KPIs And Metrics

What’s the Difference: KPI vs Metrics

Metrics and KPIs are often confused, but the clear difference is KPIs are the key measures that will have the most impact in moving your organization forward. They clearly articulate and provide insight into what your organization needs to measure and achieve to reach your long-term objectives. Great strategic plans have 5-7 clear Key Performance Indicators that keep the pulse on how you’re performing against your plan.

Metrics also track and provide data on your organization’s standard business processes but are not the most important metrics your organization needs to measure, monitor, and perform against to make progress against your strategic plan.

It’s easy to use the two terms interchangeably, but here is a good way to think about it. Key Performance Indicators help define your strategy and clear focus. Metrics are your “business as usual” measures that still add value to your organization but aren’t the critical measure you need to achieve. Every KPI is a metric, but not every metric is a KPI.

As you create yours, KPIs are comprised of four key attributes and your output should be 5-7 clear KPIs for your plan. Remember the following:

1) Define Your Measure – This sounds obvious, but every KPI must have a clear expression of what you need to measure. The more descriptive your performance measure, the better.  You can categorize performance measures into these categories:

  • Activity Measures –This measures activity and can include a percentage, number, currency and activities, or processes. An example of this measure would be the number of leads in your pipeline.
  • Outcome Measure – This measures progress against a defined outcome, often expressed as a percentage increase, change, or results from an outcome. An example of this would be % increase in revenue compared to last year.
  • Project Measure – This measures the progress of a project, often expressed as percent complete, a deliverable, activity, or process the owner can influence. An example would be % complete to complete XX strategic project.
  • Target Structure – These represent a numeric result against a date. A perfect example would be $XXXM in revenue by the end date of a strategic objective.

2) Define Your Target – Your target is the numeric value you’re setting out to achieve. Targets need to match your measurement type and due date. If your measure is a percentage, your target needs to be a percentage. If your measure is a raw number, the target should be a raw number.

3) Outline the Data Source – Every KPI needs to have a clear data source. Make sure you articulate where you are pulling your data from and what the calculations are so everyone is on the same page.

4) Define an Owner and Tracking Frequency – As with any SMART goal, a KPI needs to have a clear owner and defined tracking frequency. So, make sure someone is accountable for pulling the data and updating performance on a defined frequency. We recommend monthly in most cases.

A Checklist to Know You Got Your KPIs Right

We know KPIs and performance metrics can be downright hard. As an evaluation to see if you got your Key Performance Indicators right, here’s a quick punch list you can use to pressure test your list of KPIs to make sure they’re strategic:

  • They provide a way to see if your strategy is working.
  • They focus our staff’s attention on what matters most for success.
  • They provide a common language and understanding for communicating our performance.
  • They are valid and realistic, helping ensure we’re measuring the right things.
  • They are verifiable and ensure accurate data.
  • Bonus: They’ve moved from outputs to outcomes.

When we say moving from outputs to outcomes, it means the KPI has clearly expressed the result or outcome of achieving the objective. It helps answer the question, “why are we working on this objective?” The best KPIs are a clear expression of your desired outcome at the end of your strategy.