Key Performance Indicator(KPI) Glossary

July 9, 2018

KPI stands for key performance indicator, a way to track and measure performance of a particular business objective that benefits the organization. KPIs are used to quantify and make accountable the efforts that an organization undertakes to get to its goals.

The Characteristics of an Effective KPI

In order for a KPI to be an effective indicator of your performance, it needs several characteristics:

  • The KPI has to be important enough to reach the overarching business goals. Every KPI should lead to achieving the larger goal. (Hence it’s “key.”) If it isn’t crucial, it isn’t a key performance indicator, it’s just a cool goal.
  • The KPI must be public and communicated to the entire organization. It won’t be successful unless everyone knows what each person and the entire team is working toward.
  • The KPI must be quantifiable and well defined. Instead of saying “our app should become popular,” express your KPI as “Get to 100,000 downloads.”
  • The KPI must be time bound. Without a deadline, it becomes merely a “someday” objective. Instead of “Get to 100,000 downloads” express the KPI as “Get to 100,000 downloads by Q4 2020.”

How to Determine Which KPI to Use

Sure, the KPI is a benchmark target that you can track and measure over a period of time. But before you go around picking 10 different KPIs your team needs to deliver on, ask the following questions:

  • What SHOULD we measure? (instead of “What can we measure?”)
  • What is the single, most important KPI I should be measured on? Pick that one aspect of your work that you could use as proof of your value when it’s time to negotiate a salary raise.
  • What is the most ideal result of your work? If you’re the app developer, is it amount of bugs dealt with or the number of features delivered? If you’re the app marketer, is it number of conversions within the app, or number of downloads? Find that one crucial result or stat, and make that your KPI.

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