Have you, like me, wondered what’s the difference between KPIs and metrics? The whole world of analyzing data can be confusing when you don’t even know what you should be tracking. Part of it may be wrapped up in the fact that it can be hard to determine if something should be a KPI or a metric.
We know we need to be tracking something. In order to grow a business, it’s important to track the data so we can determine what’s working and what needs improvement. Why then does the idea of tracking KPIs and metrics send some folks running for the hills?
It’s often because there’s a grey area about what’s the difference between KPIs and metrics. I hope clear up the muddy waters in this blog post. Helping you decide what to track is another goal for this post.
KPIs vs. Metrics
If you are confused about the difference between KPIs and metrics, rest assured that you aren’t alone. Many business owners avoid metrics and KPIs because they deal with numbers.
That’s not a solution, though, if you are serious about growing and scaling your business. So let’s dive in and put an end to this confusion.
Metrics are the numbers you collect to see how your efforts to grow your business are doing. This could be:
- Likes on your Facebook page
- Number of email subscribers
- Webinar attendance
- Memberships sold
These are all great numbers to be tracking! When choosing which metrics to track, focus on the numbers that will reveal if the current efforts you are making to grow in one area of your business are successful. You don’t want to be tracking numbers just for the sake of saying you collect metrics. Be intentional about gathering the numbers that will reflect your efforts.
Like metrics, KPIs help a business evaluate how they are performing in a particular area. KPIs, however, are top performance indicators. They are measurable values that indicate how well your company is achieving its key objectives. Some examples may include:
- Conversion rates of a product
- Operating profit
- Client onboarding time
For example, let’s say a key objective for the quarter is to increase your visibility. You decide to hold a webinar that leads into your membership. Your metrics will revolve around your marketing efforts. You may track how many saw your ads or sales page. Your KPIs, however, will be the conversion rate for the number who signed up divided by the number who saw your ads. This number will tell you how often the messaging in your ads and sales page led to someone signing up for your webinar.
How To Decide What To Track
First, you need to decide the objectives you want to focus on in your business. Some things you may be focused on depending on your business are listed below.
- More visibility which will lead to more sales
- Operating profit
- Retention of team members
When deciding what to track, you have to keep you key business objectives in mind. Begin to list out what you can track that will help you determine if you’ve been successful in reaching that objective goal. Basically, this will be a metrics brain dump session. Write down everything that comes to mind.
Next, go through your list to pick out the metrics that will indicate a measurable value to reflect your business’s growth. They should be most aligned with your key objective. These will be your KPIs.
Tracking metrics is just as important as tracking KPIs because they track the progress or performance that moves the business towards attaining the key objectives. Without metrics, you won’t know if what your are doing behind the scenes is moving your business closer to your key objectives and vision.
It can all be very confusing, but once you dig in, things can become so much clearer. Just remember, all KPIs are metrics, but not all metrics are KPIs.
P.S. For more information, check out this blog post about metrics.