KPIs Meaning

Key Performance Indicator (KPI) Definition

A Key Performance Indicator is a measurable value that demonstrates how effectively a company is achieving key business objectives. Organizations use KPIs at multiple levels to evaluate their success at reaching targets. High-level KPIs may focus on the overall performance of the business, while low-level KPIs may focus on processes in departments such as sales, marketing, HR, support and others.

So what is the definition of KPI? What does KPI mean? What does KPI stand for? Here are a couple other definitions:

  • Oxford’s Dictionary definition of KPI: A quantifiable measure used to evaluate the success of an organization, employee, etc. in meeting objectives for performance.
  • Investopedia’s definition of KPI: A set of quantifiable measures that a company uses to gauge its performance over time.
  • Macmillan’s Dictionary definition of KPI: A way of measuring the effectiveness of an organization and its progress towards achieving its goals.

Get to know the different types of KPIs

Identifying which KPIs you should track becomes easier when you have a better understanding of the types of KPIs that are most commonly used to measure progress.

  • Quantitative KPIs are all about measurable facts that can be represented with a number. Think stats, percentages, and dollar signs.
  • Qualitative KPIs involve human interpretations and can’t be quantified with numbers. Think opinions, feelings, and experiences.
  • Lagging KPIs measure what’s already happened in the past to predict success or failure. Think of looking back at what you’ve already accomplished, or where you’ve struggled.
  • Leading KPIs measure performance to predict future success and long-term trends. Think of looking forward to where you’re headed.

Leading and lagging KPIs are commonly used together. Along with quantitative and qualitative KPIs, they’re a good place to start.

For each KPI that you choose to track, assign an owner and agree on tracking frequency. Whatever KPIs you decide to track, using a KPI platform or tool is key for collaborating with your team on KPI definitions. By collectively defining each KPI, then capturing contextual data and unifying it into a single view, you enable spot-on, real-time actions.