Deciphering the difference Between KPIs and Metrics

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KPIs and metrics are a few of the buzzwords floating around businesses these days but what’s the real difference between the two? They are important when it comes to reporting on your business performance and success.

Let’s figure out the difference between them. We’ll try to keep it simple so you can decipher what a KPI is and what a metric is and why both are important parts to a business. To start with, think of KPIs as strategic and metrics as tactical.

What is a KPI?

KPI stands for Key Performance Indicator. It is a goal that can be quantified or measured. These goals are strategic and have clear business objectives. A KPI sets a measurement in place to gauge how successful the business is in accomplishing that goal. The success in reaching that business goal is quantifiable.

What is a metric?

In business, a metric is used to track or record activity and see if that activity was successful or not. However, a metric is a reflection of the tactical activities that have gone on to support the bigger accomplished of the strategic KPI. Metrics give you quantifiable data so you can display your results and state how well the activities are going against the established target.

Metrics can be seen in various settings throughout a business. For instance, a metric can be something as basic as how many times people went to download inventory software from your website. The simple metric could compare how many people chose to download inventory software in May versus how many people chose to download inventory software in June. It can become more complex if you look at this data after that’s intertwined with the dates of a marketing campaign. These metrics can support a greater more strategic business KPI to grow the market share by 4% a month.

If a business has a KPI to grow monthly sales by 4%, then it needs to put a plan in place on how this will be achieved to make sure it’s a success for the business. Metrics can be monitored regularly and can track web traffic daily or could track downloads weekly to show what activity is going on towards the greater KPI.

How are KPIs and metrics related?

Essentially, metrics support KPIs. Metrics measure activities that are stepping stones to reach the bigger goal, the KPI. Metrics track performance and how things are going on the journey to reach the KPI.

The KPI is the larger goal that holds key business objectives and strategic goals. They rely on performance metrics being met and smaller activities achieved in order to reach these overarching goals.

It is important to realise that every KPI is a metric, but that doesn’t mean every metric is a KPI. Creating clear KPIs for your business helps you define your overall strategy. Putting metrics in place to support your KPIs will position you for success!

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Melanie - Unleashed Software

Article by Melanie Chan in collaboration with our team of Unleashed Software inventory and business specialists. Melanie has been writing about inventory management for the past three years. When not writing about inventory management, you can find her eating her way through Auckland.

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