Marketing

What is a KPI? A Comprehensive Guide with Tips and Examples

A Key Performance Indicator (KPI) is a metric that signals how well a company is achieving important business objectives. Here’s how to set and track yours.

Avatar Kevin Kononenko on June 25, 2019 (last modified on August 20, 2019) • 14 minute read

Key Performance Indicators (KPIs) help businesses turn high-level goals into actionable tasks with measurable results.

A common high-level goal is something like this: “Increase company revenue by 20% this year.” And while that’s a great goal to strive for, it fails to tell individual departments and team members what actionable steps they can take to help the company reach that goal.

It’s difficult for individual teams and employees to translate high-level goals into personal daily and weekly tasks. And as a result, those high-level goals are unlikely to be met.

What your employees need instead are feedback loops—short-term goals they can directly impact that provide a clear indication of success or failure.

KPIs create those feedback loops by helping employees focus their time and energy on the tasks and projects they control that directly contribute to high-level company goals.

Table of Contents:

What is a KPI?

A Key Performance Indicator (KPI) is a metric that’s used to quantify progress towards important business objectives. High-level KPIs measure the overall performance of a company, while low-level KPIs focus on measuring the impact of tasks and projects led by individuals teams like marketing, sales, customer service, or IT.

KPIs cascade down from high-level goals. For example, your company sets an overall goal to grow revenue by 20% this year. Individual department leaders then define the specific components of that goal that their teams directly control and establish KPIs that will quantify their teams’ contributions to the goal.

what is a KPI

What Are KPIs Used for?

KPIs are used for two primary objectives:

  1. to make sure every team and employee at your company has an actionable plan for helping you reach overall goals
  2. to measure individual team and employee contributions to overall company goals

For example, imagine that you run a customer service team. Your company’s goal is to grow revenue by 20% this year, so you need to develop an actionable plan for your team to follow to help the company achieve that goal.

In order to help the company grow by 20%, you need to reduce customer churn from 2.5% to 1% this quarter. Your team’s primary activity is to resolve support tickets in a timely manner, and you believe that if you can reduce your ticket resolution time from 12 hours to three hours, you will accomplish this. 

Your team’s overall KPI, then, is your ticket resolution time. By setting a goal to reduce ticket resolution times from 12 hours to three hours, your team has an actionable plan for helping the company reduce churn—and therefore grow revenue.

But to measure individual employees’ contributions to the goal, you might also need to assign KPIs to each team member.

Let’s say you’re growing your team from four to eight people, and there are 800 tickets received each week. In addition to assigning them a three-hour resolution time KPI, you might also assign a KPI to each team member where they must resolve 100 tickets per week.

How to Define KPIs

example KPIs

In order for KPIs to work, it’s important to define them properly.

There’s a huge difference between the goal “grow revenue” and the goal “grow revenue 20% this year.” If you simply aim to “grow revenue,” then revenue growth of $1 is acceptable, and employees will not be inspired to change what they’re doing.

KPIs must be well-defined so that teams and individuals know what they’re trying to achieve and when they are trying to achieve it by. For this reason, KPIs usually follow SMART goal criteria:

  • Specific: Is the objective specific enough that everyone knows what must be done?
  • Measurable: Can the objective be measured?
  • Assignable: Is the KPI assigned to at least one individual or team?
  • Realistic: Can the KPI be realistically achieved?
  • Time-bound: Is there a specific time frame for achieving the goal?

By defining the KPI in this way, you can be sure that the outcome is binary: pass or fail.

The general flow for setting business KPIs is: Set Company Goals > Set Department Objectives > Establish KPIs for Teams and Individuals

Companies first define high-level goals, like “grow revenue by 20% this year.”

Then, individual departments/teams create objectives—specific goals they can aim for that will help the company meet its overall goals. For example, a marketing team’s objective may be to “increase inbound leads by 50%.”

Once you have team objectives, you can establish SMART KPIs. Some SMART KPI examples for the objective “increase inbound leads by 50%” might be:

  • Publish two new pieces of content to the company blog each week in Q1
  • Increase inbound organic search traffic by 15% in Q1
  • Refresh and optimize one old blog post each week during Q1

Each of these KPIs is specific to the marketing team, can be easily measured, can be assigned to specific teams or individuals, and is time-bound. As to whether or not each is realistic, that’s a discussion that leaders must have with their teams. 

If the team determines that the KPI is unrealistic, then it either needs to be updated to reflect something more realistic (e.g. “we can update one old blog post every two weeks”) or changes need to be made to make the KPI realistic (e.g. “we’ll hire another writer”).

Related: How to Choose the Right KPIs for Your Organization

How to Measure KPIs

If you’ve taken the time to define SMART KPIs, then the metric you’ll use to measure progress and performance should be defined as part of your KPI.

Looking at the example marketing KPIs we defined above, the metric we’ll track to measure each KPI is clear. 

KPIMetric
Publish two new pieces of content to the company blog each week in Q1# of new blog posts published
Increase inbound organic search traffic by 15% in Q1# of users/sessions from organic search
Refresh and optimize one old blog post each week during Q1# of blog posts updated

The specific tools you’ll use to measure KPIs will depend on the systems your teams and employees use to do their work. Marketing teams may use Google Analytics to measure their KPIs, sales teams may use CRMs, and support teams may use help desk reports.

As your teams make progress towards hitting their KPIs, you can determine if each KPI—and the associated tasks required to achieve it—actually helped you accomplish your higher-level business objectives.

Related: 11 Marketing KPI Reports with Industry-Specific Benchmarks

What is a KPI Dashboard?

A KPI dashboard is a single source of information that displays all of the metrics you’re measuring to track progress toward individual KPIs, team objectives, and company goals.

For example, if team leaders define multiple KPIs for different employees, a KPI dashboard shows them the individual metrics they’re measuring for all of the KPIs they’ve defined and assigned. Likewise, company leaders can use KPI dashboards to monitor every team’s progress toward—and contributions to—company goals.

There are three common ways to create KPI dashboards:

  1. Use a data visualization tool
  2. Create a spreadsheet
  3. Create a presentation

Using a data visualization tool is the ideal way to create KPI dashboards because the data for each metric is updated automatically and in near-real-time. Everyone in the company can access these KPI dashboards, and there’s no need to manually update spreadsheets or build presentations when it’s time to report on progress.

At Databox, we offer more than 200 pre-built KPI dashboards that teams can use to consolidate metrics from 70+ sources like Google Search Console, Stripe, ActiveCampaign, Ahrefs, Salesforce, and Help Scout. 

For example, the HubSpot Marketing ATTRACT Performance dashboard below consolidates data from seven different sources: Google Analytics, HubSpot, LinkedIn, Facebook, Twitter, Instagram, and SEMrush.

marketing KPI dashboard

And in addition to our pre-built templates, teams can build their own custom KPI dashboards from scratch. Choose from more than 600 pre-built Datablocks, then drag-and-drop the Datablocks you need onto a dashboard to track the metrics you’re monitoring for all of your KPIs.

KPI Examples

If you need more help defining KPIs for your company, teams, and employees, consider the examples below. First, we’ll look at how three real companies defined the KPIs they track. Then, we’ll take a look at some general KPI examples for marketing and sales teams.

Real-World Example KPI #1: Rheo.tv

Rheo.tv screenshot

Rheo.tv is a web, mobile, and Apple TV app that serves short, entertaining video clips based on your mood. Think of it as Pandora for video: you choose your mood—like Laugh, Chill or Spark—and the service will give you an interesting video based on your history with the app.

Rather than using Rheo, users could be mindlessly clicking through YouTube or channel-surfing TV. So, the Rheo product team focuses on daily active users as one of their KPIs.

In order to grow that number each month, the product team must create a “sticky” app: one that hooks new users and quickly convinces them to return again and again instead of reverting to old habits.

Rheo went from the goal “increase the total number of hours watched,” to the objective “improve stickiness of product,” and landed on the KPI “increase percentage of daily active users.”

Real-World Example KPI #2: Databox

Databox homepage

Databox (that’s us) is a data-visualization tool that helps salespeople, marketers, agencies, and product leaders build consolidated KPI reports. It helps users end the vicious cycle of updating spreadsheets and PowerPoint presentations. Instead, users set up a dashboard with all of their KPIs that automatically updates every hour.

We’re a freemium tool, which means that we have a permanently free version that can always be upgraded to a paid version. One of our biggest KPIs is signups to our free version

Sure, free product signups don’t lead directly to revenue, but a percentage of free users do end up buying every month. And, if the marketing team is generating page visits but not signups, that may be a sign that we are reaching the wrong type of user.

We went from the goal “increase revenue by X%,” to the objective “create a strong base of free users,” and landed on the KPI “increase signups of our free plan by X%.”

Real-World Example KPI #3: Zappos

Zappos homepage

Zappos.com is an ecommerce business, owned by Amazon, that allows people to order shoes online and send back the ones that don’t fit. Zappos has a big focus on customer service since they compete with local shoe stores for any individual customer’s attention.

For that reason, the Zappos customer service team is one of the best in ecommerce. They must go above and beyond all the other ecommerce stores for shoes—as well as the in-person experience of visiting a shoe store—so they measure call time rather than call volume as a KPI.

The difference may seem subtle, but call time encourages representatives to spend as long as they need with each customer, while call volume incentivizes reps to take as many calls in a day as possible.

Zappos went from the goal “grow revenue by X%,” to the objective “keep customer satisfaction at X%,” and landed on the KPI “spend an average of six hours/day on the phone with customers.”

Example KPIs for Marketing Teams

As marketing has become ever-more digital, it has become increasingly measurable. In fact, marketing is the most measurable department in industries like ecommerce, software, and even service businesses.

Here’s an example from a B2C company: 

A pasta brand was trying to set a marketing goal that would measure whether its brand was growing in the eyes of consumers. They chose to focus on website sessions for their KPI since a larger number of sessions should indicate more attention from consumers.

But here was the problem: when Tom Shapiro from Stratabeat looked at the pasta brand’s site metrics, he found that almost nobody was visiting multiple pages on the site or watching the videos. So the company was not really building its brand. 

He recommended that they change their KPI to minutes of video watched or bounce rate to measure the engagement of visitors.

Some common marketing KPIs include:

  • Cost per lead: This is your marketing spend divided by new leads acquired by the marketing team.
  • Visitor-to-lead ratio: This helps you understand how much traffic you need to bring in to hit your lead generation goals.
  • Landing page conversion rate: This determines which content offers are most popular with your audience.
  • Organic traffic: This measures the number of visits that originated from organic search.

However, marketing teams commonly have multiple specialists that focus on very specific tactics and channels. You may have different employees who focus solely on content marketing, email marketing, social media marketing, PPC advertising, or SEO.

For that reason, we’ve polled hundreds—maybe even thousands—of marketers over the years to compile several lists of the most important KPIs for each marketing discipline. To see example marketing KPIs for each individual discipline, check out the articles below:

Editor’s note: Databox makes it easy to consolidate and visualize your most important marketing KPIs. To get started, grab the free Organic Blog Traffic dashboard below to create a single source of truth for KPIs like goal completions, top pages, organic traffic, and signups.

blog KPI dashboard

Example KPIs for Sales Teams

Sales KPIs have become common in business, especially since most companies now use a customer relationship management (CRM) system to track contact engagement and deal stages. It’s also relatively easy to work backward from sales targets to activity targets.

Based on your revenue goal, you should be able to calculate the number of deals that you need to close in a given quarter. And based on the number of deals you need to close, you should be able to determine the number of opportunities that your sales team needs to create.

Unfortunately, most companies stop there and fail to really build a predictable funnel. Have you ever sat down to review the quarterly numbers only to find out your team did not close enough opportunities? Unfortunately, by that time it’s usually too late to course-correct.

To avoid this fate, create a series of KPIs around sales activity so you can track progress on a weekly or monthly basis.

For example, you might set a prospecting call quota for each sales rep on a weekly basis. You should also track the call-to-meeting conversion rate to ensure that your salespeople are getting meetings, not just making calls.

Some common sales KPIs include:

  • Total emails sent: This is the total number of outreach emails from each sales rep.
  • Meeting-to-opportunity conversion rate: This is the frequency with which salespeople convert meetings to opportunities.
  • Number of qualified opportunities: This is the number of deals that meet certain qualification criteria.
  • Total pipeline created: This is the total potential revenue that a salesperson has added to the pipeline.

If you want to see more example sales KPIs, check out the articles below where we share the KPIs that real sales teams track to make sure they’re contributing to overall business goals:

These KPIs form the basis of weekly or monthly meetings with sales reps. If reps are not hitting their weekly activity goals, they are less likely to hit their monthly quotas.

Editor’s note: HubSpot CRM users can grab this free HubSpot Sales Activity dashboard to track the activity of all your sales reps in one place. Not a HubSpot user? Get similar dashboards for CallRail, Copper, Intrix, Pipedrive, or Salesforce.  

sales KPI dashboard

Get Started Tracking and Visualizing Your KPIs

If you’d like to define KPIs for multiple teams today, you can use the SMART goals feature in your Databox account. On our free plan, you can set up an unlimited number of KPIs from up to three of our 70+ integrations and assign them to up to three members of your team.

Originally published in August 2018, this post has been refreshed with updated information and additional KPI examples.

About the author
Avatar
Kevin Kononenko Growth Marketer @ Databox. Making it easy for marketers to tell the story of their success. Everton FC supporter. Startup guy.
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