Difference between KPI and metric – how it affects your business
Do you know the difference between KPI and metric? Well, these terms, which are often used interchangeably, do not mean the same thing. Did you know that?
Then this article is essential for you. After all, understanding how to measure the success of your actions is essential to have a strategic and successful plan in hand – find out more below.
What are key performance indicators – or KPIs?
A KPI, or key performance indicator, is a measurable value that monitors a company’s progress toward established goals.
This way, KPIs direct you and your digital marketing team or agency to achieve your goals and make better decisions. Thus, an effective KPI is:
- Measurable and clearly defined;
- Applicable to your business;
- Continuously monitored;
- Presents a clear performance history that shows your progress towards business goals and objectives.
KPIs focus on your progress toward long-term goals. Additionally, they also provide measurable ways to determine how your business fares against industry standards and competitors.
What about OKR?
Objective and Key Results (OKR) is an agile goal-setting framework. It allows companies to break down their strategic goals into actionable quarterly objectives.
This framework makes use of KPIs to quantify and monitor crucial results. Thus, KPIs become key results when they have:
- Baseline value;
- Target value;
- Term;
- Owner/responsible for achieving the goal.
So what are metrics?
Metrics refer to a quantifiable value that monitors progress and evaluates success. In this way, metrics monitor the performance and improvement of specific vital processes in the business.
Today business executives use metrics to assess the overall status of the business. But while some metrics offer valuable data, some are called vanity metrics .
They even bring data, but they do not effectively translate the success or failure of their actions.
After all: what is the difference between KPI and metric?
Both KPIs and metrics are quantifiable values, but they refer to different things within a company. So much so that they sometimes overlap, so some people use them interchangeably.
But the big difference between KPI and metric is that the former aligns with business goals .
The second focuses on activities and processes in the business that do not necessarily connect to a business goal or indicate the health of the business.
To make this clearer, we will explain the difference between KPI and metric in practical examples – check it out below:
Difference Between KPI and Metric in Business Goals
Think about a webinar and what can be measured:
- Number of clicks on an email or advertisement promoting the webinar;
- Total registrations;
- Webinar page conversion rate .
This way, these individual metrics show the overall record and success of this action.
On the other hand, the number of webinar attendees who become customers is a great KPI. Because it contributes to a goal regarding new leads or new revenue.
While the metrics listed above support improving this KPI, they do not address the primary strategic objective of webinars. Something that the KPI does.
Difference between KPI and metrics in deadlines
KPIs help you measure specific short-term goals your team aims to achieve.
These are specific points, which indicate the health of the business within a defined period – such as the next month or quarter.
Metrics are similar to growth markers and are not attached to specific essential objectives. Furthermore, they also do not have a specific schedule.
Difference between KPI and revenue metrics
True KPIs are directly related to how your company generates income, such as:
- Sales leads;
- Revenue;
- Cost ratios, such as return on investment (ROI).
Meanwhile, metrics represent diagnostic values that can help improve your KPIs . Or help determine whether your KPIs are successful in certain scenarios.
Difference between KPI and metric in terms of importance
In this case, think about the characters in a fiction book. Each has a purpose and is part of the story – but they serve different ends.
Furthermore, there are also those supporting characters, who appear in some chapters and are important to the plot.
Meanwhile, the main characters define the story. In other words, if they weren’t in it, there wouldn’t be a book.
Your business’s KPIs are the major characters in the story. The others, which support them and help the narrative make sense, are the metrics.
How can tracking KPIs and metrics help your company?
Now you know the difference between KPI and metric. But you also know that making business decisions in the digital environment based on assumptions is no different than walking through a maze blindfolded.
So you have no control over where you are going, but you know you are going somewhere. The same happens when tracking KPIs and metrics.
Most of the time, tracking KPIs and metrics can help you stay on top of your business. By doing so, you can improve the data-driven decisions you make and do more.
Monitor the health of the company
While you may think of this as a time-consuming process, all it takes is a few KPIs to monitor the health of your business, such as:
- Financials : Measure and compare past and current financial metrics to drive revenue growth
- Employees : Monitor employee productivity and happiness to assess the company’s work environment
- Customer Success : Analyze how your services are performing for your customer and discover ways to improve
These KPIs fall under metrics like customer retention rate, net profit margin, and more of the same nature.
Additionally, they can easily assess the health of your business over a given period.
Measure progress
Key performance indicators can help you check your company’s progress toward pre-determined goals or objectives.
All you need to do is set the right KPIs and track critical metrics like revenue and gross margin. Then simply compare past and present performance to measure progress.
Because metrics provide in-depth insights into how well certain campaigns, strategies and activities are executed in your company.
In this way, they help their managers identify areas in which they need changes to obtain better results.
Make adjustments for KPI and metric
At certain times, a wrong decision can hinder your business .
However, knowing the difference between KPI and metric and following up accordingly allows you to be in control of what is working. And, mainly, what is not there.
Therefore, monitoring both will help identify problematic points. As well as determining the future course of action for the best growth of your business.
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