Sales Loves MarketingA key performance indicator (KPI) is a number that tells you whether you are reaching a goal. A sales team might track deals won per quarter, and a marketing team might track qualified leads per month. Unlike the hundreds of metrics a business could watch, KPIs are the few it agrees matter most.
What is the difference between a KPI and a metric?
A metric is any number you can measure. A KPI is a metric tied to a specific objective and a target. Website sessions are a metric. Demo requests from the website, with a monthly target, can be a KPI. KPIs exist at every level: company KPIs such as revenue growth, and team KPIs such as cost per lead or support response time.
Why do KPIs matter?
- They show progress. You can see whether you are on track before the quarter ends.
- They focus the team. Everyone knows which numbers count.
- They support decisions. Comparing the same KPIs over time shows patterns, such as seasonal dips, so you can plan for them.
- They give early warnings. Leading indicators show trouble before it reaches revenue.
Leading vs lagging KPIs
Lagging KPIs measure results that have already happened, such as revenue, new customers or churn. They are easy to measure but hard to change quickly.
Leading KPIs measure the activities that drive those results, such as proposals sent, meetings booked or trial sign-ups. They are harder to link to outcomes, but they give you time to act. A good set mixes both.
Examples of sales and marketing KPIs
| Area | Example KPIs |
|---|---|
| Lead generation | Qualified leads, cost per lead, conversion rate |
| Sales | Win rate, average deal size, sales cycle length, pipeline value |
| Customers | Customer acquisition cost (CAC), customer lifetime value, churn, Net Promoter Score |
| Revenue | Monthly recurring revenue, revenue growth |
For more ideas, see marketing KPIs to measure performance and SDR KPIs.
How do you choose good KPIs?
- Start from the goal. Pick the number that best shows whether the goal is met. "Improve sales" is a wish. "Raise the trial-to-paid rate" is measurable.
- Run the SMART check. A good KPI is specific, measurable, achievable, relevant and time-bound.
- Keep the list short. Too many indicators get ignored.
- Make each KPI someone's job. Name an owner who reports on it.
- Review them regularly. Drop KPIs that no longer link to a goal.
What can go wrong with KPIs?
People tend to optimise for what they are measured on. If an SDR team is judged only on meetings booked, meeting quality can drop. This is often summed up as Goodhart's law: when a measure becomes a target, it stops being a good measure. Pair volume KPIs with quality KPIs, such as meetings booked and the share that turn into opportunities.
Related terms
Frequently asked questions
What is the difference between a KPI and a metric?
Every KPI is a metric, but most metrics are not KPIs. A metric is any number you can track, such as page views. A KPI is a metric you have tied to a goal and agreed to manage, such as demo requests per month against a target.
What are leading and lagging KPIs?
Lagging KPIs measure results that have already happened, such as revenue or customers lost. Leading KPIs measure activities that predict those results, such as proposals sent or qualified meetings booked. Lagging ones are easy to measure but hard to change quickly, while leading ones give you time to act.
How many KPIs should a team have?
There is no fixed number, but fewer is better. Each team should track only the handful that link directly to its goals. Long lists of indicators tend to be ignored, and the important signals get lost.