What is “Key Performance Indicator (KPI)”?

A Key Performance Indicator (KPI) is a measurable value used to track progress toward specific business goals. KPIs help businesses assess how well they are performing in areas such as revenue, customer satisfaction, and operational efficiency. KPIs are widely used across various industries to measure success and make data-driven decisions.

Example

"Our quarterly KPI report showed that customer retention improved by 15%, directly contributing to higher revenue growth."

How is “Key Performance Indicator (KPI)” used in business?

In business, KPIs are used to evaluate performance and guide decision-making. They serve as critical benchmarks for progress, helping companies monitor everything from sales performance to employee engagement. Businesses set KPIs to align their teams with organizational goals, track progress, and identify areas for improvement. KPIs often influence strategic decisions and day-to-day operations.

Pro Tip

Focus on setting SMART (Specific, Measurable, Achievable, Relevant, Time-bound) KPIs to ensure they are impactful and aligned with your business goals.

Related Terms

Performance metrics, business objectives, goal setting, data analysis