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Measuring business performance is essential to business success. A company needs to not only know where they are performing well but where they fall short just the same. 

But how? The most effective method top companies are using has been the KPI. So then, what are KPIs? Read on and you will find out and you will find out how your business can achieve its goals with them.

The Key Performance Indicator

KPI or Key Performance Indicator is a defined measure of progress towards a specific aim or goal. By having KPIs an organization can provide its teams with specific targets to shoot for.

Difference between KPI and Metric

A KPI is a key target that helps structure the goal of a campaign or business strategy. They help the variety of departments make the largest impact that they can.

Whereas a metric is a numerical measurement of the day to day work. This work is pushing towards the measured KPIs. 

Although related, the terms should not be used interchangeably 

The Importance of Tracking KPIs

Progress is always an important factor to measure but having defined goals makes sure there are focus and accountability. These measurements allow for maximum efficiency and impact.

Having defined performance tracking provides a wide scope view of the health of the organization. This includes items ranging from financial standing to potential risk and operations.

Different Types 

No matter what the time frame is or what the department of operations they are observing each of the KPIs have a common trait, they are all connected to a strategic goal. 


These include important, “big-picture”, items such as market share and revenue. By tracking these indicators executives can get a clear idea of how the organization is operating at any time.

They also allow for the monitoring of change. This is particularly helpful when implementing new business practices and can be done by looking at an indicator such as return on investment.


These are tied to specific departments or functions of the organization. A large focus often is around finances and tax responsibilities, as a universal goal for businesses is the reduction of overhead costs and their assets.

At times the functional KPI can fall into the category of operational or strategic as well.


These tend to measure items in a small frame of time. Their focus tends to be on a day to day activities and various organizational processes and their efficiency. 

Good examples of these things would be daily expenditures for certain supplies, sales numbers in different regions, and commuting/transportation costs.

Leading and Lagging

It is important that you know the difference between the two of these and keep them separate. The leading KPIs are what help to predict future outcomes whereas the lagging track progress that has already occurred.

By monitoring both of these items you have an idea of where things are working, to keep priority there, and where things are not, and what to either change or cut out completely.

How to Track KPIs

The easiest way to keep watch on KPIs are smart tools and KPI dashboard technology. These get referred to as KPI tracking systems or key performance indicator reports.

KPI reports allow for the collection of specific data, defined by the various indicators, over some time. Using these reports aids in performance tracking and analysis using a visual dashboard.

Dashboards allow for the arrangement of a specific data set or sets. This is perfect for quick decision making and organized data management.

What Are KPIs? A Path to Success 

You have answered the what are KPIs question, you have seen how they can serve your business and its goals. Now it is time to define them and put this system to work.

Addressing the financial concerns should always be at the top of your KPI list. Meet those goals with help from the experts at Sterling

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