If you’re going to build a successful company, then it’s important that you’re keeping track of your progress — getting a new project underway is all good and well, but if you’re unable to measure how well they’re performing, then you’ll be leaving some valuable information on the table, information that could have the ability to push your business even further forward. Fortunately, there are approaches to measurement that you can use. Two of the most common are KPIs and metrics.
You might have heard of these terms before, and may even think that they’re the same thing. While they’re broadly similar, there are some key characteristics that put them both in different camps. In this blog, we’re going to take a look at the difference between KPIs and metrics, as well as offer advice on how you can get the most from both.
What Does KPI Mean?
Before we discuss the differences between KPIs and metrics, let’s first define what we mean by each term. KPI stands for Key Performance Indicator. It’s a value that can be measured when it comes to looking at the progress of a company’s goals. The advantage of using them is that they can push a business towards better results, and can also be used to make decisions. Of course, there are good KPIs and bad KPIs. To make sure that yours is the former camp, you’ll need to ensure that your KPI is clearly measurable, not overly open to interpretation, is specific to your company, and can be used to get a solid overview of your performance related to your company’s objectives.
What Are Metrics?
A metric sounds similar to a KPI; it is also a quantifiable measure that businesses use to see how they’re progressing. Rather than being a general approach, you usually use metrics to determine success — or failure — in specific areas of a company, particularly the most important areas, such as customer growth, revenue, employee productivity, things like that. However, one thing about metrics is that they can be used for anything. Indeed, that’s part of their charm.
You can think of some metrics as ‘vanity metrics’; these are measures that are good to know, but which ultimately don’t have a direct impact on the success of your business, and they may not even tell you all that much about your business. For example, you could create a metric to gauge your social network follower growth, but even if you smashed through your target, you wouldn’t necessarily know that your business was doing well.
In a sense, however, metrics are similar to KPIs. You use metrics to see how you’re doing — if you wanted to earn $50,000 in revenue a month, then you’d take your raw data and see how it measures against the target. You’d be able to see how far towards your target you have moved.
The Difference Between The Two
It’s normal that people have a hard time differentiating between KPIs and metrics, because they’re kind of similar. The easiest way to think about the two is that KPIs are more important. They’re Key Performance Indicators, which means they’ll have the biggest impact on your company’s success. Metrics track and measure aspects of your business, too, but they’re not measuring the aspects of your business that’ll have the biggest influence. That’s not to say that they’re not important, however — they most definitely are. It’s just that you can’t expect them to have such a gigantic impact on your business.
Another way that they differ is in the timeframe they’re connected to. A metric might have no timeframe whatsoever — it can be an ongoing way to measure a certain part of your business. A KPI can be a little more intense. You might have a KPI that lasts for 30, 60, or 90 days. KPIs are better suited to those big drives forward, whereas metrics can be used to generally improve your company over a longer period.
Useful Tips
There are some things you can do that’ll help to improve both your KPIs and metrics. It’s important to know what you’re trying to achieve, for instance. You’ll also want to have a defined time to check-in with your metrics; this will give you a chance to see patterns developing. It’s also vitally important that you have a reliable and defined data-source. The information you use for your measurements can only be as good as the data-source allows.
Used correctly, both KPIs and metrics can have a hugely beneficial impact on your operations.
