Key Performance Indicators In Business [Scaling Using KPIs]

Most people in business have heard the term “KPIs,” but don’t know what they are or how to use them. 

You might understand already that key performance indicators are metrics that track progress and areas of improvement.

But the most important question you should be asking is “what KPIs are most important for tracking and scaling my business?”

If you’re an online marketing agency and want to get more clients, your KPIs would likely be different to a dropshipping company trying to reduce product cost.

In this article, we’ll share how to choose the right key performance indicators to know where to focus your team’s efforts for the best chance of success.

Key Performance Indicators: An Overview

Key Performance Indicators (KPIs) are metrics used to measure the performance of a business, organization, or individual. They are used to track progress and identify areas for improvement. 

Key performance indicators for business can measure anything from financial performance to customer satisfaction. KPIs provide an objective way to assess how well a business is doing in relation to its goals and objectives. They can compare performance over time or across different departments or teams.

What are Key Performance Indicators or KPIs?

Key Performance Indicators (KPIs) are measurable values that organizations use to evaluate their success in achieving specific goals. 

For example, a business KPI can measure performance areas such as employee engagement, financial performance, and operational efficiency. They help organizations keep track of their progress toward their goals and determine where they need to improve. 

How do KPIs impact a business?

Key Performance Indicators are used to compare performance against competitors and industry benchmarks. Business KPIs are divided into four categories: financial, customer, process, and employee. 

  • Financial KPIs measure the financial health of a business, such as revenue growth or profitability. 
  • Customer KPIs measure customer satisfaction and loyalty, such as customer retention rate or net promoter score. 
  • Process KPIs measure operational efficiencies, such as cycle time or lead time. 
  • Employee KPIs measure employee engagement and productivity, such as employee turnover rate or average hours worked per week.

KPI trackers in business can provide valuable insights into performance and lead to informed decisions on improvements. This can help companies to stay competitive in their industry and achieve long-term success.

Business KPIs Explained

Key Performance Indicators can be divided into two main categories; quantitative KPIs and Qualitative KPIs.

  1. Quantitative KPIs

A quantitative KPI measures progress toward a target using numbers. Most key performance indicators are quantitative, like the number of closed sales, customer support tickets, and annual income.

  1. Qualitative KPIs

A qualitative KPI monitors non-numerical information, such as consumer feedback or employee engagement. There are ways to get quantitative data from qualitative research, but these key performance indicators focus on qualitative data. 

Qualitative KPIs come under the following categories:

  • Financial Performance KPIs: Measure the financial health of a company, including its profitability, liquidity, and solvency. Measured by examining a company’s income statement, balance sheet, and cash flow statement.
  • Customer Satisfaction KPIs: Measured by how satisfied customers are with a company’s products or services. Done through surveys and customer feedback, most commonly.
  • Operational Efficiency KPIs: How efficiently a company uses its resources to produce its offers. Measured by the quota fulfilled per employee and the cost and time of production.
  • Employee Retention KPIs: How well a company can retain its employees. Measured by analyzing the staff turnover rate, the average employment length, and other variables.

Effective KPIs

The most valuable KPIs for business have the following attributes:


Companies should identify their business objectives to ensure that KPIs are goal-focused. Once these have been established, decision makers should then develop KPIs that measure progress toward those goals.

Suppose a company aims to reduce transportation costs. In this case, it could create a business KPI that measures the cost per mile of transporting goods.


At Scaling With Systems, we advise that clients look at KPIs on a monthly or weekly basis, and we make decisions based on these KPIs monthly and quarterly. We create a new system after gathering enough information to determine whether or not goals are being met. If KPIs are not frequently assessed, you won’t be able to action the insights effectively. 

How they’re measured

When keeping track of KPIs for business owners, ensure that your team keeps them recorded by week, month, or quarter for easy comparison. The simplest indicators can be tracked easily: the number of calls made, the cash intake daily, weekly, or monthly, or the number of emails of interest received for that period. This way, you can see the statistics of the last week, last month or last quarter. Using the data as a percentage is also super helpful. 

KPI Levels


A KPI for business is a metric used to measure the performance of an organization as a whole. They can be used to compare different departments or divisions within an organization or other organizations. 

Department Level

A department-level key performance indicator measures the performance of a specific department within an organization. 

Department-level KPIs are usually tailored to the individual needs of each department. They can measure efficiency, effectiveness, customer satisfaction, employee engagement, and other important metrics.

Project Level

A project-level KPI is a measurable value indicating how well a project performs against its objectives. 

They are typically based on specific goals and objectives in the project plan. These include quantitative and qualitative measures such as cost, time, quality, and customer satisfaction.

Categories of KPIs

Strategic KPI

Strategic Key Performance Indicators are metrics used to measure the success of a company’s overall strategy. The most important strategic KPIs are those that measure the performance of the company’s core business activities. These include customer satisfaction, market share, revenue growth, and profitability.

Functional KPI

Functional KPIs focus on certain firm divisions or functions. For instance, the finance department may check the number of new vendors added to their accounting information system each month. The marketing department may monitor the number of clicks each email distribution receives.

Operational KPI

An operational KPI is a quantitative metric that expresses short-term business trends. 

They are utilized to monitor organizational operations, enhance efficiency, and assist firms in understanding results.

Leading/Lagging KPI

Leading: Consists quantitative data that enables a firm to evaluate prospective responses to a change.

Lagging: These metrics determine whether a change is accomplishing its objectives. These are sometimes referred to as output indicators.

Main Key Performance Indicators

Revenue Growth KPIs

Revenue growth is used to measure the success of a business in terms of its ability to increase sales and profits. 

This provides insight into how well the company is doing financially and whether or not it is meeting its goals. Revenue growth KPIs are typically measured over a quarter or a year.

Revenue Per Client KPIs

Revenue per client (RPC) is a key performance indicator used to measure the amount of money a business earns from each customer. 

It’s calculated by dividing total revenue by the number of customers. RPC helps companies understand how much they’re making from each customer. It can be used to identify areas for improvement to incease profits.

Profit Margin KPI

A profit margin is used to measure the profitability of a business. It is calculated by dividing a company’s net profit by its total revenue. This KPI can be used to compare different companies in the same industry and track changes in profitability over time.

Client Retention Rate KPI

Client retention rate measures the success of a business in retaining its existing customers. It’s found by dividing the number of loyal customers by the number of customers at the beginning of the period. A high client retention rate indicates that customers are satisfied with their experience and are likely to continue doing business with the company. 

Customer Satisfaction KPIs

Several business KPIs can be used to measure customer satisfaction, including customer feedback surveys, Net Promoter Score (NPS), customer satisfaction index (CSI), and customer effort score (CES). 

How to Measure KPI for Business

1. Use The Right Tools/Software

Here are some of the most popular tools and software for measuring KPIs:

  • Google Analytics: Google Analytics is a free web analytics tool that provides detailed insights into website traffic and user behavior. It measures page views, time on site, bounce rate, and more.
  • Tableau: Tableau is a powerful data visualization tool that allows users to quickly analyze large datasets and create interactive dashboards. Tableau measures customer lifetime value, customer acquisition cost, and more.
  • Microsoft Power BI: Microsoft Power BI is a business intelligence platform that enables users to create interactive dashboards and reports. You can look at KPIs like sales performance, marketing ROI, and more.
  • Salesforce Analytics Cloud: Salesforce Analytics Cloud is a cloud-based analytics platform that provides insights into customer data. It measures KPIs such as customer engagement, customer retention, and more.

2. Create a final list of KPIs & create a report

After evaluating the areas of your company that you would like to optimize, choose the business KPIs your company will focus on moving forward. Collate your collected information into an easy-to-follow report as you add more information.

3. Design visualizations for important KPIs

Use charts, diagrams, and other visual aids to show the growth or change of the key performance indicators.

4. Share KPIs reports for quality checks

Send out the reports to those it’s relevant to (e.g.department heads or sales reps). This allows them to see where there is room for improvement and implement changes.

5. Choose a reporting cadence for stakeholders

When deciding on a KPI reporting cadence for stakeholders, determine the frequency of reports (weekly or monthly, for example).

The type of information in the report can include feedback on customer satisfaction, sales figures, and employee performance. 

6. Set new goals and KPIs based on results

KPIs are to be continually evaluated to follow the effectiveness of changes that are put in place. A new set of goals and KPIs should be implemented each time a target has been met.

Understanding KPIs: FAQs

What are KPIs, and how can they be used to measure business performance?

Key Performance Indicators are used to measure the performance of a business. They provide an objective way to assess progress and identify areas for improvement. 

They keep track of financial performance, customer satisfaction, operational efficiency, employee engagement, and more.

What are 5 key performance indicators (KPIs)?

The five top KPIs for businesses are sales KPIs, customer KPIs, financial KPIs, operational KPIs, and marketing KPIs.

What are KPIs examples?

Business KPI examples include contracts signed in a time period, leads generated, hours a task took to be completed, articles published per month.

Some customer-specific KPIs include the number of customers retained, the average ticket/support resolution time, and the percentage of market share.

Wrapping Up: Key Performance Indicators For Business 

Key performance indicators can provide tremendous insight for businesses looking to understand their potential and assess their performance. 

Choosing the right KPIs for your business requires understanding your goals and then tracking them over time as your business evolves. 

If you’re reading, you are about the long-term growth of your business. We can help you with that. We develop profitable client acquisition systems for online businesses. If you want to establish a consistently lucrative way of drawing customers in, book a free consultation call with us at Scaling With Systems.

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