Key Performance Indicator (KPI)
Key Performance Indicators (KPIs) are measurable metrics that track progress toward specific goals, helping teams evaluate success and guide decision-making.
TL;DR
- Quantifiable metrics tied to goals and objectives.
- Track performance at individual, team, or company levels.
- Used for measuring progress and identifying improvement areas.
- Must be relevant, actionable, and regularly reviewed.
Definition
A Key Performance Indicator (KPI) is a measurable value that indicates how effectively an individual, team, or organization is achieving defined objectives, serving as a benchmark for success.
Detailed Overview
KPIs are one of the most common tools for measuring performance across industries. They translate strategic objectives into numbers that can be tracked, compared, and improved. Whether evaluating design impact, product adoption, or business revenue, KPIs create accountability and provide clarity on whether efforts are succeeding.
One of the most common questions is how KPIs differ from metrics. While all KPIs are metrics, not all metrics are KPIs. A KPI must tie directly to a strategic goal. For example, “daily active users” could be a KPI for engagement, while “number of button clicks” is simply a metric. KPIs measure outcomes, not just activity.
Another frequent query is how teams choose the right KPIs. The best KPIs are specific, measurable, and relevant to the desired outcome. Using the SMART framework (Specific, Measurable, Achievable, Relevant, Time-bound) helps filter out vanity metrics and ensures KPIs provide meaningful insight.
Teams also ask how many KPIs they should track. Too many KPIs dilute focus, while too few risk overlooking key areas. Most organizations select 3–5 KPIs per goal to balance depth with clarity. For product teams, examples might include retention rate, feature adoption, or customer satisfaction.
A recurring question is how often KPIs should be reviewed. Effective KPIs are tracked consistently, often weekly or monthly, depending on the time horizon. Reviewing them too infrequently can hide problems, while over-frequent review may create noise. The cadence should match the impact of the KPI being measured.
Finally, there’s interest in how KPIs influence decision-making. KPIs guide resource allocation by highlighting what is working and what isn’t. They also create accountability within teams, allowing leaders to assess whether strategies are effective. Importantly, KPIs should not be static; adjustments are often needed as goals evolve.
Learn more about this in the KPIs for SaaS Products Exercise, taken from the Measuring Success Lesson, a part of the Introduction to Product Management Course.
Recommended resources
Courses
KPIs & OKRs for Products
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Product Discovery
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Introduction to Design Audits
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Lessons
Planning the Mobile App Flow
Measurement of Design Team Success
Value Proposition & Problem Selection
OKRs, KPIs, and North Star Metrics
Influence Through Data
Exercises
FAQs
Metrics measure activity, while KPIs measure progress toward strategic objectives. For example, tracking the number of emails sent is a metric, but tracking conversion rate from those emails is a KPI because it ties to growth goals.
This distinction ensures KPIs focus on outcomes rather than surface-level numbers.
Most teams focus on 3–5 KPIs per goal. Tracking too many creates confusion and dilutes focus, while too few may overlook critical insights. The right balance depends on company size and complexity of objectives.
A focused set of KPIs keeps teams aligned and prevents distraction from vanity metrics.
KPIs should be reviewed consistently, typically weekly, monthly, or quarterly. The cadence depends on the time horizon of the goal. Revenue KPIs may be tracked quarterly, while product engagement KPIs might need weekly review.
Regular reviews ensure teams can respond to trends quickly without reacting to short-term noise.
Effective KPIs are tied directly to goals, measurable, and actionable. They follow the SMART framework and avoid vague or vanity metrics. For example, “increase customer retention by 10% in six months” is stronger than “improve customer happiness.”
Clarity ensures that everyone knows what success looks like and how to measure it.
Yes. As company goals shift, KPIs must evolve. A startup may initially track user acquisition, but later prioritize retention and revenue. Static KPIs risk becoming irrelevant.
Revisiting KPIs regularly ensures they continue to reflect organizational priorities and market realities.