KPIs vs Metrics: What’s the Difference?

KPI vs Metrics What’s the Difference
KPIs vs Metrics What’s the Difference

The terms “metrics” and “Key Performance Indicators (KPIs)” are often (incorrectly) used interchangeably. While it is true that the two overlap, they are not the same thing. Let’s discuss KPI vs metrics and why choosing the right metrics is crucial for a successful business analytics dashboard.

Metrics: The Building Blocks

Metrics are quantifiable measures used to track and assess the status of a specific process or business activity. They provide raw data and insights into various aspects of operations but may not inherently signify success or failure. For instance, in an e-commerce setting, metrics could include: 

  • Website Traffic: the total number of visitors to a website over a specific period.
  • New Subscribers: let’s you know the number of new subscribers to your blog, social media platforms, etc.
  • Customer Satisfaction Score (CSAT): a metric gauging customer satisfaction based on surveys or feedback.
  • Sales
  • Employee Turnover Rate

Basically, anything that is related to a direct, measurable outcome (a number or percentage) and can be compared to prior measurements can be considered a metric.

What Are Key Performance Indicators?

While KPIs are also based on quantifiable data, they often include multiple metrics carefully selected to help you track your progress toward a specific objective. In other words, you identify metrics that translate into something more meaningful. 

For example, if a business has a goal of increasing customer satisfaction rates, they wouldn’t just use their CSAT. They would also want to include other metrics that correlate with industry standards for a good client experience, such as:

  • Conversion rates
  • Repeat customers
  • Referral rates
  • Retention rates
  • Average response/resolution times 

All of these metrics can be used as part of a KPI related to customer satisfaction.

Choosing the Right Metrics for Your KPIs

Selecting the right metrics to drive your KPIs is a critical step in the performance management process. Incorrect or irrelevant metrics can lead you strategically in the wrong direction. Keep the following in mind when you are choosing your metrics:

Metrics Should Align with Goals

Ensure that your chosen metrics directly align with the strategic objectives of your organization. 

Assess the relevance and significance of each metric in the context of your industry and business model. Focus on metrics that truly matter and have a meaningful impact on your success.

Metrics Should Be Actionable

Choose metrics that provide actionable insights. If the data collected cannot be translated into actionable steps or improvements, it won’t be of much use. You need metrics that don’t just tell you that something is happening, but why.

Some Metrics Should Be Timely

While periodic metrics are also useful, consider choosing real-time or near-real-time metrics  to drive certain KPIs. These are especially useful in industries with high service volumes or for whom rapid decision making is essential.

How to Track Your KPIs

There are many platforms that allow you to set and track your KPIs. In most of these, you create a dashboard with visual representations of your company’s performance. You can set KPIs and add appropriate metrics as you see fit. 

But knowing which metrics to choose and interpreting the results is not the most straightforward task. What and how many KPIs should you be tracking? And which metrics are the best to reflect progress toward those goals? Furthermore, where are you sourcing your data from? Is it even reliable?

This is why we recommend outsourcing your analytics to a specialized firm. At Impact by Insight, we not only help you build a customized dashboard, we continually monitor your data and help you interpret it so you can make relevant and timely decisions for your business. Call or go online today to chat with us about starting or improving your data strategy. 

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