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What is a KPI?

KPIs are used to evaluate the success of an organization or of a particular activity in which it engages.

A Key Performance Indicator (KPI) is a quantifiable measure used to evaluate the success of an organization, employee, or specific activity in achieving key objectives. KPIs are utilised across various industries to assess the effectiveness of operations, track progress towards goals, and identify areas for improvement. They serve as critical data points that inform decision-making processes and strategic planning.

KPIs can be financial, such as revenue growth or profit margin, or non-financial, such as customer satisfaction or employee engagement. They are designed to provide objective evidence of progress towards a desired result, offering a comparison that gauges the degree of performance change over time.

Effective KPIs are aligned with strategic goals and are specific, measurable, achievable, relevant, and time-bound (SMART criteria). They can be categorised into leading indicators, which predict future success, and lagging indicators, which reflect past performance.

Organisations use KPIs to focus on what matters most, ensuring that resources are allocated efficiently and strategic objectives are met.

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