What are KPIs?
A KPI is a metric chosen because it reflects progress toward a key goal. Good KPIs are few in number, clearly defined and tied to decisions. Not every metric is a KPI.
Common financial KPIs
- Revenue growth rate
- [Gross profit](/glossary/gross-profit) margin and [net profit margin](/glossary/net-profit-margin)
- [Operating cash flow](/glossary/operating-cash-flow) and [burn rate](/glossary/burn-rate)
- [Current ratio](/glossary/current-ratio) and [quick ratio](/glossary/quick-ratio)
- Days sales outstanding (collections speed)
- [Inventory turnover](/glossary/inventory-turnover)
- [Return on investment](/glossary/return-on-investment-roi)
Common operational KPIs
- Customer acquisition cost and lifetime value (see [unit economics](/glossary/unit-economics))
- Churn and retention rates
- Average order value
- Employee productivity
How to choose good KPIs
Use the SMART test: Specific, Measurable, Achievable, Relevant and Time-bound. Pick leading indicators (which predict results, such as pipeline value) as well as lagging ones (which report results, such as profit).
Tracking KPIs
- Set a target and owner for each KPI.
- Review them on a regular cadence: weekly, monthly or quarterly.
- Use a dashboard pulling data from your accounting and sales systems.