Definition
A Key Performance Indicator (KPI) is a measurable value that demonstrates how effectively a company, team, or individual is achieving key business objectives.
KPIs are the most critical metrics that are tracked to monitor progress toward a specific strategic goal. They provide a clear, quantifiable way to evaluate performance and identify areas for improvement.
Examples
- Sales Team:
- KPI: Monthly Recurring Revenue (MRR)
- Goal: Track revenue growth and stability.
- SDR Team:
- KPI: Number of SQLs (Sales Qualified Leads) generated per week.
- Goal: Measure the team’s prospecting effectiveness.
- Account Executive:
- KPI: Closing Rate (or Win Rate).
- Goal: Evaluate the rep’s ability to close deals.
- Marketing Team:
- KPI: MQL-to-SQL Conversion Rate.
- Goal: Measure the quality of leads being passed to sales.
- Website:
- KPI: Landing Page Conversion Rate.
- Goal: Assess the effectiveness of a webpage’s call-to-action.
Advantages/Benefits
- Clear Focus: Aligns teams and individuals around the most important, measurable goals.
- Data-Driven Decisions: Replaces guesswork with objective data, allowing leaders to make informed, strategic decisions.
- Performance Tracking: Provides a simple, transparent way to monitor progress over time and hold teams accountable.
- Identifies Issues Early: A sudden drop in a key KPI can act as an early warning system for a business problem.
- Motivates Teams: When tied to specific goals, KPIs can motivate individuals to improve their performance.
Related terms
- Metric
- ROI (Return on Investment)
- Sales Quota
- Dashboard
- Sales Velocity
- Closing Rate
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