, and so on.

    And by analyzing these metrics, businesses can make informed decisions, identify areas for improvement, and gauge their overall success in achieving organizational objectives.

    Each department within an organization tracks its own set of metrics – e.g. financial metrics, marketing metrics, sales metrics, etc.

    What Is the Difference between KPIs and Metrics

    Now that we’ve covered the base definition for both KPIs and metrics, let’s see how these two differentiate.

    KPIs are tied to specific goals, while metrics are data points.

    KPIs are directly tied to strategic goals and they’re used for measuring performance against set objectives.

    Metrics, on the other hand, are much broader and include various data points used for analysis – but may not directly align with key objectives.

    So, if we set a KPI to boost customer satisfaction, we’d have to track metrics such as Net Promoter Score (NPS), customer satisfaction rate, customer churn rate, average resolution time, and similar ones.

    Jeremy Cross of Virtual Team Building also gave us a good example:

    “For us, KPIs tend to be goal-oriented, for example, having a KPI of how many leads we generate in a month. Metrics are the numbers that inform these goals, but not directly the goals themselves. For example, metrics we track are page views, SEO position, bounce rate, and similar.”

    In essence, KPIs can have multiple metrics tied to them. Our research further confirms this.

    We asked businesses whether they track multiple metrics for each KPI, and 75% of them answered “Yes”.

    Tracking multiple metrics for each KPI

    KPIs have a time-frame

    KPIs are also associated with a time frame to achieve set goals.

    Whether it’s a short-term KPI (daily and weekly) or a long-term KPI (quarterly, yearly), organizations have a set time frame in which they want to achieve the objective.

    For example, a potential KPI for your business can be – “decrease churn rate by 5% in the next 6 months.”

    On the other hand, metrics only give us a real-time insight into how we’re performing right now. We don’t put any time limitations on them (nor can we).

    KPIs focus on results, while metrics concentrate on processes and problems

    KPIs concentrate on end results and provide insights into whether an organization is achieving its strategic objectives. They offer a snapshot of success.

    At the same time, metrics concentrate more on processes and components that contribute to overall performance. They highlight specific areas where adjustments can be made or problems that require attention.

    Every KPI is a metric, but not every metric is a KPI

    Here’s one common question that business owners ask – “why are KPIs metrics, but not all metrics are KPIs”?

    Every KPI is a metric because it inherently involves the use of data points.

    However, not every metric qualifies as a KPI. KPIs are a select subset of metrics chosen for their critical relevance to strategic goals and overall performance evaluation.

    While metrics provide a comprehensive set of measurements, KPIs stand out as strategically significant indicators that are essential for analyzing the success of your organization’s goals.  

    Daniella Alscher of G2 puts it in perspective:

    “Think of metrics like characters in a story. Each character is part of that story and is there for a reason. But some of those characters only appear on a page, others show up in every chapter, and then there are those characters – the main characters – that a story can’t be told without.

    Those main characters are the KPIs of your business’ story. Other characters are the metrics, which are there to assist the storytelling and support your main characters.

    In other words, there are a ton of different metrics to choose from, but some are more important than others when it comes to your business goals. Those are your KPIs.”

    What Is the Difference Between a Measure and a Metric?

    The terms “measure” and “metric” are also often used interchangeably, even though they have slightly different meanings.

    Simply put, a measure is a fundamental or unit-specific term, whereas a metric can be derived from one or more measures.

    A measure serves more as a general term and encompasses various types of data points that can be assessed to gain insights into different facets of an organization.

    For instance, customer satisfaction, employee engagement, or production efficiency can all be considered measures.

    On the other hand, a metric is a specific unit of measurement used to quantify the level of a particular performance within a given process.

    Metrics are more concrete and well-defined than measures, as they involve a numerical value that helps in analyzing and comparing performance over time or across different segments of a business.

    How Many KPIs Should a Business Track?

    The number of KPIs a business should track can vary depending on its size, industry, and specific goals.

    While there is no one-size-fits-all answer, it’s generally recommended to focus on a manageable number of KPIs to avoid information overload and ensure that the most critical metrics are given proper attention.

    According to our research, most respondents set 2-4 KPIs per business goal.

    How Many KPIs Should a Business Track?

    As for metrics, nearly 50% of our respondents set goals for approximately 1-5 metrics.

    How many metrics do you set up goals for?

    But how do you select these few KPIs that you’ll be focusing on? This is another thing we asked our respondents.

    Turns out, almost half of our respondents select the KPIs they’ll track based on their previous experiences.

    How to select KPIs for your business?

    KPIs vs. Metrics Examples

    To further demonstrate the difference between the two terms, let’s check out some examples of both KPIs and metrics.

    Marketing KPI and Metric Example

    Did you know that marketing (alongside sales and finance) is the most monitored and reported operation for performance?

    What performance metrics does your company monitor?

    Marketers and business owners set marketing KPIs to properly assess the efficiency of their marketing strategies and see how each channel is performing.

    KPI: Website Traffic

    Here’s one popular marketing KPI example – website traffic.

    Website traffic is used to measure the amount of visitors that a website receives. This way, you see how many people are coming, where they’re coming from, and whether they’re converting into customers.

    To make this KPI more actionable, you can set it up like this – “increase website traffic by 20% in the next three months.”

    This KPI is sometimes considered a vanity metric as website views are something a lot of marketers look down upon, but in reality, it can offer a great deal of insights you can use to better optimize your strategies.

    Metric: Average Session Duration

    Average session duration is a metric we commonly use to measure the average amount of time users spend on a website during a single session.

    And it’s one of the key metrics you can track for the “website traffic” KPI.

    As you’re tracking your progress toward getting more website traffic, the average session duration tells you whether the visitors you’re attracting are engaging with the way you want them to.

    If the average session duration is just a few seconds, all the traffic in the world won’t help you much as you won’t get many conversions.

    KPI dashboard example

    How much traffic are you generating daily? Which channels generate the most (and the best quality) visitors? Which keywords are responsible for your organic visits?

    There’s a lot that goes into the website traffic KPI and there are numerous areas you need to be monitoring to reach your set goal.

    Average session duration, unique visitors, bounce rate… it’s not easy to track all of these things in several different reports.

    And with Databox, you don’t have to.

    Below is our free Google Analytics Website Traffic Dashboard where you can track all of these things in one place. And stay on top of the website traffic KPI properly.

    Sales KPI and Metric Example

    Sales KPIs are used to evaluate the effectiveness and performance of a company’s sales team in achieving its objectives. These indicators help businesses measure various aspects of the sales process to ensure they are on track and making informed decisions.

    KPI: Sales Pipeline Growth

    Sales pipeline growth is a KPI that measures the development of a company’s sales pipeline over a specific period.

    The sales pipeline represents the stages that a potential customer goes through from initial contact to making a purchase. It typically includes stages such as lead generation, qualification, presentation, proposal, negotiation, and finally, closing the deal.

    Metric: Closed Won Amount

    This sales metric represents the total monetary value of deals that a sales team has successfully closed and won.

    In other words, it reflects the revenue generated from finalized sales transactions.

    This metric is important for evaluating the performance of sales efforts and measuring the success of your sales representatives in closing deals.

    KPI dashboard example

    If you’re manually tracking a KPI like sales pipeline growth and have trouble organizing your data properly, you’re not alone.

    Even if you’re using a quality CRM such as HubSpot or Salesforce, it can still be complicated to track all of your key sales metrics for the specific KPI.

    Instead, the best practice is to compile your most relevant metrics and put them all in one screen – like in the example below.

    You can download this HubSpot CRM Dashboard for free and fill it in with your data. Oh, and don’t worry if you use another sales CRM instead of HubSpot – we have 100+ integrations you can choose from.

    Customer Success KPI and Metric Example

    Customer success KPIs are used to measure the effectiveness of a customer success team in ensuring customer satisfaction, retention, and overall success.

    KPI: Customer Happiness Score

    The Customer Happiness Score is a KPI that measures the level of customer satisfaction with a product, service, or overall experience with your business. It quantifies how well a company is meeting the needs of its customers.

    The KPI is often determined through surveys, feedback forms, or other methods that directly collect customer opinions. Customers may be asked to rate their satisfaction on a numerical scale or provide qualitative feedback.

    Metric: Resolution Time

    Resolution time is a customer support metric that measures the amount of time it takes to resolve a customer’s issue from the moment it is reported to the time it is fully resolved.

    This metric is crucial in evaluating the efficiency of an organization’s customer support team.

    Resolution time typically includes the entire lifecycle of a support ticket, starting from when the customer first contacts support until the issue is successfully addressed and the customer is satisfied.

    It includes the time spent by support agents actively working on the issue, as well as any waiting time, such as time spent in a queue or waiting for customer responses.

    KPI Dashboard Example

    Responsiveness, handling time, happiness score… there are so many diverse customer success metrics you should be tracking, depending on your exact KPI.

    And the best way to do it is through one comprehensive dashboard, like in the example below.

    This free Customer Support Dashboard template helps you stay on top of your customer success KPIs and metrics easily by helping you track key insights and changes as they occur in real time.

    And the best thing is, you can do it in just a few minutes – simply connect your data source, add the metrics you want to track, and turn them into understandable visuals in just a few clicks.

    Best Practices for Measuring KPIs and Metrics

    Measuring your KPIs and metrics properly can be complex, especially if you don’t have a lot of previous experience with it.

    And even if you set a reasonable amount of KPIs to track, data-related matters can quickly get out of hand.

    To prevent this from happening, here are some of the best practices you should follow when it comes to measuring:

    1. Separate Your Metrics From KPIs
    2. Choose the Right KPIs (and the Right Metrics to Track Them)
    3. Visualize Your Data in a Live Dashboard
    4. Modify Your KPIs Every Quarter
    5. Set Realistic Targets
    6. Monitor Your KPIs Frequently

    Separate Your Metrics from KPIs

    Don’t put everything in one place.

    To stay on top of both your KPIs and metrics, it’s best to organize them separately. This means having a separate view of each specific KPI, and then (ideally) dashboards with the metrics related to them.

    Not only does this help you with later analysis and KPI reporting, but you can also quickly weed out any metrics that might not be as useful as you initially thought and recognize areas where you could use additional insights instead.

    Choose the Right KPIs (And the Right Metrics to Track Them)

    If you’re not tracking the right KPIs and metrics, you might as well not track them at all.

    When defining your KPIs, consider the SMART criteria (Specific, Measurable, Achievable, Relevant, and Time-bound).

    Each KPI should have a clear purpose, be quantifiable, realistically attainable, aligned with business objectives, and set within a defined time frame.

    Also, include your stakeholders, managers, department heads, and team members in the process.

    This way, everyone in the department will be aligned on the same goals and understand what you’re aiming to achieve (and how). It also boosts accountability.

    Another great tip here is to balance leading and lagging indicators to provide a comprehensive view of performance.

    Lagging indicators, such as revenue and profit margins, reflect the outcomes of past actions, while leading indicators, like customer engagement metrics or employee satisfaction, provide insights into future performance.

    A well-rounded set of KPIs should include both types to offer a holistic understanding of your organization’s trajectory.

    Then, once you have your KPIs ready, you can move on to the specific metrics that will help you track your progress toward achieving them.

    As for metrics, the most popular ones are Outcome metrics for nearly 80% of our respondents.

    Which metrics do you include in your performance reports?

    Visualize Your Data in a Live Dashboard

    Visualizing data in a live dashboard offers several advantages.

    One key benefit is the ability to provide real-time insights.

    Live dashboards allow you to access up-to-the-minute data, which means you can react promptly to changes and make timely decisions.

    This is crucial in dynamic environments where conditions can shift rapidly.

    Additionally, live dashboards are great for transparency. By presenting KPIs in a visual format, team members across different departments can quickly grasp the current status of key metrics.

    There’s also trend identification and pattern recognition.

    When you’re displaying data trends over time, stakeholders can gain a deeper understanding of how different factors impact KPIs. This not only helps with recognizing patterns but you can also see potential correlations and causal relationships.

    Modify Your KPIs Every Quarter

    Markets, consumer behaviors, and the overall competitive landscape evolve over time, which is why you need to make it a routine to modify your KPIs on set time frames.

    According to our state of business reporting survey, for over 45% of our respondents, that time frame is quarterly.

    Modify Your KPIs Every Quarter

    Quarterly KPI modifications are the sweet spot at which organizations make sure their objectives remain relevant and are responsive to changing external factors.

    Of course, you can test different cadences and see which one best fits your specific business. It’s not a one-size-fits-all solution for each organization.

    Set Realistic Targets

    Setting realistic targets is vital for businesses.

    They ensure that goals are within reach, which keeps employees motivated and prevents burnout.

    Achievable targets also help in proper resource management, avoiding a scenario where you’re trying to build a house with only half the necessary bricks. This, in turn, also facilitates better risk management.

    Unrealistic goals may lead to blind spots in decision-making, as teams may overlook potential challenges or obstacles. You need a more comprehensive understanding of the potential risks associated with a particular initiative.

    To set realistic targets with KPIs, organizations should start by conducting a thorough analysis of their current performance, capabilities, and market conditions.

    This involves a realistic assessment of your strengths and weaknesses, as well as a clear understanding of external factors that may impact operations.

    You also want to set targets based on benchmarks and insights into how other businesses in your industry are performing.

    How can you find this data? Easily, with Databox’s Benchmark Groups.

    With Benchmark Groups, you can instantly access any performance data you need and see how you stack up against similar-sized competitors in your niche.

    From marketing to financial insights, there are dozens of cohorts you can join.

    And the best thing is, it doesn’t cost a dime. All you have to do is connect your data source (which is 100% anonymized for everyone involved).

    Monitor Your KPIs Frequently

    Lastly, you want to monitor your KPIs on a regular basis.

    One big reason for this is that you’ll be able to detect issues and anomalies in real time as they occur, which allows you to act in a timely fashion.

    Furthermore, regular KPI tracking provides a snapshot of how well a company is performing against its goals. It’s like checking your fuel gauge while driving to ensure you don’t run out on the road.

    It’s also vital for quick decision-making.

    Waiting for quarterly reports can sometimes be too late if a significant change happened two months ago… and it might be too late to react to it.

    For instance, if website traffic dips, the marketing department can take responsibility and see what’s going on and act accordingly.

    google-analytics-kpi-dashboard-template-databox

    Streamline KPI Monitoring and Reporting with Databox

    You’ve nailed down your KPIs, compiled a list of crucial metrics, and aligned them with your business goals.

    But without a solid tracking and analysis strategy, these efforts could go down the drain—especially if you’re stuck with manual processes.

    Luckily, there’s an easier route – using Databox.

    Why scramble with tracking all of your different KPIs and metrics in multiple reports, when you can do it from one comprehensive screen with Databox Dashboards?

    In a single dashboard, you can consolidate all your key metrics and KPIs, tracking changes in real time and reacting to them promptly.  

    And creating these dashboards is a piece of cake. Just connect your data source, add your metrics, and whip up professional visuals for easy interpretation.

    OK – so we’ve covered tracking and analysis, but what about reporting? Don’t worry, Databox Reports has you covered.

    No more endless hours refining reports to impress managers—we handle that for you.

    And lastly, we have Benchmark Groups as a cherry on top.

    Make sure your strategies hit the mark by comparing yourself with similar-sized businesses in your niche, in real-time. You can forget about unreliable industry reports now that you have direct insight into your competitors’ performances.

    Want to see just how powerful KPIs can be? Try Databox for free and let us show you.

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    Article by
    Filip Stojanovic

    Filip Stojanovic is a content writer who studies Business and Political Sciences. Also, I am a huge tennis enthusiast. Although my dream is to win a Grand Slam, working as a content writer is also interesting.

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