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What is a Key Performance Indicator (KPI)?

A key performance indicator (KPI) is the key indicator of progress required to reach an intended outcome. It is used to monitor and measure effectiveness. Although there are some common KPIs across all industries, most industries have their own key performance indicators.

As Peter Drucker pointed out, “What gets measured gets done.”

Managing the KPIs usually means working on what drives lagging benefits. It includes setting goals and tracking progress against that goal.

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Characteristics of Effective KPIs

Good KPIs should act as a compass, helping you understand whether you’re taking the right path towards your strategic goals. Effective KPIs have the characteristics of being:

  • Well-defined,
  • Quantifiable,
  • Crucial to achieving your organizational objective,
  • Applicable by related departments,
  • Offers comparison that measures performance change over time,
  • Balanced between leading and lagging indicators.

Most Used KPIs in Digital Marketing

Here are some instances of common KPI sources an organization uses to measure the performance of its business goals:

What is a unique visitor?

  • Number of engaged qualified leads in the conversion funnel,

What is a conversion funnel?

  • Net sales,
  • Return on investment for different digital activities,
  • Bounce rate,
  • Average time on site,

What is average time on site?

  • Number of customers acquired,
  • Number of customers retained,
  • Percentage of market share,
  • Website traffic in a given time frame,
  • Number of qualified leads,
  • Number of clicks on call-to-actions,

What is call-to-action?