A marketing team hears and sees the words KPI and metrics almost daily. What exactly are they? What do they do or achieve, and is there a difference between the two, to start with?
Forget the misleading information; keep reading to find out the fundamental differences between metrics and key performance indicators (KPIs).
At their hearts, both of them are quantifiable measurement values of tactical or strategic goals or activity. So, how do you differentiate them? At the highest levels, this is how you should picture them:
KPIs = targets core business objectives or goals.
Metrics = do not target a core business objective.
Therefore, KPIs are a quantifiable measure reflecting business goals/objectives and how successfully your business achieves those objectives/goals. On the other hand, metrics are the measurable values reflecting the success of activities to support accomplishing the KPIs.
If that’s still not clear enough, you’re in luck as the complete definitions are up next.
It is a company’s performance metrics indicator showing a key quantifiable value that you use to track progress. Further, it charts how well you are achieving the set goals or objectives. Its only concern is recording the key metrics, such as monthly recurring revenue, total cost, average revenue, and business success.
Secondly, KPIs are particular and quantifiable, for instance, ‘the number of people visiting the store’ rather than ‘amount of work.’
KPIs can provide the direction to help you achieve your fundamental objectives and goals through informed decisions.
It is a measurement tracking an aspect of your business activity, and then charts how well you’re performing that activity. Metrics help you identify how your overall business processes are performing, covering all aspects of business performance, not just core business objectives like KPIs.
They are measurable, which allows you to jot down your results and highlight the activities’ success or failure.
If you try to monitor customer data, one of your KPIs would be the ‘number of incoming customers.’ Your KPI will tell you the number of customers is decreasing. However, it will not tell you why that’s happening.
That’s why business metrics are essential. They help you get to the bottom of the issues and what you can do to solve them.
Here are further examples:
Since KPIs metrics are often short-term, you need your team to stay focused and informed of essential metrics changes. One brilliant way of achieving this is through project management dashboards using digital dashboards.
With management dashboards, you can customize boring spreadsheets from your KPI dashboard into beautiful visualizations for display. The tool allows you to display KPIs such as revenue growth, customer acquisition cost, customer satisfaction scores, net promoter score, or customer retention, and map them against past performance. As a result, an employee can have real-time graphs to gauge whether they are on track or not.
To sum up, while KPIs and metrics both point to goals or objectives that your business hopes to achieve, they are not the same. Sure, people often use them interchangeably, but a closer look reveals the inherent differences. In a nutshell, all KPIs are metrics, but not all metrics are KPIs. That’s because KPIs emphasize the key performance indicators that you can’t do away with, unlike metrics.
Also Read: Basecamp: Project Management Solution
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