What is KPI?

KPIs turn business strategy into measurable tracking signals. They answer the question: how do we know if we're on track? A business focused on growth might track monthly new revenue. One focused on retention might track net revenue retention. A marketing team might track cost per acquired customer. Each KPI should map directly to a strategic priority — random metrics that don't connect to goals are "vanity metrics," not KPIs.

The best KPIs share four characteristics: they're leading (they signal what's likely to happen, not just what already happened), actionable (when they move, you know what to do), measurable (objective and unambiguous), and relevant (connected to a business outcome you actually care about). Page views, for instance, are often a vanity metric — unless you can show a direct relationship between page views and revenue, they're just a number that feels good to watch grow.

Teams typically track KPIs at multiple levels: company-level KPIs (revenue, growth rate, customer count), department-level KPIs (marketing: cost per lead; sales: close rate; product: activation rate), and individual KPIs (a salesperson's pipeline coverage ratio). OKRs (Objectives and Key Results) are a popular framework for connecting strategic objectives to measurable KPIs at team and individual levels.