Discover key performance indicator (KPI) tracking as a way for you to assess your business’s performance. Learn about how your business can better meet its goals through KPI tracking.
KPI (key performance indicator) tracking examines the change in KPIs over a period of time, allowing business leaders to monitor the progress of business operations or team efficiency. A KPI is any metric that measures performance in an aspect of business, such as teams, employees, finances, or sales. Tracking KPIs over time allows you to see business growth and progress so that you can continue to set goals and optimize operations to meet those goals.
Discover the kinds of KPIs you can track, what they’re used for, who in a business uses KPI tracking, its pros and cons, and how you can start tracking your own KPIs.
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KPIs are specific metrics related to the goals of your business or department, meaning that each aspect of a business has different KPIs you can track. Examine some types of KPI tracking in business, including financial, customer, process, and marketing areas.
Tracking financial KPIs allows you to assess the financial health of your business. One of the traditional financial KPIs measures net profit in a given period, which is all the revenue that remains after paying taxes, wages, and interest in that period. Other financial KPIs you can track include the following:
Revenue growth measures the amount of money the business is making over a given time period. It can help you see if a change in product pricing is earning the business more money than at other times.
Return on investment (ROI) measures the revenue earned from an investment minus the cost of the investment, allowing you to track investment successes over time. ROI is useful in measuring the benefits of investing in marketing campaigns or new equipment.
Solvency measures a company's financial health over an extended period by tracking the ease with which it can pay debt over time. An example is how much debt a company carries compared to its assets.
Tracking customer KPIs allows you to focus on the customer experience your business provides over a period of time. With it, you can evaluate things like efficiency and retention, plus gain an overall view of your customer service. Some examples include:
Churn rate: This shows the number of customers your business has lost during a certain period of time as compared to your total number of customers. It allows you to see the rate at which customers leave your business and can help you determine why, which can be anything from new market trends to competitors’ tactics.
Resolved customer tickets: This KPI compares the number of resolved customer service tickets to the total number of requested tickets, allowing you to see how well the customer service department solves customer issues.
Customer satisfaction: You can track this metric in multiple ways, such as using internal metrics or surveys to uncover customers’ perceptions of your business.
Read more: Customer Analytics: How to Use Customer Data to Grow Your Business
Process KPIs measure the efficiency of your business's operations. They allow you to assess and analyze performance or quality issues involving business processes. Process KPIs are interchangeable with operational KPIs.
Production efficiency: You can measure this KPI by determining how long each stage in a manufacturing process takes and dividing that number by the entire time it takes to produce a product. You may use it to find how efficient certain production processes are compared to others, allowing you to analyze why one stage is taking longer than projected.
Throughput: This KPI measures the production time of individual units by taking the total number of units produced and dividing it by the speed it takes to produce one unit.
Quality rate: This KPI measures how often products adhere to the company’s quality control measures. You can divide the total number of units produced by the number of units that pass quality control. The quality rate can help you evaluate how effective your manufacturing process is at producing quality products.
Marketing KPIs measure the effectiveness of your business’s marketing strategies and campaigns. They allow you to gain insight into metrics like customer conversion rate, which tells how many customers see your advertisement purchase your product or service. Other important marketing KPIs include:
Click-through rates (CTR): CTR measures the number of customers who actually click on your link, article, or video compared to the total number of users who saw that content in their feed. Measuring this helps you see how your content engages the customer on first look.
Cost per lead: This metric measures the amount of money you spend on marketing to get a potential customer to see your product or service. It helps you keep track of marketing spending over time.
Website traffic: This KPI tells you how many people visit specific pages of your website, allowing you to analyze if the website is properly funneling potential customers to make purchases.
KPI tracking gives your company a better picture of how you're reaching specified goals over time. It can help you track the processes of departments, teams, and individual employees to see how every process contributes to the KPI goals and, thus, overall productivity. You can measure, for example, how a price increase this year affected sales and compare that figure to the number of sales during a similar period the previous year. Then, compare that to overall revenue during the same periods to see if the price increase brought in more profit, regardless of the amount of sales.
By tracking these KPIs, you can determine if it’s worth adjusting your pricing strategy to reach sales numbers. You can also see how it affects financial health, customer service numbers, and overall business operations.
Many different departments in a business use KPI tracking to monitor their teams. For example, an HR manager can monitor employee metrics like satisfaction, which might lead to employee churn. In contrast, a business executive can monitor macro KPIs like profit margin and debt-to-equity ratios. Some specific roles that use KPI tracking include:
Business analysts
Project managers
HR managers
Executives
Average annual base pay: $93,834 [1]
Job outlook (projected growth from 2023–2033): 11 percent [2]
As a business analyst, you will evaluate a business’s entire operations using KPIs like finances, processes, and employee feedback to find ways to reduce costs and improve efficiency. You will use this analysis to propose organizational changes, and you can even specialize in certain aspects or industries.
Average annual base pay: $90,494 [3]
Job outlook (projected growth from 2023–2033): 7 percent [4]
If you’re a project manager, you will organize, budget, and schedule projects by communicating with clients and managing schedules to ensure employees meet the project deadline. You’ll work with teams to accomplish goals and can utilize KPIs to track progress, uncover roadblocks, and determine the risks of a project.
Average annual base pay: $86,663 [5]
Job outlook (projected growth from 2023–2033): 6 percent [6]
As a human resource manager, you oversee a company's new hires, recruiting, and administration. You will manage employee relations and payroll and coordinate the efforts of specialists within the organization. You’ll use KPIs to measure and track productivity and employee satisfaction metrics.
Average annual base pay: $188,906 [7]
Job outlook (projected growth from 2023–2033): 6 percent [8]
Executives strategize overall organizational goals and direct processes to carry out those goals. As an executive, you’ll analyze key performance indicators like financials and sales to determine if the company is meeting those goals.
KPI tracking offers many advantages and can help you create goals, use data effectively, and keep teams accountable. However, you may run into some limitations, like tracking KPIs for KPIs’ sake instead of focusing on overall results. Below is a table that you can use to weigh the pros and cons of KPI tracking:
Pros of KPI tracking | Cons of KPI tracking |
---|---|
Allows you to measure the effectiveness of marketing and sales strategies with data | It takes time to track KPIs, as some metrics require years of data to analyze |
Holds teams accountable to the goals set forth by providing actual data that reflects performance | Requires continual monitoring to put the insights from KPIs to use, making it another task a business must tackle |
Creates a connection between daily operations and overall goals by providing concrete metrics to hit and analyze | Some managers may focus so heavily on hitting the KPI target that they lose sight of overall results s |
Makes goal setting more focused and actionable since it’s connected to a measurable metric | Creates pitfalls by focusing on non-actionable metrics like “views” or trying to track too many KPIs; you risk losing sight of goals |
KPI tracking is an effective way to measure company progress when you’re looking to achieve goals, but you will want to gain an understanding of what you are tracking and why you are tracking it. These tips below can help you start tracking KPIs for your business or organization:
Set actionable goals for your business.
Choose metrics that correspond to your goals.
Find a system to track KPIs.
Monitor KPIs over time and adjust as necessary.
The first step to effectively tracking KPIs is to have measurable goals that connect back to an overall organizational strategy. You can do this by creating specific objectives or an organizational strategic plan. Many organizations follow the acronym SMART when it comes to setting goals:
Specific
Measurable
Achievable
Relevant
Time-bound
By creating goals you can measure, you set yourself up to have KPIs that can help you see if the business is reaching those goals.
Once you have your goals and strategic plan, you can choose KPIs that correspond to those goals. It’s important to remember that KPIs are indicators of performance, so choosing the right ones for your goal is key to measuring your progress. You can track just one or multiple KPI, but ensure their relevance so you’re not just tracking KPIs without progressing toward your goal.
Now that you’ve chosen your goals and narrowed down some KPIs to track, you will want to find a system to track those KPIs. If you’re tracking KPIs but can’t organize the data, you won’t be able to analyze their insights. Many organizations opt for tools like KPI dashboards to help them organize, analyze, and visualize the information their KPIs provide. These dashboards also ensure that everyone has access to data. They track metrics automatically and create less room for manual error while tracking.
As you review KPIs over time, it’s important to learn from them and use them as a tool to help you make data-driven decisions. Certain KPIs deliver insights at different time intervals, so you’ll want to review certain metrics daily, weekly, monthly, and/or quarterly, depending on your goals and what you are tracking. By tracking and sharing KPIs with the entire team, organization, and stakeholders, you can make strategic decisions that may involve departmental changes, shift goals, or lead you to find new KPIs to track to meet goals.
KPI tracking is an effective way to improve business operations by assessing performance over time. To learn more about KPI tracking, try the Assess for Success: Marketing Analytics and Measurement course as part of the Google Digital Marketing & E-commerce Professional Certificate on Coursera. If you’re a manager, you may also want to try the Setting Expectations & Assessing Performance Issues course from UC Davis, also on Coursera.
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Glassdoor. “How much does a Business Analyst make? https://www.glassdoor.com/Salaries/business-analyst-salary-SRCH_KO0,16.htm.” Accessed February 13, 2025.
US Bureau of Labor Statistics. “Management Analysts, https://www.bls.gov/ooh/business-and-financial/management-analysts.htm.” Accessed February 13, 2025.
Glassdoor. “How much does a Project Manager make? https://www.glassdoor.com/Salaries/united-states-project-manager-salary-SRCH_IL.0,13_IN1_KO14,29.htm.” Accessed February 13, 2025.
US Bureau of Labor Statistics. “Project Management Specialists, https://www.bls.gov/ooh/business-and-financial/project-management-specialists.htm.” Accessed February 13, 2025.
Glassdoor. “How much does a Human Resources Manager make? https://www.glassdoor.com/Salaries/united-states-human-resources-manager-salary-SRCH_IL.0,13_IN1_KO14,37.htm.” Accessed February 13, 2025.
US Bureau of Labor Statistics. “Human Resources Manager, https://www.bls.gov/ooh/management/human-resources-managers.htm.” Accessed February 13, 2025.
Glassdoor. “How much does an Executive make? https://www.glassdoor.com/Salaries/executive-salary-SRCH_KO0,9.htm.” Accessed February 13, 2025.
US Bureau of Labor Statistics. “Top Executives, https://www.bls.gov/ooh/management/top-executives.htm.” Accessed February 13, 2025.
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