The Difference Between a Key Performance Indicator (KPI) and a Key Metric

The Difference Between a Key Performance Indicator (KPI) and a Key Metric

Last Edited April 20, 2018 by Garenne Bigby in Blog

Understanding the terms behind tracking the development, function, and usability of digital content has become streamlined using the two categories of Key Metrics and Key Performance Indicators. While they are similar in the general sense that they provide information outlining site success, they have different elements that impact how that information is processed. A Key Metric is part of a whole that contributes to the Key Performance Indicator (KPI). By using both data sets, an organization can not only see where they are succeeding in their business but also in what areas they are coming up short.

Using KPIs and Key Metrics allows for objectives to move from the idea stage to fully-realized goal. The success of both of these components is dependent on the result of their existence and associated actions. Merely having a series of Key Metrics that feed into a Key Performance Indicator but no clearly defined end goal means that both have failed.

While both of these factors are used together to signal a business’s weakness or strengths, they both have a primary function. By separating these modules, it becomes easier to rearrange goal structures, introduce new methods for reaching goals and improve on problem-solving.

Key Performance Indicator (KPI) and a Key Metric


KPIs and Key Metrics

What is a Key Metric?

A Key Metric, also known as a business metric, is a unit of measuring the progress of a specific business process. It is associated with Key Performance Indicators and is used to track the projected end result of goal seeking. Key Metrics are based on statistics and data recorded over a period of time. Key Metrics are a way to create measurable data that impacts smaller scale projects as well as an entire organization. This data tracking is used to gauge the health of an organization. These measurements are not specific to any one industry and are used in multiple fields.

Without Key Metric data, it would be difficult to chart organizational progress. Visually, Key Metrics are representative of data and can be presented in various formats. Bar graphs, charts, and other forms are available to use so long as they can illustrate clear division of the data subjects. Key Metrics are generally for management personnel to chart their employee’s development and task completion.


Classifying your Key Metrics

The classification of Key Metrics is determined by what the metrics are being used to record progress and also how the target audience is using a given service. User interaction is one of the most vital aspects of understanding and using your Key Metric data. Depending on how you want to interact with your audience, you can collect your metric data using different forms. Submission forms for downloading offline content, signing up for newsletters, inquiries on a FAQ page and other methods of direct communication can be determined by metrics.

It is also part of the Key Metric process to determine how that data will be collected and what the effects of it reveal. For example, if the goal of a Key Metric is getting more subscriptions to a blog, then the data should be indicative of how this will be accomplished and which methods work best. How is the interest being developed? What avenues, based on the collected data, should be explored? The number of metrics being measured conceptually has no limit so an organization could get highly focused on each factor. Doing so can ensure that no metric component is being missed but as there is not a time limit for it, it can be added later.

Also following the revelation of Key Metric data, it can be determined which areas are not beneficial to the overall goal and no longer require attention.  It is important to remember that Key Metrics are part of the Key Performance Indicators and must still meet the needs of that larger objective.


What is a Key Performance Indicator (KPI)?

As the name implies, a Key Performance Indicator is a track record of progress that can be measured over time that shows how well a company is reaching their main business objectives. It is a record of prioritized goals and the necessary factors to meeting them. In a way, it is like having a weekly or monthly quota to be filled but more importantly, a plan towards filling it. Simply having a goal or an idea is not enough. Key Performance Indicators are roadmaps toward success.

Key Performance Indicators will have some variances, however. This is usually distinguished as being either a high or low KPI. A low tier KPI prioritizes on using the resources found in areas like call centers, marketing departments or sales. The idea is to collect the necessary amounts of data that will show in what specific zone improvements are needed to meet a larger objective. For example, following the results of customer exit surveys, a call center would gain insight into how better to handle customer complaints via phone or email.

A high-level KPI is one that encapsulates the entirety of the organization’s performance instead of specific departments. While a customer care sector is the low-level KPI, having the sector belongs to the high-level KPI because it is a means to address a problem (customer service) and offers a solution (trained call center representatives).


Categorizing KPIs

One of the reasons Key Performance Indicators fail is because they fail to address a few basic parameters. Using a generic KPI that does not align with your Key Metrics or company objectives is a costly use of time, money and resources. If you are not seeing the results of using Key Performance Indicators or Key Metrics, it might be time to revisit both topics. The SMART criteria of goal setting is just one method to determine whether or not your goals are tangible and clear. SMART can be broken down as follows: Specific, Measurable, Attainable, Relevant and Time Frame. By answering these five areas, the function and success of a Key Performance Indicator can be measured.

There are five questions that need to be answered for a KPI to fit the SMART criteria. Is the goal specific to the company’s objective? For example, if an organization is focusing on increasing revenue by faster product delivery, it might be wise to focus more on the shipping sector rather than customer service. Is progress measurable? Are the goals being sought after actually attainable? The big ideas that drive company successes are only good if the products behind them can be materialized. Relevance is also very important to the function of Key Metrics and Key Performance Indicators.

Settings goals that are outside the scope of a company’s objective, even if they can be achieved, does not help in the grander scheme of things. Without relevance, there is also a diversion of funds and innovation from the previously specified goal. Lastly, what is the timeframe for reaching the KPI goal? The difference between implementing new strategies in 6 months versus 6 years will determine how much work is involved. Using the SMART criteria can help with the formation of your KPIs.

Categorizing them follows this step and allows KPIs to be grouped accordingly. This is because of the ‘key’ element in KPI that addresses a focused subject. If the goal is improving staff knowledge, there might be an Employee Training and Development KPI. The category titles will straddle the line between being broad in terms of general use but concentrated in terms of application.


Combining Key Metrics with KPIs

The formula for a successful arrangement of a Key Performance Indicator is as follows: the KPI is at the center and is the main objective of a project or company. A feature overseeing the KPI is the strategic plans needed to be completed for the KPI to happen. On either side of the KPI, there are two more components, Key Metrics and accompanying triggers. Utilizing all four areas will create a potentially successful cycle where objectives are defined, Key Metrics are used to explore the data behind the objective, actions are taken as a result of the data, and the Key Performance Indicator is met when the goal is achieved. At its simplest, this process has a cause-and-effect relationship. If X (strategy and planning) is done using components from Y (the Key Metric statistics data in combination with the trigger actions), then Z will be the result and reveal the KPI. It is important when you’ve reached this step of making decisive moves toward meeting a goal that the specifics of the Key Metrics and Key Performance Indicators are certain and understood.


Recognizing Triggers

A trigger, as it relates to Key Metrics and Key Performance Indicators, is the action(s) that are necessary to meet the demands of the Key Metrics and start a positive chain reaction. The trigger can only happen once the Key Performance Indicator has been determined and tasked with a specific problem. Without a predetermined end goal, there is essentially no action being required, so the trigger is nonexistent. The trigger aspect of Key Metrics answers the question of, “How do we make this goal happen?” The focus of the trigger is to create methods of action on multiple fronts.

There are triggers for both the web content developers but also some on the part of the consumer. What really matters is how the trigger can lead to fulfilment of the Key Metrics. A simple goal for most websites is to generate revenue by site clicks. However, merely displaying a host of links without purpose is not guaranteed to get the desired results. Instead, this action could be triggered by hyperlinking additional links directly into the web content in either text or images. It is possible that there can be multiple triggers for the same Key Metric. Triggers require an understanding of both sides regarding being a developer and also a user. The experiences are different on the front and backend of a webpage, but those in charge of the metrics need to be able to use both in order to reach a goal.

Making a chart outlining your triggers as related to the Key Metrics and Key Performance Indicators is a great way to not only keep track of your ideas but to also check if the triggers relate to the metrics. If you have three goals in your Key Metric requirement but cannot determine how to trigger them from static idea to active experience, it might be time to revisit the goals. Additionally, if meeting a Key Metric becomes too complex or requires too many triggers, it would be beneficial to break it down further into small steps. Doing so will make both the triggers and metrics more manageable.


Setting Up KPI Target Objectives

Knowing what Key Metrics and Key Performance Indicators are is different than actually setting up the system in which you can utilize them. They help with organizing your project, but the main purpose of Key Metrics and KPIs is to track whether or not you’re achieving your goals. Is your strategy sound? Can your team understand the objective and are they performing well? If not, what’s stopping them? The answers to these questions can be found in the data surrounding your Key Performance Indicators. Setting your objectives should not be done blindly simply because having foals helps productivity. Goals without meaning are more likely to disregarded and never fulfilled.

Key Performance Indicators are meant to answer a basic question about your organization. Are we meeting our goals? What those goals are will vary but using metrics is how you know what direction to take. So the first step is deciding on a set of goals (with or without the SMART criteria) and writing out a base strategy to help you reach them. From that list, it should be determined which is the most important Key Performance Indicator with regard to your strategy. This will take heavy influence on what type of business you have and the overall mission of it. For example, a charity service would be less focused on how much money they earn in a fiscal quarter and more invested in how many people see the positive effects of their work. On the other hand, a fashion designer would use metrics to determine how well her company is doing in terms of revenue and profitability.

Draft a concrete target over a set period of time. Typically, this is a five-year plan for the KPI and the steps to bring it to complete success while being conscious of potential obstacles. It can be daunting but knowing how much money to invest can save costly mistakes and ensure better profits. Using this information, create a yearly goal for your KPI. Compute any other financial consequences (like hiring staff, having an office space, networking events, etc.) and then shift your focus.

One main thing to remember when setting your KPIs is to consider the customer or client experience. You want your objectives to be beneficial to them as well as your company. There should also be aspects of your targeted objectives that are primarily for the benefit of those working with you toward the goals. Finally, combine all of your targets to make a strong business plan in which you can use Key Metrics to track progress.


Understanding the Key Metric and KPI Relationship

On as surface level, it might seem like Key Metrics are the same as Key Performance Indicators. It’s true that both are a measurable source of data that outlines an organization’s development and goal achievement. There is a difference in what their purpose and function are, however. A Key Metric does not address the overall or targeted goal objectives the way that a KPI would. In that same way, a KPI is not going to be as specific as a Key Metric. But using them both is necessary for accurate tracking of progress across multiple facets of an organization, from staff to enterprise.

Another similarity with Key Metrics and KPIs is that they are not exactly fixed points. The Key Performance Indicator is mostly unchanging, but even that has to sometimes be revisited and edited if the Key Metrics are not aligning with the objective vision. A well-developed strategy might become obsolete during the five-year application of the plan. Staff and personnel might change. So being flexible with both the Key Metrics and using the knowledge gained from the data is a necessary part of continually pursuing the finalization of a KPI.


Final Words

Targeted goals and data tracking are only two components behind Key Metrics and Key Performance Indicators. Using the appropriate triggers can be a springboard toward meeting the KPI goals while also combining this information with the data collected via Key Metrics. Before you can really delve into the world of metrics and data modeling, it is necessary to first decide on the objective of your organization. What are you working toward? Once that’s determined, there is a follow-up question. How will you get there? What materials are needed and what are the steps to help the goal be fulfilled?

Key Metrics and Key Performance Indicators help answer these questions with tangible collections of experiences and data. This places more weight on the target objectives. By elevating goals from simple notes to fully-realized statistical data, it is possible to use metrics in order to succeed in goal achievement.

Garenne Bigby
Author: Garenne BigbyWebsite: http://garennebigby.com
Founder @dynomapper
Garenne Bigby is freelance Chicago developer and founder of DYNO Mapper with over 10 years experience in both agency and freelance roles in design, development, user experience, SEO, and information architecture.

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