indicators of business plan which is not effective

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Kpi meaning + 27 examples of key performance indicators.

As your organization begins to sketch out what your strategic plan might look like, it’s likely to come to your attention that you’ll need to gain consensus around what your key performance indicators will be and how they will impact your organization. If you haven’t thought much about your KPIs yet, that’s okay. We can help!

We’ve compiled a complete guide that includes an overview of what makes a good KPI, the benefits of good key performance indicators, and a list of KPI examples [organized by department and industry] for your reference as you run your strategic planning process to build your organization’s strategic plan and goals.

Video Transcript – How to Write KPIs

Hi, my name is Erica Olsen. Today’s whiteboard video is on key performance indicators, or KPIs for short. These are those things that are associated with either goals or objectives, whatever you’re calling them, those elements of your plan that are the expressions of what you want to achieve by when those quantifiable outcome-based statements.

So KPI’s answer the quantifiable piece of your goals and objectives. They come in three different flavors. So we’ll talk about that in just a minute. But before we do, putting great measures together and making sure they work well for you, you need to have these four attributes. And before I talk about those four attributes, so I just want to say the reason they need to work well for you is because KPIs are the heartbeat of your performance management process. They tell you whether you’re making progress, and ultimately, we want to make progress against our strategy. So KPIs are the thing that do that for us. So you’re going to live with them a lot. So let’s make sure they’re really good.

Okay, so the four things you need to have in order to make sure your these measures work for you.

Our number one is your measure. So the measure is the verbal expression very simply, in words, what are we measuring, which is fairly straightforward. The tricky thing is, is we need to be as expressive as we possibly can with our measures. So number of new customers, that’s fine. There’s nothing wrong with that. But a little bit advanced or a little bit more expressive, would be number of new customers this year, or number of new customers for a certain product or a certain service. So what is it is it? Yeah, so it is, so be really clear. And when it comes to measuring it on a monthly basis, you’re gonna want to be as clear as possible. So number of new customers, let’s say this year,

Number two, is our target, or target is the numeric value that we want to achieve. So a couple of things that are important about this is, the target needs to be apples to apples with when the goal date is set, or the due date is set. So we want to achieve 1000 new customers by the end of the year. This is your time frame. So the due date in the target works hand in hand. The other thing is the measure and the target need to work hand in hand. So it’s a number. So this is a number, this is a percentage, this is a percentage, you get the idea.

Third thing, we actually run a report on this data. So where is it coming from? Be clear about what the source is. Most organizations have all sorts of data sources, fragmented systems. So making sure you identify where this data is coming from will save you a lot of time.

And then frequency. So how often are you going to be reporting on this KPI, ideally, you’re running monthly strategy reviews to report on the progress of your plan, at least monthly, in which case we’d like to see monthly KPIs. So you got to be able to pull the data monthly in order to make that happen. That’s not always possible. But let’s try to get there. Certainly some organizations are weekly and others are daily, monthly is a good place to start. So frequency. Great.

So now we know the components that we need to have in place in order to have our KPIs. Here are some different types of KPIs that you might think about as you’re putting your plan together.

So there are just straight up raw numbers, I call these widget counting, there’s nothing wrong with widget counting, they don’t necessarily tell a story. And I’ll talk about how to make this tell a story in a minute. But this is just simply widget counting number of things.

The second thing is progress. So this is really often used, it’s great. We use this, which is expressed as percent complete percent complete of the goal, percent completed a project, whatever it might be, it’s a project type measure. It’s a good measure, if if you don’t have quantifiable measures, or you can’t get the data, and you just want to track the performance of the goal as it relates to action items being completed under it.

The third type of indicator is a Change Type Indicator, like percent increase in sales, making this better would be percent increase in sales compared to last year. And the idea is 22%. So you can see how that starts to be more expressive, and work with the target. So this serves to tell a little bit more of a story than this one does, right? And if you want to actually make your widget counting measures tell more of a story like this one does, you might change something like this to read percentage of new customers acquired compared to same time last year. So that’s an example.

Okay, so now we know what we have to have in place and kind of different types of measures to get our ideas flowing. Let’s talk about one thing that you might take your measure writing to the next level and that is think about the fact that there are leading and lagging measures so are leading and lagging indicators. So percent increase in sales or sales is a lagging indicator it occurred as an outcome. If you want to make sure that you’re on track ACC, you might have a KPI in place, which is telling us whether we’re going to hit that increase such as your pipeline, maybe number of leads, or the size of your pipeline. So we don’t want to over rotate on this necessarily, but we do want to make sure we have a combination of leading and lagging measures when we’re looking at our performance on a monthly basis.

So with that, that’s all we have for today. Hopefully you have what you need to write great KPIs for your organization. Happy strategizing. And don’t forget, subscribe to our channel.

What is a Key Performance Indicator KPI — KPI Definition

Key performance indicators, also called KPIs, are the elements of your organization’s plan that express the quantitative outcomes you seek and how you will measure success. In other words, they tell you what you want to achieve and by when.

They are the qualitative, quantifiable, outcome-based statements you’ll use to measure progress and determine if you’re on track to meet your goals or objectives. Good plans use 5-7 KPIs to manage and track their progress against goals.

DOWNLOAD THE FREE KPI GUIDE

KPI Meaning, and Why Do You Need Them?

Key performance indicators are intended to create a holistic picture of how your organization is performing against its intended targets, organizational goals, business goals, or objectives. A great key performance indicator should accomplish all the following:

• Outline and measure your organization’s most important set of outputs.
• Work as the heartbeat of your performance management process and confirm whether progress is being made against your strategy.
• Represent the key elements of your strategic plan that express what you want to achieve by when.
• Measure the quantifiable components of your goals and objectives.
• Measure the most important leading and lagging measures in your organization.

The Five Elements of a KPI

These are the heartbeat of your performance management process and must work well! Your plan’s strategic KPIs tell you whether you’re making progress or how far you are from reaching your goals. Ultimately, you want to make progress against your strategy. You’ll live with these KPIs for at least the quarter (preferably the year), so make sure they’re valuable!

Great strategies track the progress of core elements of the plan. Each key performance indicator needs to include the following elements:

• A Measure: Every KPI must have a measure. The best ones have more specific or expressive measures.
• A Target: Every KPI needs to have a target that matches your measure and the period of your goal. These are generally a numeric values you’re seeking to achieve.
• A Data Source: Each of these needs to have a clearly defined data source so there is no gray area in measuring and tracking each.
• Reporting Frequency: Different measures may have different reporting needs, but a good rule to follow is to report on them at least monthly.
• Owner: While this isn’t a mandatory aspect of your KPI statement, setting expectations of who will take care of tracking, reporting, and refining specific KPIs is helpful to your overall organizational plan.

Indicators vs. Key Performance Indicators

An indicator is a general term that describes a business’s performance metrics.

There can be several types of indicators a company may track, but not all indicators are KPIs, especially if they don’t tie into an organization’s overall strategic plan or objectives, which is a MUST!

Key Performance Indicators

On the other hand, a key performance indicator is a very specific indicator that measures an organization’s progress toward a specific company-wide goal or objective. We typically recommend you narrow down the KPIs your organization tracks to no more than 7. When you track too many goals, it can get daunting and confusing.

Pro Tip : You should only track the best and most valuable indicators that tie to your organization’s long-term strategic goals and direction.

Benefits of Good Key Performance Indicators

What benefits do key performance indicators have on your strategic plan, and on your organization as a whole? A lot of benefits, actually! They are extremely important to the success of your strategic plan as they help you track progress of your goals. Implementing them correctly is critical to success.

• Benefit #1: They provide clarity and focus to your strategic plan by measuring progress and aligning your team’s efforts to the organization’s objectives. They also show your measurable progress over time and create ways to track your organization’s continued improvement.
• Benefit #2: Key performance indicators create a way to communicate a shared understanding of success. They give your team a shared understanding of what’s important to achieve your long-term vision and create a shared language to express your progress.
• Benefit #3: They provide signposts and triggers to help you identify when to act. A good balance of leading and lagging key performance indicators allow you to see the early warning signs when things are going well, or when it’s time to act.

How to Develop KPIs

We’ve covered this extensively in our How to Identify Key Performance Indicators post. But, here’s a really quick recap:

Step 1: Identify Measures that Contribute Directly to Your Annual Organization-wide Objectives

Ensure you select measures that can be directly used to quantify your most important annual objectives.

PRO TIP: It doesn’t matter what plan structure you’re using – balanced scorecard, OKRs, or any other framework – the right KPIs for every objective will help you measure if you’re moving in the right direction.

Step 2: Evaluate the Quality of Your Core Performance Indicators

Select a balance of leading and lagging indicators (which we define later in the article) that are quantifiable and move your organization forward. Always ensure you have relevant KPIs. Having the right key performance indicators makes a world of difference!

Step 3: Assign Ownership

Every key performance indicator needs ownership! It’s just that simple.

Step 4: Monitor and Report with Consistency

Whatever you do, don’t just set and forget your goals. We see it occasionally that people will select measures and not track them, but what’s the point of that? Be consistent. We recommend selecting measures that can be reported upon at least monthly.

The 3 Common Types of KPIs to Reference as You Build Your Metrics

Key performance indicators answer the quantifiable piece of your goals and objectives . They come in three different flavors. Now that you know the components of great key performance indicators, here are some different ones that you might think about as you’re putting your plan together:

Broad Number Measures

The first type of KPI is what we like to call broad number measures. These are the ones that essentially count something. An example is counting the number of products sold or the number of visits to a webpage.

PRO TIP: There is nothing wrong with these, but they don’t tell a story. Great measures help you create a clear picture of what is going on in your organization. So, using only broad ones won’t help create a narrative.

Progress Measures

Progress key performance indicators are used to help measure the progress of outcomes . This is most commonly known as the “percent complete” KPI, which is helpful in measuring the progress of completing a goal or project. These are best when quantifiable outcomes are difficult to track, or you can’t get specific data.

PRO TIP: Progress KPIs are great, but your KPI stack needs to include some easily quantifiable measures. We recommend using a mixture of progress KPIs and other types that have clear targets and data sources.

Change Measures

The final type of KPI is a change indicator. These are used to measure the quantifiable change in a metric or measure. An example would be, “X% increase in sales.” It adds a change measure to a quantifiable target and is usually measured as a percentage increase in a given period of time.

The more specific change measures are, the easier they are to understand. A better iteration of the example above would be “22% increase in sales over last year, which represents an xyz lift in net-new business.” More expressive measures are better.

PRO TIP: Change measures are good for helping create a clear narrative . It helps explain where you’re going instead of just a simple target.

Leading KPIs vs Lagging KPIs

Part of creating a holistic picture of your organization’s progress is looking at different types of measures, like a combination of leading and lagging indicators. Using a mixture of both allows you to monitor progress and early warning signs closely when your plan is under or over-performing (leading indicator) and you have a good hold on how that performance will impact your business down the road (lagging indicator). Here’s a deep dive and best practices on using leading versus lagging indicators:

Leading Indicator

We often refer to these metrics as the measures that tell you how your business might/will perform in the future. They are the warning buoys you put out in the water to let you know when something is going well and when something isn’t.

For example, a leading KPI for an organization might be the cost to deliver a good/service. If the cost of labor increases, it will give you a leading indicator that you will see an impact on net profit or inventory cost.

Another example of a leading indicator might be how well your website is ranking or how well your advertising is performing. If your website is performing well, it might be a leading indicator that your sales team will have an increase in qualified leads and contracts signed.

Lagging Indicator

A lagging indicator refers to past developments and effects. This reflects the past outcomes of your measure. So, it lags behind the performance of your leading indicators.

An example of a lagging indicator is EBITA. It reflects your earnings for a past date. That lagging indicator may have been influenced by leading indicators like the cost of labor/materials.

Balancing Leading and Lagging Indicators

If you want to ensure that you’re on track, you might have a KPI in place telling you whether you will hit that increase, such as your lead pipeline. We don’t want to over-rotate on this, but as part of a holistic, agile plan, we recommend outlining 5-7 key performance metrics or indicators in your plan that show a mix of leading and lagging indicators. .

Having a mixture of both gives you both a look-back and a look-forward as you measure the success of your plan and business health. A balanced set of KPIs also gives you the data and business intelligence you need for making decision making and strategic focus. We also recommend identifying and committing to tracking and managing the same KPIs for about a year, with regular monthly or quarterly reporting cadence, to create consistency in data and reporting.

27 KPI Examples

Sales key performance indicators.

• Number of contracts signed per quarter
• Dollar value for new contracts signed per period
• Number of qualified leads per month
• Number of engaged qualified leads in the sales funnel
• Hours of resources spent on sales follow up
• Average time for conversion
• Net sales – dollar or percentage growth
• New sales revenue
• Growth rate
• Customer acquisition count
• Lead conversion rate
• Average sales cycle

Increase the number of contracts signed by 10% each quarter.

• Measure: Number of contracts signed per quarter
• Target: Increase number of new contracts signed by 10% each quarter
• Data Source: CRM system
• Reporting Frequency: Weekly
• *Owner: Sales Team
• Due Date: Q1, Q2, Q3, Q4

Increase the value of new contracts by $300,000 per quarter this year.

• Measure: Dollar value for new contracts signed per period
• Data Source: Hubspot Sales Funnel
• Reporting Frequency: Monthly
• *Owner: VP of Sales

Increase the close rate to 30% from 20% by the end of the year.

• Measure: Close rate – number of closed contracts/sales qualified leads
• Target: Increase close rate from 20% to 30%
• *Owner: Director of Sales
• Due Date: December 31, 2023

Increase the number of weekly engaged qualified leads in the sales from 50 to 75 by the end of FY23.

• Measure: Number of engaged qualified leads in sales funnel
• Target: 50 to 75 by end of FY2023
• Data Source: Marketing and Sales CRM
• *Owner: Head of Sales

Decrease time to conversion from 60 to 45 days by Q3 2023.

• Measure: Average time for conversion
• Target: 60 days to 45 days
• Due Date: Q3 2023

Increase number of closed contracts by 2 contracts/week in 2023.

• Measure: Number of closed contracts
• Target: Increase closed contracts a week from 4 to 6
• Data Source: Sales Pipeline
• *Owner: Sales and Marketing Team

Examples of KPIs for Financial

• Growth in revenue
• Net profit margin
• Gross profit margin
• Operational cash flow
• Current accounts receivables
• Operating expenses
• Average cost of goods or services
• Average account lifetime total value

Financial KPIs as SMART Annual Goals

Grow top-line revenue by 10% by the end of 2023.

• Measure: Revenue growth
• Target: 10% growt
• Data Source: Quickbooks
• *Owner: Finance and Operations Team
• Due Date: By the end 2023

Increase gross profit margin by 12% by the end of 2023.

• Measure: Percentage growth of net profit margin
• Target: 12% net profit margin increase
• Data Source: Financial statements
• *Owner: Accounting Department

Increase net profit margin from 32% to 40% by the end of 2023.

• Measure: Gross profit margin in percentage
• Target: Increase gross profit margin from 32% to 40% by the end of 2023
• Data Source: CRM and Quickbooks
• *Owner: CFO

Maintain $5M operating cash flow for FY2023.

• Measure: Dollar amount of operational cash flow
• Target: $5M average
• Data Source: P&L
• Due Date: By the end FY2023

Collect 95% of account receivables within 60 days in 2023.

• Measure: Accounts collected within 60 days
• Target: 95% in 2023
• Data Source: Finance
• Due Date: End of 2023

Examples of Customer Service KPIs

• Number of customers retained/customer retention
• Customer service response time
• Percentage of market share
• Net promotor score

Customer KPIs in a SMART Framework for Annual Goals

90% of current customer monthly subscriptions during FY2023.

• Measure: Number of customers retained
• Target: Retain 90% percent of monthly subscription customers in FY2023
• Data Source: CRM software
• *Owner: Director of Client Operations

Increase market share by 5% by the end of 2023.

• Measure: Percentage of market share
• Target: Increase market share from 25%-30% by the end of 2023
• Data Source: Market research reports
• Reporting Frequency: Quarterly
• *Owner: Head of Marketing

Increase NPS score by 9 points in 2023.

• Measure: Net Promoter Score
• Target: Achieve a 9-point NPS increase over FY2023
• Data Source: Customer surveys
• *Owner: COO

Achieve a weekly ticket close rate of 85% by the end of FY2023.

• Measure: Average ticket/support resolution time
• Target: Achieve a weekly ticket close rate of 85%
• Data Source: Customer support data
• *Owner: Customer Support Team

Examples of KPIs for Operations

• Order fulfillment time
• Time to market
• Employee satisfaction rating
• Employee churn rate
• Inventory turnover
• Total number of units produced or on-hand
• Resource utilization

Operational KPIs as SMART Annual Goals

Average 3 days maximum order fill time by the end of Q3 2023.

• Measure: Order fulfilment time
• Target: Average maximum of 3 days
• Data Source: Order management software
• *Owner: Shipping Manager

Achieve an average SaaS project time-to-market of 4 weeks per feature in 2023.

• Measure: Average time to market
• Target: 4 weeks per feature
• Data Source: Product development and launch data
• *Owner: Product Development Team

Earn a minimum score of 80% employee satisfaction survey over the next year.

• Measure: Employee satisfaction rating
• Target: Earn a minimum score of 80% employee
• Data Source: Employee satisfaction survey and feedback

Maintain a maximum of 10% employee churn rate over the next year.

• Measure: Employee churn rate
• Target: Maintain a maximum of 10% employee churn rate over the next year
• Data Source: Human resources and payroll data
• *Owner: Human Resources

Achieve a minimum ratio of 5-6 inventory turnover in 2023.

• Measure: Inventory turnover ratio
• Target: Minimum ratio of 5-6
• Data Source: Inventory management software
• *Owner: perations Department

Marketing KPIs

• Monthly website traffic
• Number of marketing qualified leads
• Conversion rate for call-to-action content
• Keywords in top 10 search engine results/organic search
• Blog articles published this month
• E-Books published this month
• Marketing campaign performance
• Customer acquisition cost
• Landing page conversion rate

Marketing KPIs as SMART Annual Goals

Achieve a minimum of 10% increase in monthly website traffic over the next year.

• Measure: Monthly website traffic
• Target: 10% increase in monthly website
• Data Source: Google analytics
• *Owner: Marketing Manager

Generate a minimum of 200 qualified leads per month in 2023.

• Measure: Number of marketing qualified leads
• Target: 200 qualified leads per month
• Data Source: Hubspot

Achieve a minimum of 10% conversion rate for on-page CTAs by end of Q3 2023.

• Measure: Conversion rate on service pages
• Target: 10%
• Due Date: End of Q3, 2023

Achieve a minimum of 20 high-intent keywords in the top 10 search engine results over the next year.

• Measure: Keywords in top 10 search engine results
• Target: 20 keywords
• Data Source: SEM Rush data
• *Owner: SEO Manager

Publish a minimum of 4 blog articles per month to earn new leads in 2023.

• Measure: Blog articles
• Target: 4 per month
• Data Source: CMS
• *Owner: Content Marketing Manager
• Due Date: December 2023

Publish at least 2 e-books per quarter in 2023 to create new marketing-qualified leads.

• Measure: E-Books published
• Target: 2 per quarter
• Data Source: Content management system

Bonus: +40 Extra KPI Examples

Supply chain example key performance indicators.

• Number of on-time deliveries
• Inventory carry rate
• Months of supply on hand
• Inventory-to-sales Ratio (ISR)
• Carrying cost of inventory
• Inventory turnover rate
• Perfect order rate
• Inventory accuracy

Healthcare Example Key Performance Indicators

• Bed or room turnover
• Average patient wait time
• Average treatment charge
• Average insurance claim cost
• Medical error rate
• Patient-to-staff ratio
• Medication errors
• Average emergency room wait times
• Average insurance processing time
• Billing code error rates
• Average hospital stay
• Patient satisfaction rate

Human Resource Example Key Performance Indicators

• Organization headcount
• Average number of job vacancies
• Applications received per job vacancy
• Job offer acceptance rate
• Cost per new hire
• Average salary
• Average employee satisfaction
• Employee turnover rate
• New hire training Effectiveness
• Employee engagement score

Social Media Example Key Performance Indicators

• Average engagement
• % Growth in following
• Traffic conversions
• Social interactions
• Website traffic from social media
• Number of post shares
• Social visitor conversion rates
• Issues resolved using social channel
• Social media engagement

Conclusion: Keeping a Pulse on Your Plan

With the foundational knowledge of the KPI anatomy and a few example starting points, it’s important you build out these metrics with detailed and specific data sources so you can truly evaluate if you’re achieving your goals. Remember, these will be the 5-7 core metrics you’ll live by for the next 12 months, so it’s crucial to develop effective KPIs that follow the SMART formula. They should support your business strategy, measure the performance of your strategic objectives, and help you make better decisions.

A combination of leading and lagging KPIs will paint a clear picture of your organization’s strategic performance and empower you to make agile decisions to impact your team’s success.

Need a Dedicated App to Track Your Strategic Plan with KPI Dashboards? We’ve got you covered.

The StrategyHub by OnStrategy is a purpose built tool to help you build and manage a strategic plan with KPIs. Run your strategy reviews with zero prep – get access to our full suite of KPI reports, dynamic dashboards for data visualization, access to your historical data, and reporting tools to stay connected to the performance of your plan. Get 14-day free access today!

Our Other KPI Resources

We have several other great resources to consider as you build your organization’s Key Performance Indicators! Check out these other helpful posts and guides:

• OKRs vs. KPIs: A Downloadable Guide to Explain the Difference
• How to Identify KPIs in 4 Steps
• KPIs vs Metrics: Tips and Tricks to Performance Measures
• Guide to Establishing Weekly Health Metrics

FAQs on Key Performance Indicators

KPI stands for Key Performance Indicators. KPIs are the elements of your organization’s business or strategic plan that express what outcomes you are seeking and how you will measure their success. They express what you need to achieve by when. KPIs are always quantifiable, outcome-based statements to measure if you’re on track to meet your goals and objectives.

The 4 elements of key performance indicators are:

• A Measure – The best KPIs have more expressive measures.
• A Target – Every KPI needs to have a target that matches your measure and the time period of your goal.
• A Data Source – Every KPI needs to have a clearly defined data source.
• Reporting Frequency – A defined reporting frequency.

No, KPIs (Key Performance Indicators) are different from metrics. Metrics are quantitative measurements used to track and analyze various aspects of business performance, while KPIs are specific metrics chosen as indicators of success in achieving strategic goals.

16 Comments

HI Erica hope your are doing well, Sometime Strategy doesn’t cover all the activities through the company, like maintenance for example may be quality control …. sure they have a contribution in the overall goals achievement but there is no specific new requirement for them unless doing their job, do u think its better to develop a specific KPIs for these department? waiting your recommendation

Thanks for your strategic KPIs

Hello Erica, Could you please clarify how to set KPIs for the Strategic Planning team?

Hi Diana, check out the whitepaper above for more insight!

Hello Erica, Could you please clarify, how to set the KPIs for the Strategic PLanning team?

exampels of empowerment kpis

I found great information in this article. In any case, the characteristics that KPIs must have are: measurability, effectiveness, relevance, utility and feasibility

How to write methodology guidelines for strategy implementation / a company’s review and tracking (process and workflow) for all a company’s divisions

support on strategizing Learning & Development for Automobile dealership

Could you please to clarify how to write the KPIs for the Secretary.

Check out our guide to creating KPIs for more help here: https://onstrategyhq.com/kpi-guide-download/

That’s an amazing article.

Could you please to clarify how to write the KPIs for the office boy supervisor

Could you please clarify how to write KPIs for the editorial assistant in a start up publishing company.

Kindly advice how I would set a kpi for a mattress factory

Comments Cancel

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How to Measure Your Business Performance

• 14 Nov 2023

Measuring your business’s performance is essential to its long-term success. By assessing its operations, you can make informed decisions, find ways to improve, and establish accountability in the workplace .

Despite these benefits, many businesses struggle to use the vast amounts of data they have access to. According to a report by data storage company Seagate , businesses act on just 32 percent of the data available to them—with the remaining 68 percent going unleveraged.

If you want to help your organization achieve its strategic objectives, here’s why it’s vital to measure business performance and how to do it.

Access your free e-book today.

Why Measure Your Business Performance?

Measuring business performance is critical to ensuring effective strategy formulation and implementation . It can also help identify obstacles and setbacks that impact your company’s success—similar to risk management .

According to the online course Strategy Execution , performance measurement comprises the formal, information-based routines and procedures managers use to maintain or alter patterns in organizational activities.

Engaging in performance measurement helps you and organizational leaders , investors, and employees understand how your roles and responsibilities relate to your business’s strategy—creating a culture of accountability and commitment to achieving its goals and objectives .

How to Measure Business Performance

Long-term business success doesn’t just result from effective strategy execution; it also relies on a holistic approach to monitoring, measuring, and evaluating performance. This involves creating objective and subjective measures—often called key performance indicators (KPIs) .

While objective measures—like revenue and profit margin—are crucial to assessing performance, subjective measures are often overlooked.

“If a measure is objective, you can independently verify it,” says Harvard Business School Professor Robert Simons, who teaches Strategy Execution . “You and I could look at the same set of data and draw the same conclusion. A subjective measure, by contrast, requires judgment.”

For example, measuring employee engagement can help gauge the amount of internal support for your business strategy. High employee engagement can also greatly impact your company’s bottom line—increasing profitability by up to 23 percent .

“These measures work well only when there's a high degree of trust between employees and managers,” Simons says in Strategy Execution . “Employees must feel confident that subjective measures are applied fairly.”

Using diagnostic control systems —information systems managers use to monitor organizational outcomes and correct negative performance—you can ensure consistency and standardization when measuring success.

Examples of diagnostic control systems include:

• Performance scorecards
• Project monitoring systems
• Human resources systems
• Standard cost-accounting systems

Before implementing such systems and measuring your business performance, here are three factors to consider.

3 Considerations When Measuring Business Performance

1. financial goals.

Measuring business performance starts with financial goals. This is largely because your company’s financial value is its first indicator of success or failure. Financial goals also help ensure your diagnostic control systems effectively monitor profitability and provide insight into how to fix problems.

To set financial goals, you can use a profit plan —a summary of a specific accounting period’s anticipated revenue inflows and expense outflows—presented in the form of an income statement . Profit plans serve several purposes; their most important is creating control systems that place responsibility on management.

“Individual managers can be held accountable for achieving specific revenue and expense targets and the overall profitability of the business,” Simons says in Strategy Execution .

To confirm that your profit plan holds you and others accountable for your organization’s financial health , Simons suggests asking the following:

• Does the business create enough profit to cover costs and reinvest in future endeavors?
• Does the business generate enough cash to remain solvent through the year?
• Does the business create sufficient financial returns for investors?

“Once managers have completed the profit planning process,” Simons says, “people throughout the organization will be in agreement about the direction of the business and the assumptions that underpin the forecasts.”

Related: 7 Financial Forecasting Methods to Predict Business Performance

2. Non-Financial Goals

While financial metrics are critical to assessing short-term profitability, non-financial goals can impact your business’s long-term success.

Objectives like improving customer satisfaction, boosting employee engagement, and enhancing ethical practices can all drive business performance—even financially.

“An organization that's focused just on financial goals will rarely achieve those goals for a long period of time,” says Tom Polen, CEO and president of medical technology company Becton Dickinson, in Strategy Execution . “It's all the other goals that are going to feed into the financial goals.”

In the course, Polen says he consistently communicates his organization’s strategic objectives to employees and uses an incentivization system to reward those working to support non-financial goals.

“As a health care provider, the most important thing—bar none—is quality,” Polen says. “While we’re focused on financial goals, our quality goals—which cut across manufacturing, regulatory, marketing, and medical—contribute to making sure that we have quality products at the end of the day. And we’ll never sacrifice a quality goal for a financial goal.”

3. Intangible Assets

Your goals aren’t the only thing you can use to measure your company’s performance. Intangible assets—non-physical assets your business significantly values—can also help.

Examples of intangible assets include:

• Research capabilities
• Brand loyalty
• Customer relationships

“These are among the most valuable assets in many of today's businesses,” Simons says in Strategy Execution . “But you won't find them anywhere on an income statement or balance sheet .”

Since you can’t monitor these assets using traditional accounting systems, you can instead use a balanced scorecard —a tool designed to help track and measure non-financial variables.

“The balanced scorecard combines the traditional financial perspective with additional perspectives that focus on customers, internal business processes, and learning and development,” Simons says in Strategy Execution . “These additional perspectives help businesses measure all the activities essential to creating value.”

For example, if your business strategy focuses on improving an intangible asset, like brand loyalty, you can use a balanced scorecard to track customer satisfaction through surveys and reviews.

In this way, the balanced scorecard offers a comprehensive view of business performance, helping you make informed decisions to protect and enhance intangible assets’ value.

Start Measuring Your Business Performance

Measuring business performance doesn’t have to be difficult. By implementing the appropriate metrics and control systems, you can seamlessly track strategic initiatives’ progress.

By enrolling in an online course, such as Strategy Execution , you can be immersed in a dynamic learning experience featuring real-world examples of businesses that have employed performance measurement strategies to secure long-term success.

Do you need help measuring your business performance? Explore Strategy Execution —one of our online strategy courses —and download our e-book to discover how to think like a top strategist.

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KPIs: What Are Key Performance Indicators? Types and Examples

What Are Key Performance Indicators (KPIs)?

Key performance indicators (KPIs) are quantifiable measurements used to gauge a company’s overall long-term performance. KPIs specifically help determine a company’s strategic, financial, and operational achievements, especially compared to those of other businesses within the same sector.

Key Takeaways

• Key performance indicators (KPIs) measure a company’s success vs. a set of targets, objectives, or industry peers.
• KPIs can be financial, including net profit (or the bottom line, net income), revenues minus certain expenses, or the current ratio (liquidity and cash availability).
• Customer-focused KPIs generally center on per-customer efficiency, customer satisfaction, and customer retention.
• Process-focused KPIs aim to measure and monitor operational performance across the organization.
• Businesses generally measure and track KPIs through analytics software and reporting tools.

Jiaqi Zhou / Investopedia

Understanding Key Performance Indicators (KPIs)

Also referred to as key success indicators (KSIs), KPIs vary between companies and between industries, depending on performance criteria. For example, a software company striving to attain the fastest growth in its industry may consider year-over-year (YOY) revenue growth as its chief performance indicator. Conversely, a retail chain might place more value on same-store sales as the best KPI metric for gauging growth.

At the heart of KPIs lie data collection, storage, cleaning, and synthesizing. The information may be financial or nonfinancial and may relate to any department across the company. The goal of KPIs is to communicate results succinctly to allow management to make more informed strategic decisions.

Key performance indicators (KPIs) gauge a company’s output against a set of targets, objectives, or industry peers.

Categories of KPIs

Most KPIs fall into four different categories, with each category having its own characteristics, time frame, and users.

• Strategic KPIs are usually the most high-level. These types of KPIs may indicate how a company is doing, although it doesn’t provide much information beyond a very high-level snapshot. Executives are most likely to use strategic KPIs, and examples of strategic KPIs include return on investment , profit margin , and total company revenue .
• Operational KPIs are focused on a much tighter time frame. These KPIs measure how a company is doing month over month (or even day over day) by analyzing different processes, segments, or geographical locations. These operational KPIs are often used by managing staff and to analyze questions that are derived from analyzing strategic KPIs. For example, if an executive notices that company-wide revenue has decreased, they may investigate which product lines are struggling.
• Functional KPIs hone in on specific departments or functions within a company. For example, the finance department may keep track of how many new vendors they register within their accounting information system each month, while the marketing department measures how many clicks each email distribution receives. These types of KPIs may be strategic or operational but provide the greatest value to one specific set of users.
• Leading/lagging KPIs describe the nature of the data being analyzed and whether it is signaling something to come or something that has already occurred. Consider two different KPIs: the number of overtime hours worked and the profit margin for a flagship product. The number of overtime hours worked may be a leading KPI should the company begin to notice poorer manufacturing quality. Alternatively, profit margins are a result of operations and are considered a lagging indicator.

Types of KPIs

Financial metrics and kpis.

Key performance indicators tied to the financials typically focus on revenue and profit margins. Net profit, the most tried and true of profit-based measurements, represents the amount of revenue that remains, as profit for a given period, after accounting for all of the company’s expenses, taxes, and interest payments for the same period.

Financial metrics may be drawn from a company’s financial statements. However, internal management may find it more useful to analyze different numbers that are more specific to analyzing the problems or aspects of the company that management wants to analyze. For example, a company may leverage variable costing to recalculate certain account balances for internal analysis only.

Examples of financial KPIs include:

• Liquidity ratios (i.e., current ratios , which divide current assets by current liabilities): These types of KPIs measure how well a company will manage short-term debt obligations based on the short-term assets it has on hand.
• Profitability ratios (i.e., net profit margin): These types of KPIs measure how well a company is performing in generating sales while keeping expenses low.
• Solvency ratios (i.e., total debt-to-total-assets ratio ): These types of KPIs measure the long-term financial health of a company by evaluating how well a company will be able to pay long-term debt.
• Turnover ratios (i.e., inventory turnover): These types of KPIs measure how quickly a company can perform a certain task. For example, inventory turnover measures how quickly a company can convert an item from inventory to a sale. Companies strive to increase turnover to generate faster churn of spending cash to later recover that cash through revenue.

Customer Experience Metrics and KPI

Customer -focused KPIs generally center on per-customer efficiency, customer satisfaction, and customer retention. These metrics are used by customer service teams to better understand the service that customers have been receiving.

Examples of customer-centric metrics include:

• Number of new ticket requests : This KPI counts customer service requests and measures how many new and open issues customers are having.
• Number of resolved tickets : This KPI counts the number of requests that have been successfully taken care of . By comparing the number of requests to the number of resolutions, a company can assess its success rate in getting through customer requests.
• Average resolution time : This KPI is the average amount of time needed to help a customer with an issue. Companies may choose to segment average resolution time across different requests (i.e., technical issue requests vs. new account requests).
• Average response time : This KPI is the average amount of time needed for a customer service agent to first connect with a customer after the customer has submitted a request. Though the initial agent may not have the knowledge or expertise to provide a solution, a company may value decreasing the time that a customer is waiting for any help.
• Top customer service agent : This KPI is a combination of any metric above cross-referenced by customer service representatives. For example, in addition to analyzing company-wide average response time, a company can determine the three fastest and slowest responders.
• Type of request : This KPI is a count of the different types of requests. This KPI can help a company better understand the problems a customer may have (i.e., the company’s website gave incorrect or inaccurate directions) that need to be resolved by the company.
• Customer satisfaction rating : This KPI is a vague measurement, though companies may perform surveys or post-interaction questionnaires to gather additional information on the customer’s experience.

KPIs are usually not externally required; they are simply internal measurements used by management to evaluate a company’s performance.

Process Performance Metrics and KPI

Process metrics aim to measure and monitor operational performance across the organization. These KPIs analyze how tasks are performed and whether there are process, quality, or performance issues. These types of metrics are most useful for companies with repetitive processes, such as manufacturing firms or companies in cyclical industries.

Examples of process performance metrics include:

• Production efficiency : This KPI is often measured as the production time for each stage divided by the total processing time. A company may strive to spend only 2% of its time soliciting raw materials; if it discovers it takes 5% of the total process, then the company may strive for solicitation improvements.
• Total cycle time : This KPI is the total amount of time needed to complete a process from start to finish. This may be converted to average cycle time if management wishes to analyze a process over a period of time.
• Throughput : This KPI is the number of units produced divided by the production time per unit, measuring how fast the manufacturing process is.
• Error rate : This KPI is the total number of errors divided by the total number of units produced. A company striving to reduce waste can better understand the number of items that are failing quality control testing.
• Quality rate : This KPI focuses on the positive items produced instead of the negative. By dividing the successful units completed by the total number of units produced, this percentage informs management of its success rate in meeting quality standards.

Marketing KPIs

Marketing KPIs attempt to gain a better understanding of how effective marketing and promotional campaigns have been. These metrics often measure conversation rates on how often prospective customers perform certain actions in response to a given marketing medium. Examples of marketing KPIs include:

• Website traffic : This KPI tracks the number of people who visit certain pages of a company’s website. Management can use this KPI to better understand whether online traffic is being pushed down potential sales channels and if customers are not being funneled appropriately.
• Social media traffic : This KPI tracks the views, follows, likes, retweets, shares, engagement, and other measurable interactions between customers and the company’s social media profiles.
• Conversion rate on call-to-action content : This KPI centers around focused promotional programs that ask customers to perform certain actions. For example, a specific campaign may encourage customers to act before a certain sale date ends. A company can divide the number of successful engagements by the total number of content distributions to understand what percent of customers answered the call to action.
• Blog articles published per month : This KPI simply counts the number of blog posts a company publishes in a given month.
• Click-through rates : This KPI measures the number of specific clicks that are performed on email distributions. For example, certain programs may track how many customers opened an email distribution, clicked on a link, and followed through with a sale.

A company may desire operational excellence; in this case, it may want to track how its internal technology (IT) department is operating. These KPIs may encourage a better understanding of employee satisfaction or whether the IT department is being adequately staffed. Examples of IT KPIs include:

• Total system downtime : This KPI measures the amount of time that various systems must be taken offline for system updates or repairs. While systems are down, customers may be unable to place orders or employees may be unable to perform certain duties (i.e., when the accounting information system is down).
• Number of tickets/resolutions : This KPI is similar to customer service KPIs. However, these tickets and resolutions relate to internal staff requests such as hardware or software needs, network problems, or other internal technology problems.
• Number of developed features : This KPI measures internal product development by quantifying the number of product changes.
• Count of critical bugs : This KPI counts the number of critical problems within systems or programs. A company will need to have its own internal standards for what constitutes a minor vs. major bug.
• Back-up frequency : This KPI counts how often critical data is duplicated and stored in a safe location. In accordance with record retention requirements, management may set different targets for different bits of information.

The ultimate goal of a company is to generate revenue through sales. Though revenue is often measured through financial KPIs, sales KPIs take a more granular approach by leveraging nonfinancial data to better understand the sales process. Examples of sales KPIs include:

• Customer lifetime value (CLV) : This KPI represents the total amount of money that a customer is expected to spend on your products over the entire business relationship.
• Customer acquisition cost (CAC) : This KPI represents the total sales and marketing cost required to land a new customer. By comparing CAC to CLV, businesses can measure the effectiveness of their customer acquisition efforts.
• Average dollar value for new contracts : This KPI measures the average size of new agreements. A company may have a desired threshold for landing larger or smaller customers.
• Average conversion time : This KPI measures the amount of time from first contacting a prospective client to securing a signed contract to perform business.
• Number of engaged leads : This KPI counts how many potential leads have been contacted or met with. This metric can be further divided into mediums such as visits, emails, phone calls, or other contacts with customers.

Management may tie bonuses to KPIs. For salespeople, their commission rate may depend on whether they meet expected conversion rates or engage in an appropriate number of leads.

Human Resource and Staffing KPIs

Companies may also find it beneficial to analyze KPIs specific to their employees. Ranging from turnover to retention to satisfaction, a company may have a wealth of information already available about its staff. Examples of human resource or staffing KPIs include:

• Absenteeism rate : This KPI is a count of how many dates per year or specific period employees are calling in sick or missing shifts. This KPI may be a leading indicator for disengaged or unhappy employees.
• Number of overtime hours worked : This KPI tracks the number of overtime hours worked to gauge whether employees are potentially facing burnout or if staffing levels are appropriate.
• Employee satisfaction : This KPI often requires a company-wide survey to gauge how employees are feeling about various aspects of the company. To get the best value from this KPI, companies should consider hosting the same survey every year to track changes from one year to the next regarding the exact same questions.
• Employee turnover rate : This KPI measures how often and quickly employees are leaving their positions. Companies can further break down this KPI across departments or teams to determine why some positions may be leaving faster than others.
• Number of applicants : This KPI keeps count of how many applications are submitted to open job positions. This KPI helps assess whether job listings are adequately reaching a wide enough audience to capture interest and lure strong candidates.

Examples of KPIs

Let’s take a look at electric vehicle maker Tesla ( TSLA ) for a few examples of KPIs in real life. These numbers are from its fourth quarter (Q4) 2021 earnings release.

Vehicle Production

During the quarter, Tesla produced a record 305,840 vehicles and delivered 308,650 vehicles. Production is a big deal for the company because it has consistently been criticized for being bad at ramping up. Increased manufacturing scale means more market share and profits for Tesla.

Automotive Gross Margin

For the quarter, Tesla’s automotive gross margin expanded to 30.6%. Gross margin is one of the best measures of profitability for Tesla because it isolates its vehicle production costs. Tesla managed to expand its gross margin in Q4 even as sales of lower-priced models outpaced its higher-margin models.

Free Cash Flow

Tesla’s free cash flow clocked in at $2.8 billion during the quarter. That represented a vast improvement from the $1.9 billion free cash flow in the prior year. Tesla’s level of free cash flow production suggested that the company was reaching a scale of profitability without the help of regulatory credits.

Companies can use KPIs across three broad levels:

First, company-wide KPIs focus on the overall business health and performance. These types of KPIs are useful for informing management of how things are going. However, they are often not granular enough to make decisions. Company-wide KPIs often kick off conversations on why certain departments are performing well or poorly.

At this point, companies often begin digging into department-level KPIs. These are more specific than company-wide KPIs. Department-level KPIs are often more informative as to why specific outcomes are occurring. Many of the examples mentioned above are department-level KPIs, as they focus on a very niche aspect of a company.

If a company chooses to dig even deeper, it may engage with project-level or subdepartment-level KPIs. These KPIs are often specifically requested by management as they may require very specific data sets that may not be readily available. For example, management may want to ask very specific questions to a control group about a potential product rollout .

When preparing KPI reports, start by showing the highest level of data (i.e., company-wide revenue). Next, be prepared to show lower levels of data (i.e., revenue by department, then revenue by department and product).

With companies seemingly collecting more data every day, it can become overwhelming to sort through the information and determine what KPIs are most useful and impactful for decision-making. When beginning the process of pulling together KPI dashboards or reports, consider the following steps:

• Discuss goals and intentions with business partners . KPIs are only as useful as the users make them. Before pulling together any KPI reports, understand what you or your business partner are attempting to achieve.
• Draft SMART KPI requirements . KPIs should have restrictions and be tied to SMART (specific, measurable, attainable, realistic, and time-bound) metrics. Vague, hard-to-ascertain, and unrealistic KPIs serve little to no value. Instead, focus on what information you have that is available and meeting the SMART acronym requirements.
• Be adaptable . As you pull together KPI reports, be prepared for new business problems to appear and for further attention to be given to other areas. As business and customer needs change, KPIs should also adapt with certain numbers, metrics, and goals changing in line with operational evolutions.
• Avoid overwhelming users . It may be tempting to overload report users with as many KPIs as you can fit on a report. At a certain point, KPIs start to become difficult to comprehend, and it may become more difficult to determine which metrics are important to focus on.

Advantages of KPIs

A company may wish to analyze KPIs for several reasons. KPIs help inform management of specific problems; the data-driven approach provides quantifiable information useful in strategic planning and ensuring operational excellence.

KPIs help hold employees accountable. Instead of relying on feelings or emotions, KPIs are statistically supported and cannot discriminate across employees. When used appropriately, KPIs may help encourage employees as they realize their numbers are being closely monitored.

KPIs are also the bridge that connects actual business operations and goals. A company may set targets, but without the ability to track progress toward those goals, there is little to no purpose in those plans. Instead, KPIs allow companies to set objectives, and then monitor progress toward those objectives.

Limitations of KPIs

There are some downsides to consider when working with KPIs. There may be a long time frame required for KPIs to provide meaningful data. For example, a company may need to collect annual data from employees for years to better understand trends in satisfaction rates over long periods of time.

KPIs require constant monitoring and close follow-up to be useful. A KPI report that is prepared but never analyzed serves no purpose. In addition, KPIs that are not continuously monitored for accuracy and reasonableness do not encourage beneficial decision making.

KPIs open up the possibility for managers to “game” KPIs. Instead of focusing on actually improving processes or results, managers may feel incentivized to focus on improving KPIs tied to performance bonuses . In addition, quality may decrease if managers are hyper-focused on productivity KPIs, and employees may feel pushed too hard to meet specific KPI measurements that may simply not be reasonable.

Informs management of how a company is performing in countless ways

Helps hold employees accountable for their actions (or lack of)

Can motivate employees who feel positively challenged to meet targets

Allows a company to set goals and measure progress toward those objectives

Results in potential time commitment to consistently gather data over long periods of time

Requires ongoing monitoring for accuracy and reasonableness in data

May encourage managers to focus on KPIs instead of broader strategies

May discourage employees if KPI targets are unreasonable

What Does KPI Mean?

KPI is an abbreviation for key performance indicator: data that has been collected, analyzed, and summarized to help decision-making. KPIs may be a single calculation or value that summarizes a period of activity, such as “450 sales in October.” By themselves, KPIs do not add any value to a company. However, a company can use this information to make more informed decisions about business operations and strategies.

What Is an example of a KPI?

One of the most basic examples of a KPI is revenue per client (RPC). For example, if you generate $100,000 in revenue annually and have 100 clients, then your RPC is $1,000. A company can use this KPI to track its RPC over time.

What Are 5 of the Most Common KPIs?

KPIs vary from business to business, and some KPIs are more suitable for certain companies compared to others. In general, five of the most commonly used KPIs are:

• Revenue growth
• Revenue per client
• Profit margin
• Client retention rate
• Customer satisfaction

How Do You Measure KPIs?

It depends on the actual KPI being measured. Generally speaking, businesses measure and track KPIs through business analytics software and reporting tools. This includes everything from the collection of data via reliable sources, the safe storage of information, the cleaning of data to standardize its format for analysis, and the actual number crunching. Finally, KPIs are often reported using visualization or reporting software.

What Makes a KPI Good?

A good KPI provides objective and clear information on progress toward an end goal. It tracks and measures factors such as efficiency, quality, timeliness, and performance while providing a way to measure performance over time. The ultimate goal of a KPI is to help management make more informed decisions.

KPIs offer an effective way to measure and track a company’s performance on a variety of different metrics. By understanding exactly what KPIs are and how to implement them properly, managers are better able to optimize the business for long-term success.

Tesla Investor Relations. “ Q4 and FY 2021 Update ,” Page 7.

Tesla Investor Relations. “ Q4 and FY 2021 Update ,” Page 4.

Tesla Investor Relations. “ Q4 and FY 2021 Update ,” Page 5.

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Infographic | 1:50 min read

4 Signs Your Business Plan is a Success

Every small business owner sets out to make sure their operation becomes a success. While your product may be a hot commodity, you can't rely only on good fortune for sustained success.

It is crucial to develop a plan and marketing strategy well ahead of time. These plans will range in a variety of lengths, but the importance remains the same. According to The Houston Chronicle, business plans define your target audience and how you'll market and sell your product or service [1]. You must also clearly define how you will go about achieving your goals. Doing so will attract outside executive help, investors and conveys the organizational structure of your venture.

To ensure your business plan is heading in the right direction, here are four signs to monitor.

No. 1 - You can predict strong revenue months

Your business plan should determine your strong revenue months, while also finding opportunities for repeat business from customers. Likewise, you should always make an effort to ensure your company's current reportings exceed previous ones.

Furthermore, the business plan should account for growth opportunities. Focus on adding new customers by developing a strong marketing plan to attract new customers and keep them coming back.

No. 2 - A regular SWOT

A strengths, weaknesses, opportunities and threats analysis is another important component of any business plan and identifies key aspects of your business:

• Strengths. Characteristics of the company that give it an advantage over others.
• Weaknesses. Traits that place the business at a disadvantage.
• Opportunities. Factors that be used for future growth.
• Threats. Elements that can cause harm to the business.

No. 3 - Three month goal

At the start of every new year, you should create a 30-day sales goal for the first three months to provide you with a defined metric goal, and can help you make decisions to achieve that goal.

Profit and sales and the conversion rate, are two metrics to closely monitor.

No. 4 - Insights are important

Insights, whether positive or negative, will help guide you moving forward and allow you to make smarter business decisions.

Successful insights will help your business increase cash flows, keep profits low and increase marketing efforts.

If your business is faltering, don't get discouraged. Your business plan can always be revised to account for new strategies or to improve on existing ones.

[1] How to Write a Sales Business Plan , Houston Chronicle

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The information provided in these articles is intended for informational purposes only. It is not to be construed as the opinion of Central Bancompany, Inc., and/or its subsidiaries and does not imply endorsement or support of any of the mentioned information, products, services, or providers. All information presented is without any representation, guaranty, or warranty regarding the accuracy, relevance, or completeness of the information.

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What Are KPIs (Key Performance Indicators)? 30 Examples for Finance, HR, Process, etc.

Explore 30 key performance indicators (KPIs) across finance, HR, & more, to optimize your business processes efficiently. Contact us for more information!

If you're leading a team or steering a company, you know it's not always smooth sailing. How do you ensure you're on course toward your goals? That's where Key Performance Indicators (KPIs) come into play. They're not just numbers on a spreadsheet; they're your navigational tools, providing crucial insights into your organization's performance.

Think of KPIs as the compass guiding your ship. Choose the right ones, and you'll stay on course towards your desired destination. But choose poorly, and you might find yourself adrift, measuring things that don't truly matter for your success.

In this guide, we'll demystify KPIs, provide a step-by-step approach to selecting and tracking them, and offer over 30 practical examples to inspire your own KPI strategy.

Before we dive into the specifics of KPIs, let me introduce you to ClearPoint Strategy , the software that can revolutionize your performance management process. ClearPoint is an intuitive strategy planning, management, and execution platform that can transform the way you manage and monitor KPIs. With ClearPoint , you can:

• Streamline Data Management : Collect, analyze, and report on data seamlessly.
• Create Customizable Dashboards : Tailor KPI dashboards to different departments and executive teams for a clear view of performance.
• Foster Collaboration : Share consistent and accurate KPI reports across your organization to improve communication and alignment.

See ClearPoint Strategy in action! Click here to watch our quick 6-minute demo

What are key performance indicators (kpis).

One of the questions we are asked regularly is, "What is a KPI?"

A Key Performance Indicator (KPI) is a critical measure used to track and assess your organization's progress toward achieving its strategic goals.

Let's break it down:

• Indicator: Any raw measurement within your business. Think total hours worked, website visitors, etc.
• Performance Indicator: A measurement tied to your organization's performance, such as production output, customer satisfaction scores, or marketing campaign results.
• Key Performance Indicator (KPI): The cream of the crop. These are the most critical measurements, directly linked to your strategic goals and overall success.

In our experience, the most effective leadership teams track fewer than 25 measures that cut across the organization’s four perspectives : financial, customer, process, and people.

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30 key performance indicators examples by department & industry.

We've broken down our list of KPIs into the four categories of the Balanced Scorecard: Financial, Customer, Process and People. Make sure you select a few from each category so that your strategy is well-balanced across the organization.

Note that the right KPIs for you might not be the right KPIs for another organization. Make sure you’ve researched as many key performance indicators as you can to determine which ones are appropriate for your industry. 

From there, determine which KPI targets will help you further understand and meet your goals, and then integrate them throughout your department. KPIs should match your strategy, not just your industry.

Here's a diverse selection of KPI examples to get you thinking:

Finance KPIs

1. Profit Margins :

• ‍ Gross Profit Margin : Measures the percentage of revenue that exceeds the cost of goods sold. Formula: (Revenue - Cost of Goods Sold) / Revenue. ‍
• Net Profit Margin : Measures overall profitability after all expenses are accounted for. Formula: Net Profit / Revenue.

2. Cost Efficiency :

• ‍ Total Cost Management : Tracks total expenses and identifies areas to reduce and manage costs effectively.

3. Revenue vs. Target :

• ‍ Revenue Target Comparison : Compares actual revenue to projected revenue. Analyzing discrepancies helps assess departmental performance.

4. Cost of Goods Sold (COGS) :

• ‍ Production Cost Analysis : Calculates total production costs to determine product markup and profit margins. Formula: Total Production Costs / Number of Units Sold.

5. Days Sales Outstanding (DSO) :

• ‍ Accounts Receivable Efficiency : Measures the average number of days to collect payment after a sale. Formula: (Accounts Receivable / Total Credit Sales) x Number of Days.

6. Sales by Region :

• ‍ Regional Sales Performance : Analyzes sales performance across different regions to provide feedback and improve underperforming areas.

7. Expenses vs. Budget :

• ‍ Budget Adherence : Compares actual expenses to budgeted amounts to understand deviations and improve future budgeting.

8. Cash Flow from Financing Activities :

• ‍ Financial Strength : Demonstrates cash flow from financing activities. Formula: (Cash Received from Issuing Stock or Debt) - (Cash Paid as Dividends and Debt Reacquisition).

9. Average Annual Expenses to Serve One Customer :

• ‍ Customer Service Cost : Calculates the average annual cost to serve one customer. Formula: Total Expenses / Total Customers.

10. EBITDA :

• ‍ Operational Profitability : Measures earnings before interest, taxes, depreciation, and amortization. Formula: Revenue - Expenses (Excluding Interest, Tax, Depreciation & Amortization).

11. Customer Lifetime Value (CLV) / Customer Acquisition Cost (CAC) : ‍

• ‍ Profitability Ratio : Assesses the ratio of customer lifetime value to acquisition cost. Formula: Net Expected Lifetime Profit from Customer / Cost to Acquire Customer.

Claim your FREE eBook on 68 effective financial KPIs you should use for better strategic insights

Customer kpis.

12. Customer Lifetime Value (CLV) :

• ‍ Long-term Customer Value : Evaluates the value derived from long-term customer relationships.

13. Customer Acquisition Cost (CAC) :

• Cost Efficiency of Acquiring Customers : Calculates the cost of acquiring new customers. Formula: Total Acquisition Costs / Number of New Customers.

14. Customer Satisfaction & Retention :

• Customer Happiness and Loyalty : Measures customer satisfaction and retention rates using surveys and repeat purchase percentages.

15. Net Promoter Score (NPS) :

• Customer Loyalty Indicator : Assesses the likelihood of customers recommending the organization. Conduct quarterly surveys to track changes.

16. Number of Customers :

• Customer Base Analysis : Tracks the number of customers gained and lost to understand customer needs better.

17. Customer Churn Rate :

• Customer Retention : Measures the percentage of customers lost over a specific period. Formula: Number of Customers Lost / Number of Customers at the Start of the Period.

18. Contact Volume by Channel :

• Customer Support Preferences : Monitors the number of support requests by phone and email to understand customer preferences.

19. Percentage of Satisfied Customers :

• Customer Satisfaction : Measures the percentage of customers who are very or extremely satisfied. Formula: (Number of Very/Extremely Satisfied Customers / Total Survey Respondents) x 100.

20. New vs. Repeat Site Visits :

• Website Traffic Insights : Differentiates between new and repeat visitors to generate insights. Formula: (Website Visits by New Visitors / Total Website Visits) x 100.

Claim your FREE eBook on 53 important customer KPIs for enhanced customer satisfaction

Process KPIs

21. Customer Support Tickets :some text

• ‍ Support Efficiency : Tracks the number of new tickets, resolved tickets, and resolution times.

22. Percentage of Product Defects :some text

• ‍ Product Quality : Measures the percentage of defective products. Formula: (Number of Defective Units / Total Units Produced) x 100.

23. Efficiency Measure :some text

• ‍ Operational Efficiency : Analyzes efficiency based on industry-specific metrics, such as units produced per hour in manufacturing.

Human Resources KPIs

24. Employee Turnover Rate (ETR) :

• Employee Retention : Measures the rate at which employees leave the company. Formula: (Number of Departing Employees / Average Number of Employees) x 100.

25. Response to Open Positions :

• Recruitment Effectiveness : Measures the percentage of qualified applicants for open positions.

26. Employee Satisfaction :

• Workplace Happiness : Assesses employee satisfaction through surveys and other metrics.

27. Retirement Rate :

• Strategic Workforce Planning : Calculates the percentage of employees retiring. Formula: (Number of Retirees / Total Headcount) x 100.

28. Knowledge Achieved with Training :

• Training Effectiveness : Evaluates training effectiveness through exam pass rates and average scores.

29. Internal Promotions vs. External Hires :

• Succession Planning : Measures the ratio of internal promotions to external hires.

30. Salary Competitiveness Ratio (SCR) :

• Compensation Competitiveness : Compares company salary averages to industry standards. Formula: Company Average Salary / Competitor Average Salary.

Claim your FREE 48 Human Capital KPI library for effective HR strategy

Industry-specific key performance indicators examples, local governments.

Public Safety KPIs :

• Crime Rate : Measures the number of crimes reported per 1,000 or 100,000 residents.
• Emergency Response Time : Average time taken for emergency services (police, fire, ambulance) to respond to incidents.
• Fire Incident Rate : Number of fire incidents per 1,000 or 100,000 residents.
• Traffic Accident Rate : Number of traffic accidents per 1,000 or 100,000 residents.

Financial KPIs :

• Budget Variance : Difference between the budgeted amount and the actual amount spent.
• Revenue Collection Rate : Percentage of revenue collected compared to the amount billed.
• Debt Ratio : Ratio of total debt to total revenue.
• Grant Funding Utilization : Percentage of available grant funds that have been utilized.

Public Health KPIs :

• Immunization Rates : Percentage of the population that is immunized against specific diseases.
• Hospital Readmission Rates : Percentage of patients readmitted to hospitals within a certain period.
• Air Quality Index : Measurement of air pollution levels.
• Access to Healthcare : Percentage of the population with access to healthcare services.

Infrastructure and Public Works KPIs :

• Road Condition Index : Percentage of roads in good, fair, or poor condition.
• Water Quality Compliance : Percentage of water samples meeting safety standards.
• Waste Management Efficiency : Amount of waste recycled or properly disposed of as a percentage of total waste collected.
• Infrastructure Project Completion Rate : Percentage of infrastructure projects completed on time and within budget.

Community and Social Services KPIs :

• Affordable Housing Availability : Number of affordable housing units available compared to the demand.
• Unemployment Rate : Percentage of the labor force that is unemployed.
• Social Service Program Participation : Number of residents participating in social service programs.
• Library Usage : Number of library visits or number of items borrowed.

Environmental Sustainability KPIs :

• Energy Consumption : Total energy consumption by government facilities.
• Green Space Availability : Percentage of land designated as parks or green spaces.
• Renewable Energy Usage : Percentage of energy used that comes from renewable sources.
• Carbon Footprint : Total greenhouse gas emissions produced by government operations.

Education KPIs :

• Graduation Rates : Percentage of students who graduate from high school.
• Student-Teacher Ratio : Average number of students per teacher.
• Literacy Rates : Percentage of the population that is literate.
• School Attendance Rates : Percentage of students attending school regularly.

Download your FREE eBook on 142 important KPIs for local governments here

Healthcare industry.

Clinical Performance KPIs :

• Patient Mortality Rate : Percentage of patients who die during their hospital stay or within a certain period after discharge.
• Hospital Readmission Rate : Percentage of patients readmitted to the hospital within 30 days of discharge.
• Infection Rates : Incidence of hospital-acquired infections (HAIs) such as MRSA or C. difficile.
• Surgical Complication Rate : Percentage of patients experiencing complications following surgical procedures.

Patient Experience KPIs :

• Patient Satisfaction Score : Average score from patient satisfaction surveys, often measured using tools like HCAHPS (Hospital Consumer Assessment of Healthcare Providers and Systems).
• Average Length of Stay (ALOS) : Average number of days a patient stays in the hospital.
• Patient Wait Times : Average time patients spend waiting to see a healthcare provider.
• Discharge Against Medical Advice (AMA) Rate : Percentage of patients who leave the hospital against medical advice.

Operational Efficiency KPIs :

• Bed Occupancy Rate : Percentage of hospital beds occupied at a given time.
• Staff-to-Patient Ratio : Number of healthcare staff members per patient.
• Average Treatment Cost : Average cost incurred for treating patients.
• Emergency Department (ED) Throughput : Average time from patient arrival to departure in the emergency department.

Financial Performance KPIs :

• Revenue Cycle Metrics : Measures such as days in accounts receivable (A/R), net collection rate, and claim denial rate.
• Operating Margin : Ratio of operating income to total revenue.
• Cost per Patient : Average cost incurred per patient visit or treatment.
• Charity Care and Bad Debt : Amount of care provided for which payment is not expected.

Quality of Care KPIs :

• Medication Error Rate : Number of medication errors per 1,000 patient days.
• Treatment Adherence Rate : Percentage of patients following prescribed treatment plans.
• Preventive Care Measures : Rates of preventive measures such as vaccinations and screenings.
• Care Plan Compliance : Percentage of patients with completed and adhered-to care plans.

Human Resources KPIs :

• Staff Turnover Rate : Percentage of staff leaving the organization within a specific period.
• Staff Training and Development : Number of training hours per employee.
• Employee Satisfaction Score : Average score from employee satisfaction surveys.
• Overtime Hours : Total overtime hours worked by staff members.

Regulatory Compliance KPIs :

• Accreditation Status : Compliance with standards set by accrediting bodies such as The Joint Commission.
• Incident Reporting Rate : Frequency of reported incidents, including adverse events and near misses.
• Compliance Audit Results : Scores or findings from internal and external compliance audits.
• Patient Data Security Incidents : Number of data breaches or security incidents involving patient information.

Get your FREE 108 healthcare KPI library to improve your organizational performance

Why is it so critical to select the right kpis.

The right KPIs are incredibly powerful. They not only measure progress but also motivate your team by highlighting areas where improvement is needed. Imagine a sales team with a clear KPI tied to revenue growth – that's a recipe for focused action and impressive results.

Conversely, choosing the wrong KPIs can lead you astray. If a manufacturing company only focuses on production volume while neglecting quality, they might end up with a warehouse full of defective products and unhappy customers.

There are two rules for selecting the right KPIs (key performance indicators):

• KISS: You’ve likely heard the acronym, “Keep it simple, stupid.” This phrase rings true for KPIs. Make it as easy to understand as possible, so your employees will be clear about what they need to do.
• SMART KPIs: SMART stands for specific, measurable, attainable, realistic, and timely. Is your KPI all of these things? Read our blog on How To Get SMART With Your KPI Tracking for specifics on how to improve in each area.

How Can You Create a Culture of KPI Monitoring and Improvement?

To create a culture of KPI monitoring and improvement, it is essential to educate your team on the significance and use of KPIs . Ensure they understand that KPIs are tools for enhancement rather than enforcement. Additionally, establish a performance management system that is consistent, transparent, and straightforward.

Introducing KPIs into your work environment may initially present some challenges . Not everyone may fully understand what KPIs are and how they are used. Organize educational sessions to explain the concept of KPIs and highlight their importance for the organization's future.

Emphasize that KPIs are not enforcement tools designed to control behavior. For example, a customer service representative might see a KPI related to average handle time and assume that meeting the target is solely their responsibility, leading to anxiety about negative consequences if they fall short. It is crucial to correct this impression to prevent counterproductive behaviors.

Selecting the right KPIs is just the beginning; fostering a culture of monitoring, reporting, and continuous improvement is where the real work lies. To help your team embrace KPIs and motivate them to drive change, implement a performance management system that is:

• Consistent : Ensure that KPI tracking and reporting are done regularly and uniformly across the organization.
• Transparent : Make KPI data accessible to everyone, fostering an environment of openness and trust.
• Simple : Keep the system easy to understand and use, so that employees can focus on their performance rather than navigating complex processes.

By taking these steps, you can create a supportive culture where KPIs are viewed as valuable tools for personal and organizational growth.

You may be interested in: What Is A KPI Report, & How Do I Create One?

KPI Selection Mistakes You Should Watch Out For

There are two common missteps made during the selection process:

• Relying on outdated metrics: What worked in the past might not be relevant today. Business landscapes change, so make sure your KPIs evolve with them.
• Prioritizing easy over impactful: Tracking simple metrics might be convenient, but are they truly driving your strategic goals? Sometimes, the most valuable KPIs require a bit more effort to measure.

How to Build Your KPI Strategy 

Ready to craft your KPI strategy?

Here's your roadmap:

• Align with Objectives: Start with your overarching goals. Every KPI should contribute directly to achieving those objectives.
• Apply SMART Criteria: Ensure your KPIs are Specific, Measurable, Achievable, Relevant, and Time-Bound. Vague or immeasurable KPIs won't help you make informed decisions.
• Assign Ownership: Make individuals accountable for each KPI. This fosters ownership and ensures focused attention on driving improvement.
• Monitor and Report: Regularly review your KPIs using dashboards, reports, or dedicated software like ClearPoint . This helps you identify trends, make data-driven decisions, and communicate progress to stakeholders.

How to Choose & Track KPIs

It is frequently said that “What gets measured gets done,” but how does the measuring itself get done? Below are the important steps to consider in effectively tracking KPIs as a part of your performance management framework :

Step 1: Select 1-2 Key Measures for Each Objective

While it's tempting to track every aspect of your operations, it's neither practical nor efficient. Focus on one or two critical metrics per objective that directly contribute to achieving your goals.

For example, if your objective is to improve employee training and development programs, measuring the percentage of trained employees or training hours might not be as effective as tracking the reduction in errors post-training, which directly correlates with skill development.

Tip for Selecting Metrics :

• Lagging Indicators (Outcome KPIs) : If you're unsure which activities drive results, measure the outcome. For instance, track 'sales' to see the impact of various promotional activities.
• Leading Indicators (Driver KPIs) : If you know what drives results, measure the activity. For instance, track 'order processing time' if quick order handling increases sales.

Step 2: Ensure Your KPIs Meet Key Criteria

Effective KPIs should have specific characteristics . Consider these questions for each KPI:

• Can it be easily quantified?
• Can we influence change using this KPI?
• Does it align with our objectives and overall strategy?
• Is it simple to define and understand?
• Can it be measured accurately and timely?
• Does it cover various perspectives (Customer, Financial, Internal Processes, Learning and Growth)?
• Will it remain relevant in the future?

If the answer to many of these questions is "no," consider revising or replacing the KPI.

Step 3: Assign Responsibility for Each KPI

KPIs are more actionable when specific individuals are accountable for tracking and reporting them. This responsibility often motivates the person to ensure the KPI's success.

• Data Collection : An analyst may collect the data.
• Reporting and Analysis : A business leader should analyze and contextualize the data, explaining performance and driving improvements.

Step 4: Monitor and Report on the KPIs

Regularly review KPI performance —monthly, quarterly, or on another schedule. This helps identify periods of underperformance or overperformance and understand the contributing factors.

Consistent reporting to all relevant parties is crucial since many measures and goals are interconnected. Instead of using spreadsheets, which can lead to version control issues and errors, consider using performance management software like ClearPoint Strategy . Such tools allow you to create customizable KPI dashboards for different audiences, ensuring clarity and coherence across the organization.

About KPI Dashboards Software

Effective KPI tracking involves more than just choosing the right metrics. KPI dashboards provide visual summaries of your data, making it easier to spot trends and communicate progress. Specialized software, such as ClearPoint , can streamline data collection, analysis, and reporting, saving you valuable time and resources.

However, be prepared for challenges along the way:

• Data Quality: Inaccurate data can lead to faulty conclusions. Ensure your data sources are reliable and up-to-date.
• Lack of Engagement: KPIs are only valuable if everyone understands and supports them. Communicate the purpose and benefits of tracking these metrics to foster buy-in.
• Information Overload: Too much data can be overwhelming. Focus on the most critical KPIs that directly impact your goals.

Implementing Performance Management Software

Many organizations initially try to use spreadsheets to track KPIs, but this method often leads to issues such as version control conflicts and calculation errors. A better and simpler alternative is to use performance management software.

Tools like ClearPoint Strategy offer several advantages:

• Customizable Dashboards : Create different dashboards for various departments and executive teams, providing tailored views of KPI performance.
• Real-Time Data : Ensure that all team members have access to the most up-to-date information, reducing the risk of working with outdated data.
• Improved Collaboration : Facilitate better communication and collaboration across departments by sharing consistent and accurate KPI reports.

By implementing performance management software, you can streamline the process of tracking and reporting KPIs, ultimately driving better performance and achieving your organizational goals.

None of this is to say you can’t use spreadsheets to view your KPI data, but with ClearPoint , you save time and improve the information available for decision-making.

Book your FREE 1-on-1 DEMO with ClearPoint Strategy Here

The Future of KPIs: AI-Powered Insights

The landscape of KPI tracking is evolving rapidly. Artificial intelligence (AI) is emerging as a powerful tool for identifying new KPIs and predicting future performance trends. This exciting development promises even deeper insights and greater strategic advantage for businesses that embrace it.

Ready to Elevate Your Performance?

If you're serious about optimizing your business, consider leveraging powerful tools like ClearPoint to transform your KPI tracking into a well-oiled machine.

With streamlined data management, intuitive dashboards , and goal alignment features, ClearPoint empowers you to make informed decisions and drive your organization towards success.

Unlock Your Organization's Potential with ClearPoint Strategy Software

Ready to take your organization's performance to the next level? ClearPoint Strategy is your partner in not just tracking, but truly achieving your strategic goals. Our intuitive strategy planning, management, and execution platform transforms the way you manage and monitor Key Performance Indicators (KPIs), ensuring that every metric you track is aligned with your strategic objectives.

Book your free demo today and see how ClearPoint Strategy can empower your team to make data-driven decisions, foster a culture of continuous improvement, and drive your organization towards its strategic goals with clarity and confidence.

Your Questions About KPIs Answered:

What are key performance indicators ‍.

Key performance indicators are measures used to evaluate the success of an organization. KPIs can be quantitative and qualitative in nature. Quantitative KPIs include metrics such as sales revenue per employee, number of customers served by each call center agent, or revenue. Qualitative KPIs, on the other hand, may include customer satisfaction scores, quality rantings, or product reliability rates.

What is a SMART KPI? ‍

Organizations often use SMART criteria to create a good KPI. A SMART KPI is: Specific, Measurable, attainable, Relevant, and Time-bound. To know if your KPI is SMART, ask yourself the following 3 questions.

Why are key performance indicators so important? ‍

KPIs are important because if you don't know how you're progressing in certain areas, you don't actually know where you're going as an organization. You won't have insights into if you're making progress towards your strategic goals, or if you're headed in a direction you want. KPIs act as a 'pulse check' of your strategic plan.

What should I include in a KPI report? ‍

What you include in your report depends heavily on your audience. There are, however, a few pieces of information every KPI report should include. It's important to show the linking goals of your KPIs, the KPI measures data and calculations, and visuals showcasing the data in an easy-to-digest format.

How do I choose which KPIs to track? ‍

It's easy to convince yourself that you need to measure everything for your organization. Remember, though, that KPIs mean key performance indicators. You want to only measure the most important and influential metrics. To best identify the right KPIs, tie your measures back to your strategy goals. Make sure they relate to what you hope to achieve in your organization.

What is an example of a bad KPI? ‍

A bad KPI example is "Number of emails sent," as it measures activity without considering the quality or impact of those emails. It doesn't provide insight into whether the emails contribute to achieving business goals like customer engagement or sales growth.

What is the best example of a well-written KPI?

A well-written KPI example is "Increase website conversion rate by 15% over the next six months." This KPI is specific, measurable, achievable, relevant, and time-bound (SMART), providing a clear target and timeframe.

What is another word for KPI? ‍

Another term for KPI is "performance metric" or "performance indicator." These terms also refer to metrics used to assess the effectiveness of actions in achieving objectives.

What does KPI stand for? ‍

KPI stands for Key Performance Indicator. It is a quantifiable measure used to evaluate the success of an organization, employee, or project in meeting objectives for performance.

What is a KPI example? ‍

An example of a KPI is "Customer retention rate." For instance, a company might aim to increase its customer retention rate by 10% over the next year, measuring the percentage of repeat customers.

‍ How do you calculate a KPI? ‍

To calculate a KPI, first define the objective and the metrics to measure. Use the formula: KPI Value = (Actual Value / Target Value) * 100. For example, if your target sales are $100,000 and you achieve $90,000, your KPI is (90,000 / 100,000) * 100 = 90%.

How do you measure a KPI? ‍

Measure a KPI by collecting relevant data consistently, analyzing it against set targets or benchmarks, and using tools like dashboards or reports to track progress and performance over time.

How do you create a KPI? ‍

To create a KPI, start by identifying your business objectives. Then, make sure the KPI is specific, measurable, achievable, relevant, and time-bound (SMART). For example, "Increase monthly website visitors by 20% within the next six months."

What is the difference between OKR and KPI? ‍

OKRs (Objectives and Key Results) are goal-setting frameworks that outline what you want to achieve (objectives) and how you'll measure success (key results). KPIs are metrics that track performance toward specific goals. OKRs define goals and the steps to achieve them, while KPIs measure the performance of those steps.

Read our blog on OKRs vs. KPIs: Breaking Down The Difference

What is the difference between a KPI and a metric? ‍

A metric is a quantifiable measure used to track and assess the status of a specific business process. A KPI is a type of metric that is specifically tied to business objectives and used to gauge success in achieving key goals.

How do you create a KPI dashboard in Excel? ‍

To create a KPI dashboard in Excel, list your KPIs, input data into Excel, use formulas to calculate KPI values, and employ charts and conditional formatting to visualize the data. Pivot tables can help organize and summarize data efficiently.

What are the 4 requirements to make a KPI? ‍

The four requirements to make a KPI are: it must be specific, measurable, achievable, and relevant. Additionally, it should be time-bound, providing a clear timeframe for achieving the target.

How do you write a good key performance indicator? ‍

A good KPI is written by defining a clear and specific objective, ensuring it is measurable, setting it to be achievable and relevant to the business goals, and making it time-bound. For example, "Reduce customer support response time to under 2 hours within the next quarter."

What is the most common KPI in business? ‍

The most common KPI is revenue growth, which tracks the increase in a company's sales or income over a specified period. This KPI is fundamental as it directly reflects the business's financial health and success.

Ted Jackson

Ted is a Founder and Managing Partner of ClearPoint Strategy and leads the sales and marketing teams.

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What Is A KPI? Definition & Examples

Updated: Jun 15, 2024, 12:27pm

Table of Contents

What is a key performance indicator (kpi), kpi vs. metrics, common types of kpis, how to set kpis, kpi best practices, kpi benefits, frequently asked questions (faqs).

All businesses, from startup coffee roasters to billion-dollar e-commerce companies, are vested in tracking their progress, figuring out what works and fixing what doesn’t. That’s where Key Performance Indicators (KPIs) come in. Once you’ve determined what your strategic goals are, using KPIs to measure those goals regularly allows you to make informed decisions and improve outcomes. Keep reading to learn more about KPIs, how to choose your indicators and the best practices for using them.

A Key Performance Indicator (KPI) is a measurable target that indicates how individuals or businesses are performing in terms of meeting their goals. Reviewing and evaluating KPIs helps organizations determine whether or not they are on track for hitting their desired objectives.

By looking at several key indicators, which may include categories such as profits, sales numbers, employee turnover and average annual expenses, businesses can identify successes, as well as what is not working. Analyzing KPIs on a regular basis provides a solid overview of how well a business is performing, which allows the folks in charge to decide if current operations should be continued, or if a change of strategy is needed.

Although they are both designed to measure performance, KPIs and metrics have different characteristics and are used by businesses in different ways. Metrics are measures used to track progress and evaluate success, while KPIs are metrics tied to specific goals during a certain period of time.

KPIs are designed to align with business goals and targets, while metrics evaluate the performance of particular processes. Metrics are usually specific to a particular person or team, and frequently align with industry standards or best practices.

What Makes a Good KPI?

The best plans use between five and seven KPIs to track and manage progress. The best structured KPI plans include each element of what is called “SMART” criteria:

• Specific: define what each KPI is intended to measure, and why it is important
• Measurable: KPIs should include standards for measurement
• Achievable: the KPI should be a realistic, achievable goal
• Relevant: KPIs are intended to move a business forward, so they need to be relevant to improving outcomes
• Time-bound: it’s important to set a realistic time frame based on past performance, and make sure that the team sticks to the agreed-upon deadlines

Learn more about S.M.A.R.T. goals .

You’ll find KPIs across nearly every industry and category, including sales, marketing, customer service, IT, human resources and finance. Since these indicators are often responsible for driving performance goals and results, it’s important to choose the correct ones for your business. Opting for a smaller number of manageable KPIs per goal allows companies to make the necessary assessments and keep their workforce aligned.

These are some examples of commonly used KPIs:

Example of Sales KPIs:

• Monthly sales growth
• Monthly customers per sales rep
• Quarterly sales bookings
• Number of engaged leads in sales funnel
• Average conversion time

Example of Marketing KPIs:

• Monthly website traffic
• Page likes and comments
• Social media engagement rates
• Number of new monthly leads
• Click-through rate percentage

Example of Human Resources KPIs:

• Monthly overtime hours
• Quarterly training costs
• Cost per new hire
• Employee productivity
• Monthly absenteeism rate

Example of Customer Service KPIs:

• Customer satisfaction score
• Customer retention rate
• Monthly support ticket submissions
• Average resolution time
• Cost per resolution

You can’t begin using KPIs until you have clearly defined strategic goals; these are what will serve as the jumping-off point for deciding which indicators will be the most useful to your organization. Once your objectives are in place, the next step is to select the appropriate analytical and reporting tools, which are typically software programs designed specifically for your type of business.

Once you begin implementing KPIs, you will have a clearer picture of which indicators are useful and which ones may need to be adjusted. If the KPI you are using is not providing enough information, or the right type of information, it’s likely time to swap it for a different approach.

This will also be true as a business changes or grows, with the KPIs needing to provide different insights. The most effective KPIs are the ones that boost performance, demonstrate the success of a business and help move you closer to your goals.

Steps to Setting a KPI

KPIs should be set strategically, with defined objectives that correspond to a business’s desired outcomes and strategic goals. Remember to make KPIs measurable, specific and include a time frame. Here are the steps to setting up a KPI:

• Determine Key Objectives: Start by defining what the key objectives are, taking into account that KPIs should align teams with an organization’s goals.
• Define Intended Results: Once the objectives have been determined, define what the results need to be in order to achieve success.
• Utilize Lagging and Leading Indicators: Lagging indicators look at past performance variables, such as revenue and profit, to show the outcome of past performance. Leading indicators define what actions are needed to achieve goals and meet overall objectives.
• Set Targets and Thresholds: Setting targets and thresholds provides a way for teams to see exactly where they are and where they are going on a KPI objective time frame.
• Assess Progress and Readjust: KPIs will likely need to be adjusted as a project evolves, so assessing progress regularly illustrates any hiccups and helps keep the objective on track.

Using the wrong KPIs can lead to something as simple as wasted time, or as significant as an outcome that affects your bottom line. For example, if you manage a donut shop and want to know how many dozen are sold each day with an intended goal of reducing food waste, tracking a KPI such as average customer wait time won’t provide the measurements you need to meet your objective.

When choosing the KPIs to implement in your business, keep the following in mind:

• Choose indicators that are directly related to your objectives
• Think about lagging versus leading indicators
• Opt for realistic measurements that are attainable
• Pick a few, specific indicators instead of too many

There are many benefits associated with using KPIs, as they allow the proper resources to be allocated and channeled, ultimately improving performance. Some of the benefits include:

Real-time monitoring

Since KPIs are ongoing, managers are able to monitor team performance and progress in real time as a project unfolds. This allows adjustments to be made and necessary resources to be allocated in order to maximize productivity.

Help avoid delays

Using the KPI framework, teams can quickly view where each task stands on the timeline, allowing them to see what is on track and what might be stalled. This helps avoid delays since adjustments can be made as needed, helping to ensure completion of the objectives.

Easy to formulate

KPIs have the ability to be both simple and straightforward, making them easy to formulate. Because establishing KPIs is not a complicated process, it can be done by any type and size of business once they determine their goals.

Ensure equity and clarity

Using KPIs also means sharing objectives and providing transparency, which often leads to more invested team members. Empowering employees with the autonomy that KPIs provide means that everyone is aware of what is going on, who is responsible for what and that there is equity in success.

Bottom Line

KPIs are an important tool businesses use to evaluate achievements, analyze issues and solve problems. Performed regularly, these measurements illustrate trends and patterns that are essential to making the most informed decisions possible. When the right types and amounts of KPIs are used, these indicators provide the data that will help benefit the overall health of an organization.

What is a KPI?

A Key Performance Indicator (KPI) is a way to measure performance or progress based on specific business goals and objectives. These show organizations how well they are performing and meeting objectives, as well as the areas that need improvement.

Are KPIs and metrics the same thing?

KPIs are different from metrics, in that they measure performance based on calculated business goals instead of specific business activities. Metrics tend to be more operational, while KPIs are strategic.

What are the most common KPIs?

The KPIs a business chooses to use are based on its individual goals and objectives. Some of the most common measurements are financial, customer service, performance, marketing and staffing.

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Business owners wear many hats—and in an increasingly uncertain market, one of those roles is economist. It’s not enough to know the ins and outs of your operation and understand the needs of your customer base and the competitive landscape. To set your firm up for long-term, forward-looking success, you should interpret the economic factors that could impact your business plans. 

These are 10 economic indicators midsize business leaders should regularly track to better understand economic conditions and make informed decisions. 

1. Gross domestic product (GDP)

GDP measures the total value of all goods and services produced in a country. It’s a leading indicator of broad economic health and can help businesses understand the overall economic environment.

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• Leading indicators forecast where the economy might be heading.
• Lagging indicators reflect the economy’s historical performance.

2. Consumer spending

Consumer spending is a crucial driver of economic growth. Tracking trends in consumer spending can help businesses anticipate demand for their products or services.

3. Unemployment rate

Labor market statistics are lagging indicators—the data requires time to gather, calculate and report. A high unemployment rate may indicate a weaker economy, while a low rate could suggest a stronger economy with greater consumer spending.

4. Interest rates

Interest rates set by the Federal Reserve, the central bank of the U.S., can impact borrowing costs for businesses. Changes in interest rates can influence consumer spending, investment decisions and overall economic activity.

5. The Consumer Price Index (CPI)

The CPI , also called the inflation rate, reflects increases in cost of living, or inflation. The U.S. Bureau of Labor Statistics publishes the CPI monthly. Inflation measures the rate at which prices for goods and services rise over time. Businesses need to monitor inflation to adjust their pricing strategies and account for rising costs.

6. Business Confidence Index

This index measures business owners' confidence in the economy based on opinion surveys on future developments. It considers production, orders and stocks of finished goods. A high confidence level can indicate optimism about future economic conditions, which can lead to increased investment and growth.

7. Stock market performance

Stock markets track the values of publicly traded companies, which are just one part of the broader economy. While not a direct economic indicator, the performance of stock markets can reflect investor sentiment and overall economic health. Businesses may track stock market trends to gauge market sentiment.

8. Trade balance

Trade balance measures the difference between a country’s exports and its imports. Changes in the trade balance can impact exchange rates, which can affect businesses engaged in international trade across different currencies.

9. The housing market

Housing market indicators, such as housing starts, home sales and home prices, can provide insights into consumer confidence and spending patterns. Changes in the housing market can directly impact businesses related to construction, real estate, and home improvement.

10. Public policy and regulations

Changes in government policies and regulations—from local ordinances up to international treaties, in some cases—can  significantly impact businesses. It's important for business owners to stay informed about potential policy changes that could affect their operations.

Decoding divergent data? Dive even deeper

In recent years, many of these factors show competing trajectories. This can make interpretation of these factors difficult for even savvy business leaders. Having expert insight to help guide your understanding is critical.

Sign up for our weekly Economic & Market Update to read the latest insights from Ginger Chambless, Head of Research for Commercial Banking, delivered directly to your inbox.

By monitoring these economic indicators, midsize business owners can gain valuable insights into the overall economic environment and make informed decisions to navigate challenges and seize opportunities.

JPMorgan Chase Bank, N.A. Member FDIC. Visit  jpmorgan.com/cb-disclaimer  for disclosures and disclaimers related to this content.

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Create KPIs That Reflect Your Strategic Priorities

• Graham Kenny

Start by identifying your most important stakeholders.

This article argues that a company should structure its key performance indicators around key stakeholder groups, such as customers, employees, suppliers, regulators, funding sources, and the communities in which they operate.  Managers who fail to do this risk ignoring performance along key dimensions necessary for success. Leaders should begin by identifying the important stakeholder groups and then listing a full range of measures that track both how well the company meets stakeholder expectations and vice versa.  An executive team should winnow the list down to two or three KPIs per stakeholder.

“What do you think of our scorecard?” asked Phil (not his real name), the CEO of the main roads department of a large Australian state. Phil had emailed me his organization’s scorecard of 29 key performance indicators (KPIs) to review ahead of a workshop I was to run for them. Unfortunately, I could see that, aside from being on the long side, the list was skewed and biased, with large holes that would leave the department vulnerable to underperformance in critical areas.

• Graham Kenny is the CEO of Strategic Factors and author of Strategy Discovery . He is a recognized expert in strategy and performance measurement who helps managers, executives, and boards create successful organizations in the private, public, and not-for-profit sectors. He has been a professor of management in universities in the U.S. and Canada.

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Key performance indicators

Table of Contents

What is a kpi.

KPI stands for key performance indicators. This is a quantifiable measurement of performance over time for a specific activity that is tied to a company objective.

A key performance indicator can help you better understand your business’ financial and operational achievements, so you can see where you’re at and make improvements to your strategy.

Picture Robin Hood aiming for his archery target. Without the target, Robin Hood wouldn’t know where to aim his bow. But, with the target, he can measure exactly how far off he is from his goal, so he can adjust his aim, strength, or his bow.

The same is true for the KPIs in your business. They give you a clear marker of how you’re performing so you can understand if you’re in the right direction, or if you need to make strategic adjustments along the way.

A KPI provides your business with a target to shoot for, milestones to track your performance over time, and insights to help your organization's leaders make better decisions. From marketing to sales to finance and even HR, key performance indicators can help improve productivity, progress, and achievement across every area of your business.

What is KPI reporting?

KPI reporting is the business management practice of measuring, organizing, and analyzing a business’ most important key performance indicators.

KPI reports help business leaders identify strengths and weaknesses, optimize company performance, improve engagement, and reach strategic goals. Managers also use KPI reporting to analyze trends in specific departments or in the business as a whole to improve decision-making.

KPI reporting is typically presented visually in the form of an interactive dashboard. KPI dashboards give managers a quick overview of the essential data points associated with your specific key performance indicators.

KPI dashboards present your KPIs in an easily digestible format so managers can quickly analyze and extract the most crucial information to help them optimize their overall strategy.

How to measure KPI

If you’re going to be successful in your KPI tracking, then you need to build a proper KPI measurement framework, or use a KPI Tree Template . Here are six steps to setting a framework for your KPI measurement:

1. Determine your main goal(s)

The first step to measuring your KPIs is to first identify which KPIs you'll be tracking. To figure out your KPIs, you need to first determine the goal you and your team are working towards. For instance, the goal of a specific marketing campaign could be to generate $50,000 in revenue or bring in 50 leads. No matter what your goal is, we’ll use it to establish KPIs.

2. Establish primary KPIs

Now that you have your overall goal, it’s time to establish your primary KPIs. These are significant KPIs designed to measure the overall results of your campaign and whether it was a success or not. Some primary KPI examples include the amount of revenue generated by specific channels like email marketing or Facebook ads. Or, if your goal is brand awareness, it could be your overall reach or impressions on different social platforms.

3. Establish secondary KPIs

Next up, it’s time to establish secondary key performance indicators to further understand the success of your campaign. These could be three to five additional metrics that are important to your campaign but not necessarily your primary KPI. For instance, if your primary KPI is email revenue generated, secondary KPIs could include average order value or return customer rate.

4. Choose health metrics

Next, we’ll establish metrics that'll help you understand the overall health of your campaign, rather than whether or not you've reached your primary goal. Following our email marketing KPIs, health metrics could include metrics like open rate, click rate, and total email opens.

5. Establish specific KPI targets

Now that you’ve chosen the KPIs that you’ll track, it’s time to determine the exact numerical target for each KPI. The numbers you establish should be realistic and measurable numbers to help you stay on track. Simply stating you want to earn more revenue from email marketing isn’t enough. Get specific. State that you want to generate $50,000 from the campaign, with $20,000 of that coming from email. If your average order value (AOV) is $50, set a goal for your AOV to be $60. Aim for a 40% email open rate if you usually get 35%.

By setting specific, measurable KPIs, you’re much more likely to achieve them or at least come close.

6. Set up benchmarks

Finally, you need to set up benchmarks. Remember to look at past campaign performance to better understand what a typical benchmark for KPIs is. But, don’t stop there. Look at competitors. Look at others in your industry or similar businesses in other industries. By understanding where you’re at relative to your competitors or your own past performance, it'll help you determine whether you’re on the right track or not.

Benefits of tracking KPIs

KPIs are a critical part of any business strategy to ensure you’re staying on track and improving performance. Here are a few reasons why you should be tracking KPIs.

Measure performance

First off, KPIs help you measure your performance. If you’re just “winging it” when you’re working on a project or a campaign, how will you know whether or not you’re a success?

Without KPIs, you’ll be driving blind, not knowing what’s improving or worse yet‌‌ — ‌harming — your organization.

Tracking KPIs can help you measure your progress — or lack thereof — toward crucial business goals.

Improve employee morale and engagement

A business is nothing without people, and a business is almost as good as nothing if people aren’t engaged. One key path to improving engagement at work is by establishing KPIs.

You may think that pressuring your team to hit certain targets will make them dislike their job. But, the opposite is true. People crave growth. Establishing KPIs for individuals and different departments is a great way to get your team engaged.

Remember to align your KPIs with organizational goals and goals for your department. The better you can tie your KPIs to a deeper, purposeful goal, the more engaged your employees will be and the greater company morale will be overall.

Improve decision-making

KPIs provide leaders with key insights into their organization and department. They offer more than just numbers on a page or a screen. They offer valuable information that can help you understand what specific points of action are improving your business and what ones are hurting it.

Instead of just making decisions based on gut feelings, you can use KPIs to make data-informed decisions that will improve your odds of success.

Examples of KPIs

Curious to know what the most commonly tracked KPIs are?

Here are a few examples of KPIs, broken down by different departments that you can use as a baseline to establish your own key performance indicators:

Revenue by channel

Customer satisfaction

Conversion rates

Marketing qualified leads (MQLs)

Return on investment (ROI)

Return on advertising spend (ROAS)

Customer acquisition cost (CAC)

Total sales generated

Sales volume by location

Sales qualified leads (SQLs)

New inbound leads

New qualified opportunities

Total pipeline value

Average order value

Operating profit margin

Gross profit margin

Net profit margin

Operating expense ratio

Working capital ratio

Return on investment

Customer Service

Average response time

First contact resolution rate

Cost per conversation

Customer effort score

Most active support agents

What makes for an effective KPI?

Now that you know a few different types of KPIs you can track broken down by department, it’s time to figure out what makes for an effective KPI so you know how you can craft yours the right way.

First and foremost, the KPIs you track should be relevant to your role, team, department, and business. It should be connected with your team and organization’s overall business goals and mission.

For example, let’s say your company is aiming to increase annual recurring revenue (ARR) by 30% at the end of the year. If you’re on the marketing team, you might consider tracking conversion rates as this directly aligns with revenue.

KPIs need to be measurable. If you don’t know how to measure it, then you need to change it or throw it out. When you set up KPIs, ask yourself, ‘What am I trying to achieve? What is my desired end result?’

You need to make sure you don’t just set a number, but also a date. By setting a deadline, you will have a clear yes or no on whether you hit your KPI goals or not.

Your KPIs can’t be vague, and they can’t be passive. You need to set KPIs that can be achieved by taking specific actions. Once you have your KPI, it should be relatively straightforward to make an action plan broken down into smaller goals to achieve success.

Finally, your KPIs need to be simple. Don’t get too complicated, and don’t track too many. You don’t need to track every single possible KPI. Depending on your overall goals, you should only stick to a few primary KPIs and potentially some secondary ones.

What’s the difference between KPIs and OKRs?

So, how are KPIs different from OKRs? Are they the same? Do you choose one or the other?

Simply put, OKRs and KPIs work together. However, they serve different purposes.

While key performance indicators measure performance against specific targets, you can create OKRs, or objectives and key results, to achieve goals within a specific period of time that align with an organization's vision.

Objectives and Key Results (OKRs)

Objectives and key results are broken down into two parts.

Think of objectives as where you want to go. For example, an organization may decide they want to evolve their brand image from cheap to premium. This is an objective.

Key results are how you’re going to achieve your strategic objectives. These are measurable metrics to track your progress. For instance, if you’re trying to become a more premium brand, one key result may be increasing your average product price from $60 to $100. Another one may be upgrading the materials used to make your products from a $10 manufacturing cost per product to higher quality manufacturing for $20 per product.

Key Performance Indicators (KPIs)

The way KPIs fit into an OKR strategy is one step lower. Think of Objectives as the bird’s eye view. Key results are skyscraper buildings. Key performance indicators are the foundation on which key results lay.

For instance, a key performance indicator aligned with the objective to become a premium brand and increase your average product price might be to track your average order value (AOV). In this example, if you raise your price point, you’ll want to track if the AOV is aligning with it and by how much. Perhaps the average order value isn’t rising even though you’ve raised your prices.

Another KPI you could track is your conversion rate. Since you have started raising your prices, are your conversion rates dropping? They’re likely going to dip down to some degree. If it’s too much, perhaps you moved the price up too high too quickly.

Collaboratively set and track your KPIs

With Miro, teams can collaboratively define, visualize, and monitor KPIs in real-time. Whether you need to track sales targets, project milestones, or customer satisfaction metrics, Miro makes it easy to document your KPIs in one shared space, fostering transparency and accountability. Sign up for free to get started!

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The Most Common Business Plan Pitfalls and How to Avoid Them

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Every company benefits from an updated business plan. While it seems necessary for start-ups, it applies to established firms, too. An efficiently written business plan keeps the whole business on track in the process of execution of the company’s strategy and reaching its business goals. Business plan mistakes can result in anything ranging from small oversights to fatal errors for your business. It is even more important for the business who are at the funds raising stage, so the information they provide is accurate and none of your ideas are misleading and are in tune with the current market. To help you avoid your business plan from being discarded, here are some of the critical business plan mistakes to be careful with:

• Long and bulky Executive Summary The readers of business plan such as investors, bank institutions and key vendors start considering your business idea from reading the executive summary. Executive summary is a highlight of the most important items of your business plan in a concise but informative way. It should succinctly describe your compelling story on how a highly skilled team will deliver products or services to precisely defined target markets based on a consistent strategy. Besides, it should state the company’s value proposition on how their products or services will change the life of its customers for the better in a profitable way. In fact, many executive summaries are boring and state some business idea whose execution remains vague. Often, it is presented as just cut and paste of some sections from the introduction and some other parts of business plan. Therefore, there are high chances of the busy investor to move on to the next proposal, if executive summary does not provide a clear, convincing, and persuasive overview of the business.
• Attaching your value proposition to dated technology or dwindling markets When formulating in your business plan the opportunity you see for a product or service, you need to question it and can’t just assume that the idea has automatic demand in the real world. A professionally written business plan will assure you are setting up your business for success. This implies that you must develop a value proposition of your product or service that will change an emerging or existing market. Those markets that are shrinking or are being replaced by new industries will make it incredibly challenging for you to get funding. For instance, what would your reaction be if someone developed waterproof ink for typewriter ribbons? You wouldn’t necessarily be amazed, because the number of people looking to buy something like that is miniscule.
• Not knowing the target audience and segments A product or service that is everything to everyone does not exist. If that were so, we would all be using the same phone. In fact, your product or service is specific and advantageous to an ideal type of customer. Without defining your target market, you cannot reason how you will handle the fierce competition. There are competitors who are providing the same product and service. Investors trust their funds to companies that have completed and gained a complete knowledge of primary and secondary market. You must define your target market and outline how you will target this audience.
• Having unrealistic and aggressive growth projections Having read the executive summary, many investors jump straight to the financial section of the business plan. It is important that the assumptions and projections in this section to be realistic. Plans that show sales forecast, operating margin and revenues that are poorly reasoned, internally inconsistent or simply unrealistic significantly damage the credibility of the entire business plan. In opposite, sober, well-supported financial assumptions and projections communicate operational maturity and credibility. Benchmarking is an especially useful tool to use in your financial analysis. By comparing and basing your projections on the financial performance of public companies within your marketplace, you can prove that your assumptions and projections are achievable. Planium Pro makes your life easier in that regard. Finance section of the Planium Pro’s software provides an easy and quick benchmarking tool for a variety of industries so you can efficiently measure your projections and key ratios against your market averages.

• Acknowledging your competitors, but not researching them Many new businesses are too much inward-focused. Being confident about your product or service is certainly a good attitude. But there is risk that this could twist your idea of how it correlates with products and services of competitors who have been in the market for some time. Besides, quite often entrepreneurs also miss or underestimate the possibility of new entrants who could increase competitive pressure. Our recommendation is to learn as much as you can about the people you’re going up against and perform Competitor Analysis, based on their pricing, quality, service and distribution channels. Knowing this information helps you prepare your own strategy to differentiate your business from theirs.

Next Steps • Keep these critical mistakes in mind when writing your business plan. • If you have already started writing your plan, use Planium Pro software to ease your preparation and streamline the process. Join our Planium Pro to see all the benefits yourself. Read More We would be interested to receive comments from small-business owners on what mistakes you have made in business plan writing and how you fixed them.

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12 Tips for Choosing Effective KPIs

Scott Gerber

4 min. read

Updated March 19, 2024

With the ease of data collection in today’s technological landscape, it’s easy to get bogged down in performance metrics. But “more numbers” doesn’t always translate into a better understanding of what your company needs.

To figure out what Key Performance Indicators (KPIs) are most useful for a budding new business, we asked 12 entrepreneurs the following question: How should you go about selecting KPIs for a startup?

• 1. Avoid Vanity Metrics

It’s easy to look at numbers like pageviews, signups, likes, etc. But what you really need to ask yourself is whether any of these move your business forward. Vanity metrics are very risky because they often look good without any substance. Find those metrics that have direct correlations to your bottom line and the progression of your business, and you have your KPIs. – James Simpson,  GoldFire Studios

• 2. Look Beyond the Numbers

People can get caught up in the numbers, but quality is more important. KPIs are important, but they should be centered on quality and not just growth. The most important things in life and in business are not measurable. Becoming too obsessed with KPIs means important things that are harder to measure may fall by the wayside, hurting your business more than KPIs can help. – Dan Price,  Gravity Payments

• 3. Ask Them About Their Vacation Time

Ask your key executives the following question: “If you were away on vacation for two weeks, what are the two questions you would ask to identify how your department is performing?” Their answers will provide you with a preliminary road map you can use to select your KPIs. – Kelcy Pegler, Jr,  Roof Diagnostics

• 4. Look at Similar Companies

Contact an investment banker, and ask how similar companies are being evaluated and acquired. Are they being valued on revenue, content, profitability or traffic? Look at financial analysts’ reports on publicly-held companies as they’re valued on future profitability or revenues. Understand how more experienced businesses, public or recently acquired, were valued, and backtrack from there. – Luke Skurman,  Niche.com

• 5. Let the Data Decide

A static set of KPIs will inevitably lead to missed signals from leading metrics that might have been valuable. Instead, create a system that collects all of your metrics but only shows you the ones that are performing particularly well or poorly. Consider tools like  RJMetrics  or  Chartio . Then you can spend more time focusing on the root causes driving those metrics. – Aman Advani,  Ministry of Supply

• 6. Tie Metrics to Actions

A good KPI points you to where you need to take action. If a change in your KPIs doesn’t inspire you to act, then you have the wrong ones. Examples of this are things like marketing ROI by campaign or sales performance by market segment. When you see changes in these indicators, it’s very clear what needs to happen. – Robert J. Moore,  RJMetrics

• 7. Create External Progress Reports

We don’t do KPIs. We do, however, draft an investor newsletter every six weeks. Having to demonstrate progress to someone external on a regular basis is a huge motivator for the team. – Ioannis Verdelis,  Fleksy

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8. Look at It From the Customer’s Perspective

Looking at it from the customer’s point of view is the way to go. Measure the experience the client is having and what the prospect is going through. Then score it, pivot it, etc. – Ilya Bodner,  The Shipyard

• 9. Identify the Audience

First, identify the audience. KPIs are specific to the goal. I recommend having KPIs for customers, financials and any other stakeholders. For each of these, ask the basic question: “What are the three most important factors you would want to improve?” – Ashish Rangnekar,  BenchPrep

• 10. Start From the Top

Every startup has different goals. Some aren’t expected to generate revenue but are instead looking for investors, awareness or a target number of users. Once you make a decision on priorities based on these goals, think of KPIs like a funnel. The company’s high-level objectives are on top. They funnel down to each team and finally become the metrics that measure the success of individual team members. – David Hassell,  15Five

• 11. Focus on Fewer Variables

I’ve seen KPI dashboards that have 17 different variables, thus making us question what was actually key and what was actionable. Choose the three to five variables that actually matter and that you can actually affect, either because you understand what drives them or have the capabilities on your team to change. – Charlie Gilkey,  Productive Flourishing

• 12. Maintain Customer Satisfaction

The most important thing to get right when building an early-stage startup is maintaining great customer satisfaction, plain and simple. Revenue will follow if you have happy customers. Using a platform like  Gainsight , which integrates directly into  Salesforce.com , will help you focus on reducing churn, identifying any possible up-sells and driving adoption. – Michael Costigan,  Youth Leadership Specialist

Scott Gerber is the founder of the Young Entrepreneur Council (YEC) , an invite-only organization comprised of the world's most promising young entrepreneurs. In partnership with Citi, YEC recently launched BusinessCollective , a free virtual mentorship program that helps millions of entrepreneurs start and grow businesses.

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• 8. Look at It From the Customer’s Perspective

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• 27 business success metrics you should ...

27 business success metrics you should be tracking

Establishing and measuring success metrics is an important skill for business leaders to develop so that they can monitor and evaluate their team's performance. In this article, we discuss the importance of business metrics, as well as which metrics your team should track to achieve your business goals.

When you implement a new business strategy, how do you know whether or not your strategy is working? The most common way to ensure that your strategy is working is to identify success metrics before implementing your initiative.

Success metrics give your team a quantifiable way to measure your progress. By setting metric-based goals, you have the ability to gauge whether or not your strategy is successful. While there are many different goal-setting methods to choose from, measuring your progress with success metrics is a commonality between them.

What is a business success metric?

When the right metrics are properly tracked, leaders can use these metrics as a benchmark for how well the business is performing. It’s important to set the metrics before initiatives start to see progress from beginning to end.

Why are business success metrics important to track?

With an unlimited number of metrics you could be keeping track of, why should business leaders go through the effort of measuring them? Here are a few reasons why keeping an eye on your business success metrics is a good idea. 

Connect work to goals

One of the benefits of using success metrics is to connect the work that your team is doing to the goals that you want to achieve as a company. If your team is aligning their work to specific business goals, they can better prioritize the tasks they need to get done. 

Assess strategy efficacy

If you're implementing a new strategy or tactic with your team, use success metrics to gauge whether or not it's working. If you measured your team's metrics before you implemented a new strategy, you can use those metrics as a benchmark. As you implement the new strategy, you can compare those new metrics to your benchmark and see how they stack up. 

Make data-driven decisions

Similar to how you would use past metrics as a benchmark for new strategy, you can use historical data to help your team make smart business decisions.

Take a look at a specific year's metrics. Were they different than usual? What strategy did your team implement to get you those metrics? Was anything happening during that time that you can reflect on? Use these numbers to make decisions on how to move forward in the future so you can make more educated decisions.

Identify weak points in your strategy

If you're measuring many different metrics, and you notice a dip in one, you can easily pinpoint what part of your strategy is lagging behind. This can give your team the opportunity to adjust their strategy for the next initiative.

Example business success metrics by team

Each team in your business is there to achieve a different goal, so it only makes sense for different teams to have different success metrics. Here are a few examples of success metrics by team.

General business metrics

Gross profit margin : Gross profit margin is measured by subtracting the cost of goods sold from the company's net sales.

Return on investment (ROI) : The ratio between the income and investment. ROI is commonly used to decide whether or not an initiative is worth investing time or money into. When used as a business metric, it often tracks how well an investment is performing. 

Productivity : This is the measurement of how efficiently your company is producing goods or services. You can calculate this by dividing the total output by the total input. 

Total number of customers : A simple but effective metric to track. The more paid customers, the more money earned for the business.

Recurring revenue : Commonly used by SaaS companies, this is the amount of revenue generated by all of your current active subscribers during a specific period. It's commonly measured either monthly or annually.

Marketing metrics

Daily web traffic users : This is the number of users that visit your website daily.

New web traffic users : This is the number of users that visit your website who have never visited your website before.

Email open rates : This metric is particularly important for email marketing teams. Email open rates measure the percentage of your audience who has opened your marketing email.

Number of leads generated : Particularly good for the marketing teams that work cross-functionally with sales, this metric measures the number of qualified leads that marketing team generated and passed over to the sales team. Note that the definition of a qualified lead can vary depending on your team's goals.

Customer success metrics

Net promoter score (NPS) : This metric is one of the most common measurements of customer loyalty and satisfaction and is sometimes referred to as a customer satisfaction score. It's a numerical value in response to the question, "How likely is it that you would recommend [your product or service]?" You can calculate NPS by subtracting the percentage of individuals who voted between 0-6 from the percentage of individuals who voted 9-10. 

Customer retention rate : This metric measures how many of your customers remain  customers over a set period of time. It's up to your team to determine what timeframe makes sense for your business and industry.

Customer churn rate : This is the opposite of the retention rate. Customer churn rate measures how often your customers stop doing business with your company. It's up to your team to determine what period of time makes the most sense for your business and industry.

Customer feedback: While not a quantitative measure, anecdotal customer feedback can be extremely valuable to your company and can be used for testimonials and marketing strategy. Your customer experience is something that your team can curate, and the better experience they have the longer they stay a customer.

Average customer lifetime: This is the average length in which a customer stays your customer. This metric is used to calculate customer lifetime value.

Customer lifetime value (CLV or LTV): This is the amount of profit a company expects to earn from a specific customer over the average lifetime of a customer relationship.

Sales metrics

Qualified leads: A qualified lead is an individual who exhibits all of the characteristics that your team identifies as the ideal individual to sell to. This could include demographic, role, company size, or any other important qualities.

Lead to customer conversion rates: This is a good metric to identify because it can give both your sales and marketing team some insight to the audience you're targeting. If the conversion rate is high, you're targeting the right audience and your team is focusing on the right priorities. Low conversion rates indicate that potential customers are leaving somewhere in the pipeline.

Customer acquisition cost : This is how much your team spends on both marketing and sales strategies to convert a lead into a customer. Ideally, you want this number to be as close to zero as possible.

Total new customers : Tracking this metric can give you an indicator on how quickly your customer base is growing.

Developer metrics

Product uptime : This metric measures the time that your software is working over a given period of time. 

Bug response time : This is how quickly your team takes to identify a bug, find a patch solution, and push the fix into production. Issues can range from quick, five-minute fixes to full-fledged projects.

Daily active users : This is the number of users that use your software daily. This can help you understand how many of your customers actually use and value your software. If there is  a large gap between the number of customers and the number of daily active users, then your customers may not be finding value in your product.

Cycle time : The time it takes for a specific project to go from the very beginning to implementing the strategy into production. This is good to measure because it can help project managers get a sense of how long certain projects will take.

Throughput : The measure of total work output a specific team develops. This includes anything that is ready to QA and push into production.

Human resource metrics

Employee satisfaction: Similar to a net promoter score, an employee satisfaction score indicates how likely your employees would recommend your company as an employer to a friend or colleague. This is an important metric for HR teams because it can surface issues with company culture and policies that can be resolved.

Employee retention rate: Similar to a customer retention rate, employee retention rate measures how many of your employees stay with your company over a determined period of time. This is often measured annually. 

Employee feedback: Anecdotal employee feedback is just as valuable as customer feedback, if not more so. Employee feedback gives your team the opportunity to offer suggestions to help your company become a better employer, and in turn, increase employee retention rate.

Connect your team's work to metrics with Asana

More likely than not, your team’s work directly contributes to one or more key success metrics. But without a clear way to connect daily work to larger goals, team members can lack clarity on what to prioritize. Instead, track work and measure metrics all in one place with Asana. Asana helps you connect the work your team is doing to the goals you set so you can achieve them together.

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A Step-by-Step Guide: How to Develop Key Performance Indicators?

Key Performance Indicators (KPIs) are crucial tools for measuring and tracking the progress of your business objectives. 

Whether you’re aiming to increase revenue, improve customer satisfaction, or enhance operational efficiency, well-developed KPIs provide valuable insights into the health and performance of your organization. 

However, developing effective KPIs requires careful consideration and strategic alignment with your business goals.

This blog post is about how to develop key performance indicators that drive success. 

From understanding the purpose of KPIs to selecting the right metrics, designing measurement systems, and analyzing data, this guide will equip you with the knowledge and tools necessary to create meaningful KPIs and unlock valuable business insights. 

So, let’s dive in and discover the key to measuring and achieving your desired outcomes with precision.

What are Key Performance Indicators?  

Key Performance Indicators or KPIs, are quantifiable metrics used to measure and evaluate the performance of an organization, team, or individual in achieving specific business objectives. 

These indicators are carefully selected to provide actionable insights into critical areas of performance, allowing businesses to monitor progress, identify strengths and weaknesses, and make informed decisions.

The primary purpose of KPIs is to align strategic goals with measurable outcomes. They serve as a means to track performance and assess whether targets are being met. 

Why are Key Performance Indicators Important?

Using Key Performance Indicators (KPIs) offers numerous benefits to organizations. Here are some of the key advantages of implementing KPIs in your business:

• Goal Alignment: KPIs ensure that all levels of the organization are aligned with strategic goals. By clearly defining and measuring progress towards these objectives, KPIs help create a unified focus and direction for the entire organization.
• Performance Measurement: KPIs provide a quantifiable way to measure performance and progress. They offer a clear view of how well specific goals and targets are being achieved, allowing for accurate assessment and comparison of performance over time.
• Data-Driven Decision Making: KPIs enable data-driven decision making by providing objective and relevant information. They help identify trends, patterns, and areas of improvement, allowing leaders to make informed decisions based on reliable metrics rather than subjective assessments.
• Focus and Prioritization: KPIs help organizations prioritize their efforts by identifying key areas of focus. By highlighting the most critical metrics, KPIs ensure that resources, time, and energy are directed towards activities that have the greatest impact on achieving strategic objectives.
• Performance Monitoring and Early Warning: KPIs serve as a monitoring tool, enabling organizations to proactively identify potential issues and take corrective action before they escalate. By setting thresholds or benchmarks for KPIs, businesses can receive early warnings of performance deviations and make timely adjustments.
• Accountability and Transparency: KPIs promote accountability within the organization. When individuals and teams have clear performance targets, they are more likely to take ownership of their responsibilities and be accountable for their results. KPIs also foster transparency by providing a shared set of metrics that can be easily communicated across the organization.
• Continuous Improvement: KPIs support a culture of continuous improvement by highlighting areas for enhancement. They help identify gaps, inefficiencies, and bottlenecks, prompting organizations to seek innovative solutions and refine processes to drive better performance.
• Performance Recognition and Incentives: KPIs can be used to recognize and reward high performance. By linking KPI achievements to performance-based incentives and recognition programs, organizations can motivate employees and teams to strive for excellence and align their efforts with strategic objectives.

Key characteristics of effective KPIs

Effective Key Performance Indicators (KPIs) possess several key characteristics that contribute to their usefulness and impact. When developing KPIs for your organization, consider the following characteristics to ensure their effectiveness:

• Relevance: Effective KPIs are directly aligned with the strategic objectives of the organization. They measure aspects of performance that are critical to achieving desired outcomes and provide insights into areas that significantly impact the success of the business.
• Measurability: KPIs should be measurable and quantifiable. They should be based on data that can be objectively collected, analyzed, and tracked over time. This allows for accurate and consistent measurement of performance and enables meaningful comparisons and analysis.
• Specificity: Well-defined KPIs are specific and clearly articulated. They should focus on a particular aspect of performance and provide a clear understanding of what is being measured. Vague or ambiguous KPIs can lead to confusion and hinder effective tracking and improvement efforts.
• Actionability: Effective KPIs drive action and provide insights that can be acted upon. They should highlight areas where improvement is needed and offer actionable information to guide decision-making and performance improvement efforts. Actionable KPIs empower individuals and teams to take targeted steps to enhance performance.
• Time-bound: KPIs should be time-bound, meaning they have a specific timeframe within which they are measured. This allows for tracking progress and assessing performance over a defined period. Time-bound KPIs also provide a sense of urgency and help establish clear deadlines for achieving targets.
• Alignment with benchmarks or targets: Effective KPIs are often set in relation to benchmarks or targets. They provide a reference point against which performance can be compared. Comparing actual performance to predetermined benchmarks or targets helps evaluate progress and identify areas for improvement.
• Reliable and Accessible Data: KPIs rely on accurate and reliable data to provide meaningful insights. It is important to ensure that the data used for KPI measurement is trustworthy, regularly updated, and easily accessible. Reliable data sources and robust data management systems contribute to the credibility and effectiveness of KPIs.
• Balance: A set of effective KPIs maintains a balance between different aspects of performance. They consider multiple dimensions such as financial, operational, customer satisfaction, employee engagement, and other relevant areas. A well-balanced set of KPIs provides a holistic view of performance and enables comprehensive evaluation.

Different types of Key Performance Indicators 

There are various types of Key Performance Indicators (KPIs), each focusing on different aspects of organizational performance. Here are some common types of KPIs that span different areas of business:

• Financial KPIs: These KPIs measure financial performance and help assess the organization’s profitability, revenue generation, cost management, and financial stability. Examples include revenue growth rate, gross profit margin, return on investment (ROI), and cash flow.
• Operational KPIs: Operational KPIs evaluate the efficiency and effectiveness of business operations. They focus on key processes, productivity, quality, and resource utilization. Examples include production cycle time, order fulfillment rate, customer complaints resolved, and inventory turnover.
• Customer KPIs: Customer-centric KPIs assess various aspects of customer satisfaction, loyalty, and engagement. They provide insights into customer behavior, preferences, and the overall customer experience. Examples include customer satisfaction score (CSAT), Net Promoter Score (NPS), customer retention rate, and average order value.
• Sales and Marketing KPIs: These KPIs measure the effectiveness of sales and marketing efforts in generating leads, acquiring customers, and driving revenue. Examples include conversion rate, lead-to-opportunity ratio, customer acquisition cost (CAC), and marketing return on investment (ROI).
• Employee KPIs: Employee-focused KPIs evaluate individual and team performance, employee engagement, and development. They can include metrics such as employee satisfaction, training and development hours, employee turnover rate, and productivity per employee.
• Quality and Service KPIs: These KPIs assess the quality of products or services delivered by the organization. They measure aspects such as defect rate, service response time, customer complaints, and adherence to quality standards.
• Sustainability and Environmental KPIs: These KPIs focus on environmental and sustainability efforts within the organization. They evaluate metrics such as energy consumption, waste reduction, carbon footprint, and adherence to sustainability goals.
• Health and Safety KPIs: Health and safety KPIs monitor the organization’s commitment to maintaining a safe work environment. They can include metrics like accident frequency rate, near-miss incidents, compliance with safety regulations, and employee training hours on safety protocols.

Steps in Developing Key Performance Indicators 

Here are seven essential steps that lead you to develop robust KPIs that drive performance, inform decision-making, and contribute to the achievement of your organizational objectives.

Step 1: Identify and Prioritize Strategic Goals

Begin by identifying the key strategic goals that will drive your organization’s success. These goals should be specific to your business and reflect what you aim to achieve within a defined timeframe. For example, increasing market share, expanding into new markets, improving customer satisfaction, or enhancing operational efficiency.

Ensure that your objectives align with your organization’s mission and vision statements. These statements define the purpose and long-term aspirations of your business. Aligning your objectives with them creates a sense of purpose and direction, ensuring that your KPIs contribute to the overall strategic direction of the organization.

Step 2: Selecting the Right KPIs

Once you have defined your business objectives, the next step is to identify the relevant metrics that will help measure progress and performance in relation to those objectives.

Break down each business objective into specific components or key focus areas. For example, if your objective is to increase customer satisfaction, relevant focus areas may include response time, complaint resolution rate, or customer retention.

Brainstorm a list of potential metrics that align with each focus area. Consider both quantitative and qualitative measures that provide insights into the specific aspect of performance you want to track.

For instance, if response time is a focus area, a relevant metric could be average response time to customer inquiries.

Step 3: Linking KPIs to strategic goals

Once you have identified the relevant metrics, the next step is to link them to your strategic goals. This linkage ensures that your KPIs directly contribute to the achievement of your overall strategic objectives. 

Determine how each KPI directly relates to a specific strategic goal. Articulate how achieving the KPI will impact the progress towards the strategic objective. This connection helps create a clear line of sight between your KPIs and your broader business goals.

Ensure that each KPI aligns with only one or a few strategic goals. Avoid selecting KPIs that overlap or dilute the focus of your objectives. Each KPI should have a clear and direct relationship to a specific strategic goal, allowing for targeted measurement and improvement efforts.

Step 4: Establishing a data collection and management system

To effectively measure and track your KPIs, it’s important to establish a robust data collection and management system.

Identify the sources of data needed to measure each KPI. This may include internal systems, databases, surveys, customer feedback, or external sources. Ensure that the data sources are reliable and provide the necessary information for accurate measurement.

Define the processes and procedures for collecting data. Determine how and when data will be collected, who is responsible for data collection, and any necessary tools or technology required. Implement quality control measures to ensure data accuracy and consistency.

Step 5:  Defining measurement methods and frequency

Determine the most appropriate methods for measuring each KPI. This could involve quantitative analysis, surveys, qualitative assessments, or a combination of methods. Consider the nature of the KPI and the available data when selecting measurement methods.

Identify the specific metrics and formulas used to calculate quantitative KPIs. Determine the units of measurement and any necessary calculations or aggregations.

For KPIs that involve subjective or qualitative data, define the assessment criteria and rating scales. Establish guidelines to ensure consistency and objectivity in the assessment process.

 Determine how often each KPI will be measured and reported. The frequency may vary depending on the nature of the KPI and the need for real-time or periodic tracking. Consider the availability of data and the desired level of granularity when determining measurement frequency.

Assign clear responsibilities for data collection, analysis, and reporting. Identify the individuals or teams responsible for collecting the data, analyzing the results, and ensuring data integrity. Foster collaboration and communication among the responsible parties to facilitate effective KPI management.

Step 6: Creating a KPI reporting framework

Develop a reporting framework that outlines the structure and content of your KPI reports. Consider the following elements:

Determine the format of your KPI reports, such as dashboards, visualizations, or written summaries. Choose a format that effectively communicates the key information and insights.

Define the structure of the report, including the KPIs to be included, supporting metrics, targets or benchmarks, and any contextual information or analysis. Ensure that the report provides a clear and concise overview of performance.

Step 7: Visualization techniques for effective communication

Utilize visualization techniques to enhance the communication of KPI data. Visualizations such as charts, graphs, and infographics can make complex data more understandable and engaging. Choose visualizations that best represent the data and highlight trends, patterns, and performance gaps.

Choose visualizations that effectively represent the KPI data and highlight the key insights. Consider bar charts, line graphs, pie charts, or heatmaps, depending on the nature of the data and the message you want to convey.

Ensure that the visualizations are easy to interpret and understand. Use clear labels, appropriate color schemes, and appropriate scaling to enhance clarity and readability.

Final Words 

Knowing how to develop key performance indicators is important skill because KPIs are crucial to measure progress and success in organizations. By following the essential steps of defining business objectives, identifying relevant metrics, and linking KPIs to strategic goals, you can ensure that your KPIs are aligned with your organization’s mission and vision. 

Remember, the journey of developing and implementing KPIs is not a one-time event but an ongoing process. Regularly review and refine your KPIs to ensure their relevance and alignment with your evolving business needs. By leveraging the power of KPIs, you can gain valuable insights, track progress, make data-driven decisions, and foster a culture of continuous improvement, ultimately leading to enhanced performance and success for your organization

About The Author

Tahir Abbas

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Key performance indicators for business models: a systematic review and catalog

• Original Article
• Open access
• Published: 19 September 2023
• Volume 21 , pages 753–794, ( 2023 )

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• Montijn van de Ven   ORCID: orcid.org/0000-0001-7521-3324 1 ,
• Paola Lara Machado   ORCID: orcid.org/0000-0002-5983-0936 1 ,
• Alexia Athanasopoulou   ORCID: orcid.org/0000-0003-0274-2561 1 ,
• Banu Aysolmaz   ORCID: orcid.org/0000-0002-6540-5100 1 &
• Oktay Turetken   ORCID: orcid.org/0000-0003-3798-0439 1  

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Organizations continuously adapt and innovate their business models to remain competitive. To support the management of business models throughout their lifecycle, Key Performance Indicators (KPIs) related to business models play an important role. However, the current research on business model KPIs is dispersed and lacks clarity on how they are defined, concretized, and managed throughout their lifecycle. Therefore, we conducted a systematic literature review to analyze and consolidate the current state of the research on KPIs for business models. We identified 35 relevant publications and classified them in a concept matrix consisting of five categories related to business models and KPI management. In addition, we synthesized the business model KPIs referred to in the literature into a catalog structured by business model dimensions. Based on our review and analysis, we formulate avenues for further research on KPIs for business models. Practitioners can use the overview of available approaches for business model KPI management and the catalog of business model KPIs to effectively manage and define KPIs for their organization’s business models.

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1 Introduction

To remain competitive in today’s dynamic business environment, organizations focus on continuously innovating and improving their business models (Foss and Saebi 2017 ; Wirtz and Daiser 2018 ). A business model describes how an organization creates, delivers, and captures value (Teece 2010 ). It functions as a useful concept to understand, communicate, and manage an organization’s business logic (Osterwalder et al. 2005 ). The management of business models is viewed as a continuous cycle, referred to as the business model management lifecycle (Terrenghi et al. 2017 ; Wirtz 2020 ; Globocnik et al. 2020 ). The business model management lifecycle generally consists of five main phases: design, implementation, operation, adaptation and modification, and control (Wirtz 2020 ). To support decision-makers in effectively managing their organization’s business models throughout their lifecycle, Key Performance Indicators (KPIs) play a crucial role.

KPIs are a set of performance indicators (also called performance measures or performance metrics) that capture the most critical performance aspects for an organization’s current and future success (Parmenter 2020 ). They enable organizations to operationalize their strategic objectives and assess how well they are performing in relation to these objectives (Domínguez et al. 2019 ). In the context of business model management, KPIs are essential in guiding the development and evaluation of business models across all phases of their lifecycle (Gilsing et al. 2022 ). In the design phase, organizations use KPIs to formulate measurable objectives for new business models (Heikkilä et al. 2016 ; Gilsing et al. 2021b ). During implementation, the selected KPIs are further concretized to evaluate and track the performance of the new model (di Valentin et al. 2013 ; Stalmachova et al. 2022 ). Once the business model is operationalized, organizations use KPIs to control their business model performance and benchmark against competitors to make timely adaptations (Afuah and Tucci 2003 ).

Several research contributions toward the definition of business model KPIs have been reported in the academic literature. Existing research mainly consists of KPI lists dedicated toward a specific business model type, such as KPIs for networked organizations (Heikkilä et al. 2016 ) or e-business models (Dubosson-Torbay et al. 2002 ). Moreover, several methods and frameworks have been put forward to support the definition of KPIs for business models (e.g., Heikkilä et al. 2014 ; Montemari et al. 2019 ). Despite these contributions, the existing knowledge on business model KPIs is fragmented. Currently, researchers lack an overview of which business model KPIs are proposed in the academic literature and how existing research supports organizations in systematically managing their business model KPIs. At the same time, practitioners are still facing challenges in identifying relevant KPIs for their organization’s business models (Terrenghi et al. 2017 ). Without the right KPIs, a gap might occur between the envisioned business model design and its implementation, resulting in many promising business model ideas failing to reach the market (Frankenberger et al. 2013 ; Geissdoerfer et al. 2017 ).

To address this research gap, we aimed to analyze and consolidate the current state of the literature on business model KPIs. Accordingly, we formulated the following research question (RQ) to guide our research:

Which KPIs related to business models are referred to in the academic literature, and how are they managed?

To answer this question, we conducted a systematic literature review to identify existing studies on business model KPIs. We iteratively classified the existing works in a concept matrix to analyze how they contribute to the management of business model KPIs and to identify key shortcomings in the literature. Moreover, we extracted the business model KPIs mentioned in the selected studies and synthesized them into a catalog structured by business model dimensions.

Our review contributes to business model research by providing a structured overview and critical assessment of the research on business model KPIs. Thereby our research responds to the multiple calls in the literature for investigating KPIs for business models and how they can be managed (Burkhart et al. 2011 ; Lambert and Montemari 2017 ; Nielsen et al. 2018 ). Based on our review and synthesis of the literature, we formulated avenues for further research on business model KPIs and their respective management. We contribute to practice by providing an overview of available approaches for business model KPI management that organizations can adopt to effectively manage their business models across all phases of their lifecycle. Furthermore, organizations can use the KPI catalog to identify and define KPIs for their business models. The catalog provides a comprehensive categorization of business model KPIs that can be tailored to the specific context and needs of the organization.

The remainder of this paper is structured as follows. Section  2 provides the background on the key concepts of business model, KPI management, and KPI-based business model evaluation. Next, Sect.  3 describes our research approach and the development of the concept matrix and catalog of KPIs. We present the results of our review and analysis in Sect.  4 . In Sect.  5 , we discuss the results and outline opportunities for future research. Finally, Sect.  6 concludes our review and discusses its limitations.

2 Background

2.1 the business model concept.

In the last two decades, the business model concept has gained importance in several research domains, including information systems (IS), strategic management, and technology and innovation management (Zott et al. 2011 ; Wirtz et al. 2016 ; Massa et al. 2017 ), and more recently, in environmental sustainability and social entrepreneurship (Evans et al. 2017 ; Geissdoerfer et al. 2018 ; Pedersen et al. 2021 ). Over the years, researchers have proposed several business model definitions and interpretations of the concept (Al-Debei and Avison 2010 ; Zott et al. 2011 ; Massa et al. 2017 ). For example, according to Magretta ( 2002 ), a business model can be described by a story that explains how an organization operates. According to Casadesus-Masanell and Ricart ( 2010 ), business models are made up of strategic choices and the consequences of these choices , and as such, they reflect an organization’s realized strategy. Other researchers have investigated business models as activity systems (Zott and Amit 2010 ), models (Baden-Fuller and Morgan 2010 ), and configurational patterns for addressing reoccurring business problems (Gassmann et al. 2014 ; Taran et al. 2016 ).

Despite this vast amount of research, researchers have not yet reached an agreement about the definition of a business model (Zott et al. 2011 ; Foss and Saebi 2018 ). Nevertheless, according to Foss and Saebi ( 2017 ), most definitions in the current literature are consistent with Teece ( 2010 ), who defines a business model as “the design or architecture of the value creation, delivery, and capture mechanisms” of an organization (Teece 2010 , p. 172). We follow this convergence and adopt Teece’s ( 2010 ) definition in this study. A well-designed business model describes what value proposition the organization offers, who the target customer is, what capabilities are needed to support this, and what costs and benefits are associated with this (Gassmann et al. 2014 ; Turetken et al. 2019 ).

From an IS perspective, a business model functions as an intermediate conceptual layer between an organization’s business strategy and business processes, including its information technology (IT) systems (Al-Debei and Avison 2010 ; Veit et al. 2014 ). One of the main differences between these organizational layers is the nature of the information that each concept provides (Al-Debei and Avison 2010 ). While a business strategy provides a set of high-level choices of how an organization will compete in a particular industry, the business model depicts the organization’s tactical choices about how it creates value for its customers and captures value from this (Magretta 2002 ; Casadesus-Masanell and Ricart 2010 ). In contrast, business processes provide a more detailed description of how an organization’s operations are executed (Gordijn et al. 2000 ; Turetken et al. 2019 ). Consequently, the business model has emerged as a distinct unit of analysis and innovation (Zott and Amit 2013 ; Saebi et al. 2017 ) that exceeds the scope of other concepts, such as products, services, and business processes (Bucherer et al. 2012 ; Frankenberger et al. 2013 ; Lara Machado et al. 2022 ).

To support the management of business models throughout their lifecycle, several frameworks, methods, and software tools have been put forward in the literature (Bouwman et al. 2012 ; Schwarz and Legner 2020 ). The most influential business model framework in both research and practice is the Business Model Canvas (BMC) by Osterwalder and Pigneur ( 2010 ). Originally based on the Business Model Ontology (BMO) (Osterwalder 2004 ), the BMC consists of nine building blocks of business models, namely value propositions, customer segments, customer relationships, channels, key partners, key activities, key resources, cost structure, and revenue streams (Osterwalder and Pigneur 2010 ). It poses as the quasi-standard for analyzing and communicating business models (Massa et al. 2017 ; Foss and Saebi 2018 ). Other frequently used business model frameworks and conceptualizations include the unified business model framework (Al-Debei and Avison 2010 ), STOF model (Bouwman et al. 2008 ), and Business Model Navigator (Gassmann et al. 2014 ). These business model tools function as boundary objects that facilitate collaboration and communication about business models between stakeholders (Schwarz and Legner 2020 ).

In practice, most organizations adopt more than one business model targeting different customer segments or industries (Schwarz et al. 2017 ). For example, Mercedes-Benz decided to partner up with BMW to complement its traditional car manufacturing business model with a car-sharing business model under the brand "Share Now”(ShareNow 2022 ). As business models can be vastly different in terms of their target customers, value offerings, and the required resources and activities to realize them, different business models will have different business model KPIs (Heikkilä et al. 2016 ; Gilsing et al. 2021b ). For instance, KPIs relevant for the business model of consumer bank in digital transformation (Stalmachova et al. 2022 ) will be very different from the KPIs of a smart city business model (Díaz-Díaz et al. 2017 ).

2.2 Managing key performance indicators

Organizations need to evaluate their activities and systems to determine the extent to which their objectives are being fulfilled. Therefore, they carry out performance measurement activities, for which they make use of metrics known as Key Performance Indicators (KPIs) (Domínguez et al. 2019 ). KPIs are defined as “ those indicators that focus on the aspects of organizational performance that are the most critical for the current and future success of the organization ” (Parmenter 2020 , p. 6). KPIs are used to measure the impact of change and, thus, are distinct from other performance concepts such as “evaluation criteria” (used to assess whether or not performance has changed) and “success factors” (used to explain the drivers behind performance) (Parmenter 2020 ). Using KPIs for performance measurement is the most common approach used in practice, surpassing other methods and tools such as performance appraisals, mission and vision statements, and Lean/Six Sigma management, as shown by a global survey by the Advanced Performance Institute (Marr 2012 ).

KPIs are used to measure performance at different organizational levels. While KPIs at the strategic level are often driven by external stakeholder perspectives, managers at the tactical level (i.e., the level of the business model) use KPIs to allocate resources and evaluate business performance against strategic objectives (Chennell et al. 2000 ; Gunasekaran et al. 2004 ). At the operational level, operational performance indicators and metrics are used to evaluate the business processes that support delivering products and services to the customer (Del-Río-Ortega et al. 2013 ; Van Looy and Shafagatova 2016 ). While the use of KPIs for measuring business process performance is a well-established concept in research and practice (e.g., Wieland et al. 2015 ; Van Looy and Shafagatova 2016 ), little attention has been paid to identifying KPIs relevant to measuring and managing the performance of business models (Nielsen et al. 2018 ).

Typically, the identification and analysis of relevant KPIs are part of the performance measurement activities suggested by performance measurement methods and frameworks (Nudurupati et al. 2011 ). These tools help organizations plan and conduct performance measurement activities in many different fields, including strategic management (Kaplan and Norton 1996 ), business process management (Leyer et al. 2015 ), enterprise architecture (Schelp and Stutz 2007 ), and supply chain management (Gunasekaran et al. 2004 ). One of the most well-known performance measurement frameworks is the Balanced Scorecard (BSC), developed by Kaplan and Norton ( 1992 , 1996 ). The BSC is used for translating an organization’s strategic objectives into measurable outcomes based on four dimensions of organizational performance: financial, customer, internal business processes, and learning and growth. It is the most frequently used performance measurement framework in both research and practice (Neely et al. 2005 ; Bain & Company 2018 ). Other frequently discussed methods and frameworks in the literature include the Performance Pyramid (Cross and Lynch 1988 ), Performance Measurement Matrix (Keegan et al. 1989 ), Goal Question Metric approach (Basili et al. 1994 ), and Performance Prism (Neely et al. 2001 ).

Business model performance is distinct from firm performance. As in the example of the automotive company Mercedes-Benz, customer satisfaction can be measured as an organizational KPI to evaluate the overall strategy and performance of the firm (Williams and Naumann 2011 ). However, since Mercedes-Benz is running multiple business models in parallel (i.e., a manufacturing and a car-sharing business model), the organization would also want to measure customer satisfaction separately in different ways for its distinct business models targeted at different customer segments, to manage how they perform. In addition, different business models require different business model KPIs. For instance, the value proposition that Mercedes-Benz offers in its manufacturing business model is different than the value proposition of its car-sharing business model. These two different business models also have a unique revenue model and specific business processes and activities to support it. As such, Mercedes-Benz would want to specify different KPIs for each business model to manage their performance.

2.3 Business model evaluation and key performance indicators

In recent years, there has been a rise in the number of publications related to business model evaluation (Budler et al. 2021 ; Gilsing et al. 2022 ). Evaluation of business models takes place during the different phases of the business model management lifecycle. During the early phases (e.g., design), evaluation activities are performed to assess different business model design alternatives and support design decisions (Mateu and Escribá-Esteve 2019 ; Gilsing et al. 2021a ). Subsequently, in later phases of the lifecycle (i.e., during implementation and operation), business model evaluation aids in monitoring operational performance and mitigating risks and uncertainty regarding the newly implemented business model (di Valentin et al. 2013 ; Terrenghi et al. 2017 ).

Several approaches for business model evaluation are presented in the literature (Tesch and Brillinger 2017 ; Gilsing et al. 2022 ). Evaluation approaches used prior to the implementation of a business model include the assessment of different alternative business model designs and trial-and-error-based testing and prototyping, which are often of qualitative nature (Tesch and Brillinger 2017 ). Examples of such approaches include SWOT analysis (Osterwalder and Pigneur 2010 ), external driver analysis (de Reuver et al. 2009 ), and business model roadmapping (de Reuver et al. 2013 ). As the business model progresses toward implementation and operation, data and information about the business model and its performance become increasingly available and accurate (Gilsing et al. 2021b ). Therefore, evaluation approaches used during and after business model implementation often rely on quantitative data and include financial spreadsheets (Gordijn and Akkermans 2001 ; Daas et al. 2013 ), decision support systems (di Valentin et al. 2013 ; Dellermann et al. 2019 ), and simulation analysis using System Dynamics (Cosenz and Noto 2018 ; Moellers et al. 2019 ).

One possible way to evaluate business models is by using KPIs (Heikkilä et al. 2016 ; Gilsing et al. 2021b ). Business model KPIs are used and managed in various ways and are used before, during, and after business model implementation. Before business model implementation, organizations use KPIs to formulate measurable objectives for the expected performance of a newly designed business model (Heikkilä et al. 2014 ; Montemari et al. 2019 ; Gilsing et al. 2021b ). For example, organizations may be interested in measuring the satisfaction of customer needs, which is an important indicator of business model performance (Wirtz 2020 ). During and after business model implementation, KPIs are used to monitor and control a business model’s performance, to make timely improvements and adaptations when the model’s performance deflects from its expected performance (di Valentin et al. 2013 ; Globocnik et al. 2020 ). Once the business model is implemented and operational, KPIs provide a way to compare alternative business models and benchmark an organization’s business model against those of competitors (Afuah and Tucci 2003 ; Díaz-Díaz et al. 2017 ).

In sum, we argue that KPIs are instrumental for business model evaluation, as they can be used to measure, monitor, and compare the performance of business models throughout their lifecycle.

3 Research approach

The objective of our research is to analyze and consolidate the current state of the literature on business model KPIs. To this end, we conducted a systematic literature review. A systematic literature review is a structured and reproducible method to identify, evaluate, and synthesize the existing body of knowledge (Kitchenham and Charters 2007 ; Snyder 2019 ) and to provide a foundation for future research on a particular topic of interest (Webster and Watson 2002 ). In IS research on business models, systematic literature reviews have been conducted to investigate methods for evaluating business models (Gilsing et al. 2022 ), dependencies among business model dimensions (Vorbohle et al. 2021 ), and characteristics of business model portfolios (Schwarz et al. 2017 ). In this study, we use a systematic literature review to assess existing research on KPIs for business models and to synthesize the KPIs mentioned in existing research into a catalog.

Scholars have proposed various guidelines and approaches for conducting systematic literature reviews in IS research (Vom Brocke et al. 2015 ). While most approaches offer general guidelines for conducting the review, different studies have different emphases. For example, Levy and Ellis ( 2006 ) recommend that researchers build on reputable and peer-reviewed IS journals and conference outlets. Vom Brocke et al. ( 2009 ) and Bandara et al. ( 2011 ) emphasize the need to rigorously document the literature search process. Other approaches include guidelines for synthesizing and presenting the findings of a literature review in a structured way (Webster and Watson 2002 ).

In this study, we adopt the guidelines for conducting a standalone systematic literature review by Okoli ( 2015 ), because it provides a standardized process with step-by-step guidelines. It is especially suitable for studies in which multiple researchers are involved. Accordingly, our research process comprises four main phases: planning , selection , extraction , and execution (Okoli 2015 ). The following subsections describe the literature search and selection process (Sect.  3.1 ), the development of a concept matrix based on the analysis of the selected studies (Sect.  3.2 ), and the coding and synthesis of the identified business model KPIs in a structured catalog (Sect.  3.3 ).

3.1 Systematic literature review process

During the planning phase , we identified the purpose of our literature review and drafted the review protocol. The purpose of our review is to analyze the current state of research on KPIs for business models. Based on our review and analysis, we aim to identify the gaps and develop recommendations for future research. Our review is aimed at researchers who study business models and practitioners who are designing and implementing an organization’s business model. Subsequently, we established a review protocol that all authors followed to discover and examine relevant studies, which we describe in more detail below.

In the selection phase , we first conducted pilot searches in the academic library Scopus using different combinations of keywords. Based on this initial search, we specified the following search string: “business model*” AND (“performance indicator*” OR “performance measure*” OR “performance metric*” OR “KPI*”) . We included the terms (key) performance indicator, performance measure, and performance metric in our search string since these terms are often used interchangeably in the literature (Lebas and Euske 2007 ). In this paper, we adopt the term “KPI”, as managers in practice mostly use this term to refer to a carefully selected set of performance indicators with a specific purpose in mind (Hope 2007 ). After determining the search string, we defined several criteria for including or excluding publications during our review. We decided to include only studies that (1) adopt a definition of business models that is in line with our interpretation of the concept as outlined in Sect.  1 , (2) present clearly defined business model KPIs or approaches for business model KPI management, performance indicators, measures, or metrics, (3) are published in academic venues, such as journals, conference proceedings, or academic book chapters (and excluded those that are published as workshop proceedings, book editorials, and case study descriptions), and (4) are written in English. Subsequently, we selected the digital libraries Scopus , Web of Science , and AISeL to identify relevant studies, as their combination covers the venues that are most relevant to the objective of our study (Bandara et al. 2011 ). We conducted a title, abstract, and keyword search within these libraries using the specified search string, which resulted in an initial set of 879 studies (as of 25 April 2022).

Figure  1 provides an overview of the process we followed in the extraction phase, where we systematically extracted relevant information from selected papers. As some studies were present in more than one of the selected libraries, we first eliminated 236 duplicate studies. Next, we screened the titles, abstracts, and keywords of the remaining 589 studies based on our inclusion and exclusion criteria. To increase the reliability of our research, two authors of this paper evaluated the relevance of each study. The screening of the title, abstract, and keywords resulted in an exclusion of 423 studies. The two authors independently reviewed the full text of the remaining 220 studies. Any conflict of thought on why a publication should be included or excluded was discussed by the authors until an agreement was reached. We excluded publications that did not fit the scope of our study; for instance, publications that investigate the effect of business models on firm performance (Andries and Debackere 2007 ; König et al. 2019 ; Haddad et al. 2020 ) or publications that do not clearly relate the presented KPIs to business models (Guah and Currie 2004 ; Dangayach et al. 2020 ; Cavicchi and Vagnoni 2022 ). Moreover, we found that some authors published multiple studies on developing a single approach (e.g., Wilbik et al. 2020 ; Gilsing et al. 2021b ). In these cases, we selected the most comprehensive study.

Overview of the research process in the extraction phase

Based on the full-text review, we selected 20 studies that we deemed relevant for the scope of our review and that met the inclusion/exclusion criteria. Next, we performed a structured snowballing procedure (Wohlin 2014 ) to discover related works on business model KPIs and KPI management. The snowballing procedure started with the initial set of 20 studies resulting from our search and review of the literature in the selected databases. First, we performed a backward snowballing search by identifying and scanning the publications referenced by the studies in our initial set. To include or exclude new publications, we applied the same criteria as specified in the selection phase of our review. Second, we performed a forward snowballing search on the initial set of studies using the ‘cited by’ feature in Google Scholar, as suggested by Wohlin ( 2014 ). We scanned the titles of the citing publications to decide about their relevancy and scanned the abstracts and full texts if we considered the publication potentially relevant. If a new study was included in our sample, we also analyzed its references and the publications it was cited by to discover additional relevant works. We continued these iterations of snowballing back and forth until no new relevant publications were found (Wohlin 2014 ). The snowballing procedure resulted in the discovery of an additional 15 relevant publications, leading to a final set of 35 selected studies.

Finally, in the execution phase of our literature review, we analyzed and synthesized the findings from the selected papers. To investigate how existing research supports the management of business model KPIs, we analyzed the final set of 35 studies following a concept-centric approach through a concept matrix (Webster and Watson 2002 ). We describe the development process of the concept matrix in Sect.  3.2 . To identify which business model KPIs are referred to in the academic literature, we aimed to extract KPIs related to business models from the selected studies and synthesize them into a catalog of business model KPIs. The iterative coding and synthesis process is described in Sect.  3.3 .

3.2 Development of the concept matrix

The categories in the concept matrix and their respective concepts were derived based on the theoretical works on business models and KPI management. They were refined through an iterative process of analyzing the selected studies. The goal of developing a concept matrix is to provide an overview of the existing literature and identify knowledge gaps that can pose opportunities for further research (Vom Brocke et al. 2009 ).

We derived the following categories from the literature (Fig.  2 ): the type of approach , the support offered during different KPI management lifecycle phases, the stage at which the KPIs are used, the KPI type , and the context for which the approach is designed. In the following, we describe each category and its related concepts in more detail.

Identified categories and concepts for business model KPI management

The approaches defined in the identified papers can be considered as design artefacts (Hevner et al. 2004 ). Accordingly, artefacts can be in the form of a construct (vocabulary, symbols), model (abstractions, representations), method (practices), and instantiation (implementations, prototype systems). In the context of our research, constructs are not a relevant form of approach regarding the management of KPIs. Moreover, we consider KPIs , catalogs of KPIs , and frameworks as types of models , because they provide representations and abstractions (Hevner et al. 2004 ) that support decision-making about business model KPIs. We interpret KPIs as a central aspect of performance to an organization’s current and future success (Parmenter 2020 ). While some studies give examples of one or multiple KPIs, others systematically propose catalogs of KPIs . The catalogs presented in the literature are lists or repositories of multiple business model KPIs that are structured based on a set of specific elements, such as business model dimensions (Dubosson-Torbay et al. 2002 ; Heikkilä et al. 2016 ) or value chain activities (di Valentin et al. 2012b ). Furthermore, several studies have developed a framework from which business model KPIs can be derived. In light of our research, we view frameworks as meta-models (Peffers et al. 2012 ) that provide a conceptual structure intended to support or guide business model KPI management. Furthermore, we consider methods to be a set of practical guidelines structured in a systematic way (Brinkkemper 1996 ) that aids in managing business model KPIs. Finally, we view instantiations as the conceptual structure or implementation of models and methods in (part of) a software system (Hevner et al. 2004 ) that is dedicated to business model KPI management.

The existing approaches provide support during the different phases of the KPI management lifecycle . Based on KPI lifecycles and performance measurement phases mentioned in the existing business model literature (Heikkilä et al. 2014 ; Mourtzis et al. 2018 ; Montemari et al. 2019 ), and inspired by the business process KPI lifecycle by Del-Río-Ortega and Resinas ( 2009 ) and the KPI management taxonomy by Domínguez et al. ( 2019 ), we uncovered five generic phases in the lifecycle of business model KPI management: definition, selection, operationalization, measurement , and reporting . During the definition phase, KPIs are identified and defined to measure the performance of a particular business model. The selection phase involves picking a set of relevant KPIs based on the organization’s strategic objectives. Subsequently, the selected KPIs are gradually concretized during the operationalization phase. In the measurement phase, the values of the concretized KPIs are calculated. To calculate the KPI values, performance data and information about the business model need to be gathered. Lastly, in the reporting phase, the measured KPI values are summarized into a comprehensive report or dashboard, which the responsible decision-maker can monitor.

KPIs are used in two stages : ex-ante realization and ex-post realization . The use of KPIs in ex-ante realization implies that the KPIs are defined and evaluated during the analysis and design phase of a new business model, before the new model is implemented (Heikkilä et al. 2014 ; Gilsing et al. 2021a ). In the early phases of business model management, KPIs and their associated values often take the form of qualitative statements based on the intentions and expectations of the focal organization’s management (Gilsing et al. 2020 ). These qualitative KPIs are then concretized when the newly designed business model is implemented (Heikkilä et al. 2016 ). Subsequently, KPIs are used in ex-post realization to monitor and control the performance of the new model based on the concrete KPIs and their expected values (Wirtz et al. 2016 ; Terrenghi et al. 2017 ).

We identify two types of KPIs : quantitative and qualitative (Domínguez et al. 2019 ). Qualitative KPIs are metrics that are not directly measurable (Popova and Sharpanskykh 2010 ). Examples of such KPIs in the business model context include customer satisfaction, brand image, and service quality (Heikkilä et al. 2016 ). Qualitative KPIs can be measured by aggregating other metrics or by, for example, conducting survey data analysis (Domínguez et al. 2019 ). On the other hand, quantitative KPIs are hard performance indicators that are directly measurable (Popova and Sharpanskykh 2010 ). For business models, examples of quantitative KPIs include the number of unique visitors, number of customer complaints, time to market (in days), and average order size (Heikkilä et al. 2016 ). If a study provides an approach or KPI of the quantitative type, we classify it as quantitative, and the other way around for qualitative. When publications provide approaches or KPIs for both qualitative and quantitative KPIs, we classify them into both categories.

The context of the approach describes the hierarchical level of the business model for which the approach is designed. Following Osterwalder et al. ( 2005 ), we make a distinction between two hierarchical conceptual levels of the business model: (1) approaches that are focused on managing KPIs for a specific type of business model, such as start-ups and governmental organizations, and (2) approaches that are focused on KPIs and their management for business models in general .

3.3 Development of the catalog of business model key performance indicators

To identify KPIs related to business models, we screened the selected sample of studies resulting from the systematic literature review (Sect.  3.1 ). We performed several coding iterations to synthesize the extracted KPIs from the selected studies into a catalog. Figure  3 shows the catalog development process.

Catalog development process

In the first iteration, two authors iteratively screened and coded the KPIs presented in each publication. We found that 31 of the 35 publications in the sample contained some type of KPIs related to business models. In total, we extracted an unstructured set of 951 KPIs from the sample, including duplicates. In this phase, we also kept track of how the KPIs were operationalized, for example, through a qualitative question or mathematical formula. The qualitative questions are expected to be answered by managers in a subjective way to provide an indication of a given performance aspect. On the other hand, mathematical formulas are used to calculate KPIs in an objective way based on quantitative data. We must, however, note that 16 of the 31 selected studies did not provide a concrete operationalization for the presented KPIs.

In the second iteration, we defined the initial conceptual dimensions of the catalog. We selected the nine building blocks of the Business Model Canvas (BMC) (Osterwalder and Pigneur 2010 ) as initial dimensions of the catalog: value propositions, customer relationships, customer segments, channels, key activities, key resources, key partners, revenues streams, and cost structure. We chose the BMC because it is the most widely used framework to represent business models in research and practice (Massa et al. 2017 ) and because it is a general framework that is not specific to a particular business model context. We favored the BMC over other performance measurement frameworks, such as the Balanced Scorecard (BSC), because it is typically used to evaluate business model performance (e.g., Montemari et al. 2019 ; Minatogawa et al. 2019 ; Stalmachova et al. 2022 ). Thus, in the context of performance measurement, business model dimensions can be used to guide the identification of KPIs that can be measured and compared (Osterwalder et al. 2005 ; Batocchio et al. 2017 ).

In addition, we adopted the term ‘business model pillar’ (Osterwalder et al. 2005 ) to describe the meta-dimensions of the catalog. Accordingly, we categorized the initial nine BMC dimensions into the business model pillars ‘Frontstage’, ‘Backstage’, and ‘Profit Formula’ (Osterwalder et al. 2020 ). The Frontstage pillar includes KPIs related to the value propositions, customer relationships, customer segments, and channels. The KPIs categorized in the Backstage pillar are concerned with the performance of the business model’s key activities, key resources, and key partners. The third pillar, Profit formula, contains KPIs related to the value capture mechanism of the business model and, thus, includes the revenue stream and cost structure dimensions.

Next, we inductively coded and classified the identified business model KPIs according to the nine dimensions of the BMC. In this phase, we combined similar indicators and rephrased their names into more general terms. For instance, we merged the identified KPIs ‘(Customer) value’ (Afuah and Tucci 2003 ) and ‘Extent to which the business model is valuable’ (Heikkilä et al. 2016 ) into the more general KPI ‘Perceived customer benefit’. Moreover, during this iterative process of categorization and synthesis, we discovered that several KPIs presented in the literature were related to profitability, which relates to both the revenue streams and cost structure of business models (Osterwalder 2004 ). Therefore, we added the new dimension ‘Profitability’ to the Profit Formula pillar to account for profit-related KPIs mentioned in the literature. We added the ‘Context’ pillar to categorize KPIs related to a business model’s ‘contextual logic’ (Lüdeke-Freund et al. 2017 ), which refers to the broader stakeholder environment in which the business model is embedded. We identified two subcategories of KPIs related to the Context pillar of business models: a market subcategory and a sustainability and society subcategory. The market subcategory includes KPIs related to the market that the business model operates in, such as indicators related to shareholder expectations. The sustainability and society subcategory is concerned with KPIs related to non-economic costs and benefits for the environment and society in which the business model is embedded.

Lastly, we adapted and refined the operationalizations of the KPIs in this phase. If the original authors of a publication provided a suitable description of the operationalization of a KPI, we adopted that description in our catalog. When an operationalization depicted by the original authors did not provide sufficient detail, we discussed and improved it. We tried to define the operationalizations as close as possible to their original definition and context by providing additional insight into how they could be defined. If the operationalization of a KPI was missing, we looked for appropriate definitions in the literature and discussed them to reach a consensus.

After reaching an agreement about the initial catalog, our third and final iteration consisted of reordering and refining it until all authors agreed on its final form. To ensure the robustness and comprehensiveness of the catalog, the authors met multiple times to align on the tentative syntheses and categorization of the KPIs. Therefore, the catalog of business model KPIs resulting from the iterative coding process was subsequently validated through triangulation (Cresswell 1998 ) between the authors.

In the following subsections, first, we discuss the distribution of publications resulting from our literature review in terms of their publication year, type of study, and citation network. Next, we present the concept matrix that was filled in based on the results of the review. Lastly, we describe the catalog of business model KPIs.

4.1 Distribution of publications

Figure  4 shows the chronological distribution of publications per year (from 2001 to 2022) and publication type (journal articles, conference papers, and book chapters). The distribution over the years shows that since 2016, more studies on business model KPIs have been published, with the highest number of publications in 2017. Concerning the type of publications, the majority of studies are published in journal articles (N = 16), followed by papers in conference proceedings (N = 15) and book chapters (N = 4). The statistics indicate that before the year 2001, no relevant studies were published. In the initial years, between 2001 and 2007, mainly scholars from the domain of information systems contributed to the number of publications on business model KPIs (e.g., Dubosson-Torbay et al. 2002 ; Bouwman 2003 ; Bouwman and van den Ham 2004 ). In the last five years (2017–2022), the diversity of the contributing domains has increased, with contributions by scholars from the domains of strategic management (e.g., Johnson et al. 2008 ; Wirtz 2020 ), technology and innovation management (e.g., Díaz-Díaz et al. 2017 ; Udo and Ishino 2021 ), and environmental sustainability (e.g., Morioka et al. 2016 ; Lüdeke-Freund et al. 2017 ). This diversity of contributing domains might be explained by the fact that business model research has become increasingly popular over the past two decades (Wirtz et al. 2016 ; Foss and Saebi 2017 ), and in particular by the increasing attention devoted to the topic of business model evaluation since 2016 (Budler et al. 2021 ).

Distribution of publications per year (left) and type (right)

We performed a citation network analysis on the selected publications. This analysis helps to understand the extent to which various authors are aware of one another (Jo et al. 2009 ). A visualization of the citation network of the included publications is shown in Fig.  5 . The nodes in the figure represent the selected publications, and the arrows in between the nodes indicate a citation relationship. As can be seen in the figure, 27 of the 35 selected publications are cited by one or more other publications in the network. The book titled Internet Business Models and Strategies by Afuah and Tucci ( 2003 ) is cited the most among the selected publications, with 13 citations in total. The second most cited publication is the journal article by Osterwalder et al. ( 2005 ), published in the Communications of the Association for Information Systems (CAIS), with 9 citations from the network. The latter publication is considered a seminal work in business model research (Wirtz et al. 2016 ; Massa et al. 2017 ) and includes the proposition that “ understanding a company’s business model facilitates the identification of the indicators to follow in an executive management system ” (Osterwalder et al. 2005 , p. 21). The journal article by Heikkilä et al. ( 2016 ), published in Information Systems and e-Business Management (ISeB), has the highest number of references to other publications in the network, with a total of 9 citations to other studies. Furthermore, eight publications do not have any citations to or from other studies in the network. These publications primarily focus on a specific type of business models, such as business models for human resource management (Khoshalhan and Kaldi 2007 ), healthcare (Kriegel et al. 2016 ), or product-service systems (Kastalli et al. 2013 ; Mourtzis et al. 2018 ). These publications might therefore be less embedded in conventional business model research streams in the domains of information systems, strategy, and innovation management (Zott et al. 2011 ; Wirtz et al. 2016 ). Overall, the network analysis indicates a tight connection among the selected publications. From the citation network analysis, it is clear that an initial knowledge base on KPIs for business models was established in the early 2000s by the publications of Afuah and Tucci ( 2003 ) and Osterwalder et al. ( 2005 ). Other research streams on business model KPIs have evolved around studies on performance management of network-based business models by Heikkilä et al. ( 2014 ) and the book on business model management by Wirtz ( 2020 ). A more recent line of research by Nielsen et al. ( 2017 ) and Montemari et al. ( 2019 ) focuses on demonstrating and describing how the business model concept can be used as a starting point for identifying relevant KPIs that can be used for analysis, benchmarking, and performance management for business models.

Citation network of included publications

4.2 Categorization according to concept matrix

Table 1 provides an overview of the selected 35 publications that we included in our literature review and how they are categorized according to the categories of the concept matrix; i.e., type of approach, the support offered in the KPI management lifecycle, the stage at which the KPIs are used for evaluation, KPI type, and context of the approach. We position the identified studies in the left column of the matrix and the relevant categories and their corresponding concepts in the remaining columns. In the following subsections, we synthesize and discuss the extant research based on the categories in the concept matrix.

4.2.1 Type of approach

We make a distinction between different types of approaches for business model KPI management: Key Performance Indicators (KPIs), catalogs of KPIs, frameworks (all three of which we classify as models), methods, and instantiations.

We discovered various Key Performance Indicators (KPIs) for business models presented in the literature. Examples of KPIs related to business models include customer satisfaction, average delivery time, service availability, number of partners, R&D expenses, and profit margin (Heikkilä et al. 2016 ; Montemari et al. 2019 ). Existing studies mainly focus on defining KPIs for a specific context, such as e-business (Dubosson-Torbay et al. 2002 ; Afuah and Tucci 2003 ; Yu 2006 ) or networked business models (Heikkilä et al. 2014 , 2016 ; Rodríguez-Rodríguez et al. 2015 ), rather than developing generic KPIs for any type of business model. Furthermore, many researchers consider KPIs related to financial aspects to be important indicators of business model performance, such as operational costs, revenue growth, and profit margin (Afuah and Tucci 2003 ; Kijl and Boersma 2010 ; Wirtz 2020 ). Additionally, we observe an increasing interest in defining and measuring non-financial costs and benefits of business models, such as the impact on environmental sustainability and societal benefits (Lüdeke-Freund et al. 2017 ; Turetken et al. 2019 ). Section  4.3 provides a more in-depth analysis of the number and types of business model KPIs presented in the literature.

To introduce business model KPIs in a structured way, researchers often present them in the form of a catalog (e.g., Dubosson-Torbay et al. 2002 ; Kriegel et al. 2016 ; Heikkilä et al. 2016 ). To come up with the set of KPIs in the catalog, researchers carry out literature reviews (Heikkilä et al. 2016 ), expert interviews (di Valentin et al. 2012b ), or a combination of both (Kriegel et al. 2016 ). Two studies also propose digitizing their catalogs in a software-based database (Nielsen et al. 2017 ; Mourtzis et al. 2018 ). One study that stands out is the work by Heikkilä et al. ( 2016 ), which features an extensive KPI catalog for networked enterprises developed based on the business model and performance measurement literature. The catalog is structured using the elements of the CSOFT business model ontology (Heikkilä et al. 2010 ): Customer, Service, Technical, Organizational, and Financial, and extended with three additional perspectives specific to networked organizations (Solaimani and Bouwman 2012 ): Value Exchange, Information exchange, and Process alignment.

Regarding studies that develop frameworks , we found that current research often builds on existing frameworks for developing new ones. We identified nine studies that designed a new framework based on Kaplan and Norton’s ( 1992 , 1996 ) Balanced Scorecard (BSC) (e.g., Lüdeke-Freund et al. 2017 ; Yu 2006 , 2014 ). Moreover, 19 studies mentioned or referred to the BSC, which confirms that it is still a prominent framework for managing KPIs, as indicated in Sect.  2.2 . Furthermore, 13 publications used the Business Model Canvas (BMC) (Osterwalder and Pigneur 2010 ) or Business Model Ontology (BMO) (Osterwalder 2004 ) as a basis for developing a framework for KPI management (e.g., Díaz-Díaz et al. 2017 ; Minatogawa et al. 2019 ; Stalmachova et al. 2022 ). This finding is in line with the proposition of the original authors of the BMC, who argue that understanding an organization’s business model makes it easier to identify KPIs (Osterwalder et al. 2005 ). Other frequently used or cited frameworks in the business model KPI management literature include the CSOFT ontology (Customer-Service-Organization-Finance-Technology) (Heikkilä et al. 2010 ) and the Performance Prism (Neely et al. 2001 ).

Compared to the number of models presented in the literature, extant research has paid less attention to developing methods for supporting business model KPI management. Our literature review revealed that there are different ways of applying these methods, for example for analyzing the performance of an existing business model (e.g., Afuah and Tucci 2003 ), defining KPIs during the early phases of the business model management lifecycle (e.g., Gilsing et al. 2021b ), specifying the causal relationships between KPIs (e.g., Minatogawa et al. 2019 ), and supporting KPI selection (e.g., Mourtzis et al. 2018 ). Several authors divide their method into steps, with explicit guidelines for the activities to carry out in each step (Heikkilä et al. 2014 ; Batocchio et al. 2017 ; Montemari et al. 2019 ). Moreover, most authors demonstrate their proposed method through an application in one or multiple case studies (e.g., Afuah and Tucci 2003 ; Rodríguez-Rodríguez et al. 2015 ; Minatogawa et al. 2019 ). Furthermore, methods presented in the literature are often catered toward a specific business model context, such as start-ups (Batocchio et al. 2017 ), smart cities (Díaz-Díaz et al. 2017 ), or sustainable business models (Lüdeke-Freund et al. 2017 ; Minatogawa et al. 2019 ). In addition, a few authors propose methods that support the design of performance measurement systems based on business models (Heikkilä et al. 2010 , 2014 ; Montemari et al. 2019 ). For instance, Montemari et al. ( 2019 ) propose a process that leads from a business model design to the definition of KPIs. The process starts with identifying business model configurations, then identifying relevant value drivers, and ends with defining KPIs to measure the business model’s value drivers. This method provides guidance for both defining KPIs for a certain business model and for analyzing its performance.

We found six studies that developed instantiations to support business model KPI management. A prominent example is the software instantiation developed by Mourtzis et al. ( 2018 ), which comprises an integrated software-enabled tool for selecting and assessing KPIs of product-service system (PSS) business models. PSS is a specific business model in which tangible products are combined with intangible services in a single system (Goedkoop et al. 1999 ). The tool also supports decision-makers in collecting, storing, processing, and visualizing PSS KPIs. Moreover, we identified three studies that present software instantiations to support the monitoring of business model dynamics and the transformation from an existing business model to a new one (di Valentin et al. 2013 ; Augenstein and Fleig 2018 ; Schaffer et al. 2020 ). In these instantiations, data is extracted from an organization’s ERP system and databases, and the changes in business model KPIs are measured and visualized in a dashboard.

4.2.2 Support during KPI management lifecycle phases

Figure  6 provides an overview of the approaches that support decision-making in each phase of the business model KPI management lifecycle (see Sect.  3.2 ) that we identified in the existing literature. This subsection presents and discusses the identified approaches per lifecycle phase.

Business model KPI management lifecycle and identified approaches for each phase

All studies in our sample support the definition of business model KPIs. For this phase, we identified four types of approaches in the literature. The most common approach in existing research aims to support the KPI definition by providing a catalog or list of KPIs relevant to business models (Johnson et al. 2008 ; Kriegel et al. 2016 ; Heikkilä et al. 2016 ). The second most used approach is the development of performance measurement frameworks that support the KPI definition. Instead of offering a list of pre-defined KPIs, these studies allow decision-makers to specify KPIs based on the framework’s measurement areas and high-level indicators (Bouwman and van den Ham 2004 ; Yu 2006 ; Lüdeke-Freund et al. 2017 ). Moreover, two studies propose to specify KPIs based on the performance drivers of the organization that are linked to specific configurations of business model elements (Nielsen et al. 2017 ; Montemari et al. 2019 ). Lastly, Gilsing et al. ( 2021b ) propose a set of protoforms (i.e., descriptive suggestions) to support the KPI definition for the different actor roles present in service-dominant business models, such as the customer, orchestrator, or other parties in the business network.

While existing research provides various models and methods for KPI definition, we identified only 11 approaches for selecting KPIs. In this phase, the ‘right’ KPIs are selected that best fit with the considered business model and the preferences of the organization. Most studies discussing KPI selection point out that the indicators should be aligned with the organization’s strategic objectives (Heikkilä et al. 2014 ; Batocchio et al. 2017 ) and their corresponding performance drivers (Montemari et al. 2019 ) or critical success factors (Heikkilä et al. 2014 ). In addition, many authors stress the importance of balancing between financial and non-financial indicators (e.g., Bouwman and van den Ham 2004 ; Nielsen et al. 2017 ). Thus, when selecting KPIs for a certain business model, not only KPIs related to value capture should be considered, but also KPIs relevant to value creation and value delivery should be taken into account. These principles are similar to how the BSC is used to determine a balanced set of performance indicators based on the organization’s strategy (Kaplan and Norton 1996 ). In most of the studies on KPI selection, researchers propose to select KPIs based on discussions with managers of the focal organization responsible for managing the business model (Heikkilä et al. 2016 ; Batocchio et al. 2017 ). We identified three studies that propose software-enabled algorithms for selecting relevant KPIs based on weighted criteria (Mourtzis et al. 2018 ) or the organization’s business model configuration (di Valentin et al. 2013 ; Nielsen et al. 2017 ).

Existing research provides different ways to support the operationalization of business model KPIs. A few studies specify qualitative questions for each KPI to reduce complexity and guide decision-makers in assessing their selected indicators (e.g., Afuah and Tucci 2003 ; Díaz-Díaz et al. 2017 ; Wirtz 2020 ). Moreover, six studies provide formulas to express how a particular KPI is calculated (e.g., Kijl and Boersma 2010 ; Minatogawa et al. 2019 ; Wirtz 2020 ). Lastly, four studies propose representing the relationships between KPIs in a conceptual model (Bouwman 2003 ; Rodríguez-Rodríguez et al. 2015 ; Morioka et al. 2016 ; Minatogawa et al. 2019 ). Relationships between KPIs are modeled to show cause-and-effect relationships (Minatogawa et al. 2019 ) or represent the links between a KPI and the resources and activities of an organization (Morioka et al. 2016 ).

Concerning the measurement of business model KPIs, existing research proposes several ways to collect and measure relevant data. The most frequently reported way to collect qualitative data is by organizing workshops and interviews with responsible managers of the focal organization (e.g., Heikkilä et al. 2016 ; Kijl and Boersma 2010 ; Montemari et al. 2019 ). Moreover, some studies propose carrying out surveys among employees, external partners, or customers (e.g., Heikkilä et al. 2014 ; Kostin et al. 2021 ). Other methods for data collection include inspecting financial statements (e.g., Bouwman and van den Ham 2004 ; Morioka et al. 2016 ) and studying public information (Dubosson-Torbay et al. 2002 ; Díaz-Díaz et al. 2017 ; Stalmachova et al. 2022 ). Furthermore, several authors suggest retrieving data from an organization’s IT systems, for instance, by querying ERP systems and databases (di Valentin et al. 2012b ; Augenstein and Fleig 2018 ) or analyzing a company’s website data (Bouwman and van den Ham 2004 ; Minatogawa et al. 2019 ).

To report the measured values of KPIs in a single report, we observe the use of scorecards (Osterwalder et al. 2005 ; Batocchio et al. 2017 ), matrix overviews (Kastalli et al. 2013 ), radar charts (Díaz-Díaz et al. 2017 ), and line charts (Minatogawa et al. 2019 ). For the continuous monitoring and reporting of KPIs, four studies provide software prototypes and design principles for dashboards to visualize business model performance data (di Valentin et al. 2013 ; Augenstein and Fleig 2018 ; Mourtzis et al. 2018 ; Schaffer et al. 2020 ).

4.2.3 Stage of use of the approach

In approaches used in the ex-ante realization stage of the business model, KPIs are defined and evaluated to make predictive analyses and reduce business model risks (Kijl and Boersma 2010 ; Augenstein and Fleig 2018 ). Several authors propose to use KPIs to make estimations about business model performance in future scenarios (e.g., Heikkilä et al. 2010 ; Rodríguez-Rodríguez et al. 2015 ). Moreover, a few studies propose methods and frameworks that support benchmarking business model alternatives or comparing an organization’s business model with competitors (e.g., Afuah and Tucci 2003 ; Morioka et al. 2016 ). Benchmarks of business model performance against competitors or alternative business models can be carried out both in the ex-ante or ex-post realization of a business model.

In the ex-post realization of the business model, KPIs are used to gather insights about current or past business model performance (Batocchio et al. 2017 ). For this stage, we found several studies that present software instantiations to support the continuous monitoring of business model KPIs and track the dynamics and performance of a business model in operation (e.g., di Valentin et al. 2013 ; Schaffer et al. 2020 ). By keeping track of business model KPIs, managers can compare the actual performance of a business model with its expected performance (Globocnik et al. 2020 ). In case the performance of a business model is observed to deflect, responsible managers may be triggered to create detailed action plans for re-designing the business model, for example, by adapting the business model’s underlying business processes (di Valentin et al. 2012a ; Suratno et al. 2018 ).

4.2.4 Type of key performance indicators

In the literature, two studies introduce approaches that are exclusively focused on qualitative KPIs . Gilsing et al. ( 2021b ) present a method for defining qualitative KPIs for business models using protoforms based on linguistic summarization theory. An example of a protoform that includes a KPI and an expected value is: Most customers use the service easily . These soft-quantified KPIs can gradually be concretized and quantified during later phases when the business model is implemented (Gilsing et al. 2021b ). Moreover, Díaz-Díaz et al. ( 2017 ) introduce a questionnaire-based evaluation approach, including 29 qualitative questions to assess the business model based on six KPIs. The answers to the questions are translated into quantifiable levels to assess business model performance.

Seven studies provide approaches that focus exclusively on quantitative KPIs . Most of these studies focus on financial KPIs such as product price, operational costs, and return on investment (e.g., Afuah and Tucci 2003 ). For example, based on expert interviews, Kijl and Boersma ( 2010 ) derive the following finance-related KPIs: total turnover, gross margin, profit after tax, margin per e-mail, re-investable profit, and investment portfolio value.

Many studies make use of a combination of both qualitative and quantitative KPIs. In these studies, quantitative KPIs are often measured first to calculate an aggregated qualitative KPI. For instance, Kastalli et al. ( 2013 ) propose a “ complementarity index ” as a critical KPI for manufacturing firms that adopt PSS business models. The value of this index is calculated based on sales numbers (i.e., quantitative KPI) for both products and services. Subsequently, the index can indicate a negative, substitutive, positive, or complementary relationship (i.e., qualitative KPI) between a company’s product and service offering (Kastalli et al. 2013 ).

4.2.5 Context for which the approach is designed

While some studies provide approaches for managing KPIs in the context of business models in general , most methods and tools in the literature are developed with a focus on a specific type of business model. In total, 24 of the 35 studies are developed for a specific context. Six studies were dedicated to business models of networked organizations (e.g., Bouwman 2003 ; Rodríguez-Rodríguez et al. 2015 ; Gilsing et al. 2021b ). In this type of business model, multiple organizations collaborate in a networked setting to co-create and deliver value to the customer (Bouwman et al. 2008 ; Turetken et al. 2019 ). Next, e-business was the context for which most KPI management approaches were developed. In this context, we identified studies related to internet business models (e.g., Palanisamy 2001 ) and e-commerce (e.g., Udo and Ishino 2021 ). Another context comprising multiple studies is the context of PSS business models (Kastalli et al. 2013 ; Mourtzis et al. 2018 ). PSS is a specific business model in which tangible products are combined with intangible services in a single system (Goedkoop et al. 1999 ). Moreover, two studies by di Valentin et al. ( 2012b , 2013 ) focus on the context of business models in the software industry. Specific KPIs relevant to software industry business models include the number of service requests, number of bugs, and number of implementation inquiries (di Valentin et al. 2013 ). We found two publications that provide approaches dedicated to sustainable business models by Lüdeke-Freund et al. ( 2017 ) and Morioka et al. ( 2016 ). Sustainable business models contribute to the sustainable development of business and society by positioning themselves in an ecologically and socially sound way, for example, through improving their production efficiency or product responsibility (Lüdeke-Freund et al. 2017 ). Other contexts for which specific KPI management approaches are developed include start-ups (Batocchio et al. 2017 ), manufacturing (Kostin et al. 2021 ), human resources (Khoshalhan and Kaldi 2007 ), healthcare (Kriegel et al. 2016 ), financial services (Stalmachova et al. 2022 ), and e-government (Yu 2014 ).

4.3 Catalog of business model key performance indicators

To identify which business model KPIs are referred to in the literature, we reviewed the selected sample of publications to extract any KPI, performance indicator, measure, or metric related to business models. The final catalog consists of 215 business model KPIs and corresponding operationalization and is presented at https://sites.google.com/view/catalogofkpisforbusinessmodels . The KPIs were categorized along four business model pillars and 12 business model dimensions (Table 2 ).

Figure  7 presents the number of identified KPIs per business model pillar and dimension. It shows that most KPIs are related to the Profit formula pillar of business models (73 out of 215 indicators). In comparison, the Frontstage pillar (69 indicators) and Backstage pillar (51 indicators) are also covered by many KPIs. On the other hand, we found only 22 indicators related to the Context pillar of business models. These statistics show that most KPIs in the literature are catered toward the three original pillars of the Business Model Canvas: Frontstage, Backstage, and Profit formula (Osterwalder et al. 2020 ). KPIs related to the Context pillar seem largely overlooked in the current literature on business model KPIs.

The number of identified KPIs highly differs across different business model dimensions. As shown in Fig.  7 , the Cost Structure dimension accounts for the highest number, with 31 KPIs. This number might be explained by the fact that costs play a critical role in assessing the business case of new business models (Daas et al. 2013 ) and controlling the performance of an existing business model (Wirtz 2020 ). Channel performance is the dimension with the second-highest number of KPIs, with 28 in total, and is part of the Frontstage dimension. These figures align with Wirtz et al. ( 2016 )’s argument that an organization’s customer interface is of great importance for a business model’s success. At the same time, only a few KPIs were extracted related to the business model’s sustainability and societal performance (six KPIs, respectively). Although we observe an increasing interest in evaluating sustainability and societal performance of business models (Lüdeke-Freund et al. 2017 ; Schoormann et al. 2018 ; Süß et al. 2021 ), there are only a few KPIs associated with this business model dimension compared to the other dimensions in the catalog. Finally, we found that the KPIs categorized in the Key Activities dimension are most related to the business processes that enable the operation of a business model. Examples of KPIs in this category include process throughput, process duration, and process lead time.

Number of KPIs per business model pillar and dimension

Table 3 presents the most frequently used or mentioned business model KPIs in the academic literature. The corresponding business model dimension and operationalization are presented for each KPI, including the number of studies in our selected sample that mention or use the KPI. The most used business model KPIs are ‘Product or service quality’ (part of the value propositions dimension) and ‘Customer satisfaction’ (part of the customer relationships dimension), which both appear in 14 studies. The second-most used or referred to KPIs are ‘Perceived customers benefit’ and ‘Satisfaction of customer needs’, which are mentioned in 13 studies.

5 Discussion

This section discusses our studies’ contributions to research and practice, limitations, and possible avenues for future research.

5.1 Contributions to research

The objective of our research was to analyze and consolidate the current state of research on KPIs for business models. For this purpose, we analyzed the 35 selected sources and located a variety of models, methods, and instantiations for managing business model KPIs. We investigated the characteristics of the identified approaches and classified them into a concept matrix consisting of five categories related to business models and KPI management.

Business model researchers should consider our concept matrix as a comprehensive overview of the literature on business model KPIs that can serve as a basis for further research. First, we found that existing approaches for managing business model KPIs are mainly catered toward the definition of KPIs. The methods and tools presented in the literature are often used to define new business model KPIs or monitor the performance of an existing business model in a specific context. However, when compared to the KPI definition, existing research provides limited support for selecting, operationalizing, and reporting business model KPIs. Moreover, while many studies present catalogs and frameworks for business model KPI management, less research has been dedicated to developing structured methods for managing business model KPIs. In addition, we found that only a few studies present software instantiations to support KPI management for business models. Most software tools and prototypes presented in the literature have either been only partially instantiated (e.g., Augenstein and Fleig 2018 ; Schaffer et al. 2020 ) or are only suitable for measuring business model performance in established organizations in which certain enterprise systems are in place (di Valentin et al. 2013 ). The proposed instantiations might therefore be less applicable to start-up organizations and SMEs. Lastly, our research shows that several studies offer an integrated approach for supporting business model KPI management through all phases of the KPI management lifecycle, i.e., defining, selecting, operationalizing, measuring, and reporting. In total, we found three studies that provide methods or tools that address, to a certain extent, all five phases of the KPI lifecycle (Batocchio et al. 2017 ; Mourtzis et al. 2018 ; Minatogawa et al. 2019 ). Our analysis points out several gaps in the existing literature, which may serve as future research opportunities on business model KPIs and how they can be managed (see Sect.  5.4 ).

To identify which business model KPIs are referred to in the academic literature and synthesize them into a catalog, we analyzed the sampled studies from our literature review that mentioned or used KPIs. Based on an iterative process of categorization and synthesis, we developed a catalog consisting of 215 KPIs related to business models. We categorized them into four business model pillars (Frontstage, Backstage, Profit formula, and Context) and 12 dimensions relevant to business model performance (value proposition performance, customer relationship performance, customer segment performance, channel performance, key activity performance, key resource performance, key partner performance, revenue stream performance, cost structure performance, profitability performance, market performance, and sustainability & society performance). For each KPI in the catalog, we provide an operationalization and the academic publications that mention or use it.

The results of our review give insight into the current body of knowledge on business model KPIs. Our citation analysis indicates that the sampled articles from the literature form a tightly coupled network. Thus, the authors of publications on business model KPIs seem to support and build on the existing body of knowledge. We found several academic studies that present lists or catalogs of KPIs for business models (e.g., Dubosson-Torbay et al. 2002 ; di Valentin et al. 2013 ; Heikkilä et al. 2016 ). However, more than half of the sampled studies did not provide a clear operationalization for part (or all) of the suggested KPIs. Thus, the existing literature lacks in guiding how to measure KPIs concretely. Our research goes beyond the state of the art by providing a catalog of KPIs, including an operationalization for each KPI. The explicit operationalization of the KPIs can be used for measuring the performance of existing or new business models. Thereby our research is a response to the performative research agenda for business models by Nielsen et al. ( 2018 ) and the calls for future research on the intersection between business models and performance measurement (Burkhart et al. 2011 ; Lambert and Montemari 2017 ).

5.2 Contributions to practice

The concept matrix developed in this study can guide managers in selecting relevant models, methods, and instantiations for specifying KPIs and monitoring the performance of their organization’s business models. Nevertheless, in practice, the specific context of a business model and the needs of an organization still need to be considered when selecting the KPI management approaches identified in this study. Moreover, the catalog of KPIs presented in this study can be used by practitioners who aim to define and concretize KPIs for their organization’s business models. The KPIs depicted in the catalog can be tailored to specific business model contexts. Our catalog explicitly helps in the phases of definition, selection, and operationalization, which have not been studied much in the current literature. As the KPIs in the catalog are categorized based on business model dimensions, the selection of KPIs can be guided much better. Since organizations need to evaluate different dimensions of their business models, managers can use the catalog to select and specify KPIs that fit their organization’s specific business model dimensions.

5.3 Limitations

Despite following a rigorous research approach (Webster and Watson 2002 ; Wohlin 2014 ; Okoli 2015 ), our study is subject to some limitations that should be taken into consideration. First, we initially focused on business model studies that included any type of KPI. We then broadened our results to also encompass approaches related to the management of business model KPIs. Second, the terminology around business model KPIs, performance indicators, measures, and metrics is used in diverse ways, and these terms have multiple definitions in the literature. Since we treated these terms as synonyms in this study, a certain level of subjectivity may have been involved in selecting relevant studies and synthesizing the KPIs into a catalog. To minimize this effect, multiple authors of this paper were involved throughout the entire research process. Third, we use the dimensions of the BMC and related business model pillars to categorize the KPIs identified in the literature. A main limitation of the BMC is that it takes the perspective of a single organization, as opposed to a networked-oriented perspective on business models (e.g., Bouwman et al. 2008 ; Heikkilä et al. 2010 ; Turetken et al. 2019 ). The BMC focuses on the activities and resources under the control of the focal organization and does not differentiate between suppliers, complementary vendors, and other partner organizations in the strict sense of the word. In our catalog, we categorized KPIs related to the performance of the business network in the ‘key partners’ dimension. Although the KPIs in the catalog can be tailored to an organization’s specific needs, in its current form, it might pose challenges for defining specific KPIs for networked business models featuring multiple partners. Therefore, future research can adopt a network-oriented approach to business model performance and focus on identifying and categorizing relevant KPIs for managing network-based business models. Fourth, the KPI catalog developed in this paper is still of conceptual nature. Therefore, future research should focus on empirically validating and applying it in different business contexts to enhance and confirm its validity and utility. Lastly, our study included only academic literature. Future studies should also consider including grey literature (e.g., Gartner 2021 ) to provide a broader and more extensive view of business model KPI management and related KPIs.

5.4 Avenues for future research

Based on the results and limitations of our study, we outline several avenues for future research.

5.4.1 Future research on business model KPI management

To move beyond the definition of KPIs and to increase the effectiveness of business model KPI management, future research should focus on developing step-by-step methods for managing business model KPIs. In doing so, researchers can build on KPIs and performance measurement models presented in the existing literature. For instance, future studies can focus on developing a structured method to select KPIs from a catalog and tailor them to an organization’s specific needs. Developing new methods for defining, specifying, and measuring business model KPIs can support decision-makers in assessing alternative business models and evaluating the performance of business models that are already in operation (Batocchio et al. 2017 ; Minatogawa et al. 2019 ). We recommend using design science research (DSR) (Peffers et al. 2007 ; Gregor and Hevner 2013 ) and situational method engineering (SME) approaches (Brinkkemper 1996 ; Henderson-Sellers and Ralyté 2010 ) to design and evaluate these new methods.

Second, we call for further research on developing software instantiations to support KPI management for business models. Developing software tools for managing and evaluating business models has been a major topic of interest in information systems research (Osterwalder and Pigneur 2013 ; Veit et al. 2014 ; Szopinski et al. 2020 ). The design principles and requirements in existing studies can provide initial guidelines for further development and implementation of these systems (e.g., Augenstein and Fleig 2018 ; Gilsing et al. 2021b ). The formalization of selection techniques and calculation rules in existing KPI management methods can support the further development of software tools for managing business model KPIs (e.g., Del-Río-Ortega et al. 2013 ; Mourtzis et al. 2018 ). Moreover, we argue that existing knowledge from the field of enterprise modeling can inform the development of conceptual models for representing relationships between different business model KPIs, activities, and organizational objectives (e.g., Popova and Sharpanskykh 2010 ; Strecker et al. 2012 ).

Third, future research can focus on the design of integrated approaches for other business model contexts that support all phases of the KPI lifecycle. Specifically, we see an opportunity to build on the existing knowledge and experience in the PSS domain (Mourtzis et al. 2018 ) to develop an integrated method and tool for the general context of business models.

5.4.2 Future research on business model KPIs

Our research revealed that, concerning business model KPIs, the profit formula pillar of business models has been studied the most. The other pillars (i.e., frontstage , backstage , and context ) may require more attention for identifying KPIs and ways to operationalize them. Second, we found that the extant research presents only a few KPIs related to the environmental sustainability and societal performance of business models. Given the increasing importance of the topic in practice and research (Schaltegger et al. 2016 ; Lüdeke-Freund et al. 2017 ), future research should investigate which KPIs are relevant to the environmental sustainability and societal impact of business models. Third, the validity of the catalog can be evaluated by experts in the fields of business models and performance measurement, and its utility can be assessed by conducting empirical case studies with practitioners in different domains and contexts. We recommend using DSR evaluation techniques (Peffers et al. 2012 ; Venable et al. 2016 ) for evaluating the catalog. Fourth, the catalog should be extended with environmental sustainability and societal impact-related KPIs and with others in different categories to keep the catalog relevant and useful. Lastly, developing structured guidelines for how the catalog can be used during the business model management lifecycle (Wirtz 2020 ; Lara Machado et al. 2022 ) is another future research direction. In this same context, we also propose investigating how the definition, use, and importance of KPIs may evolve across the different phases of the business model management lifecycle (i.e., design, implementation, operation, adaptation and modification, and control (Wirtz 2020 )). In the early phases of the business model lifecycle, which are often characterized by uncertainty and limited availability of data (Gilsing et al. 2021b ), KPIs are typically defined at a high-level, often in the form of qualitative statements. As the business model progresses to implementation, KPIs can be defined and operationalized more accurately. At this point, relevant KPIs can be operationalized through data collected from operational business processes. These KPIs would be related to the key activities and backstage pillar of the business model. Our review indicates that existing methods primarily focus on ex-ante or ex-post approaches, leaving room for more comprehensive strategies. Future research should prioritize the development of KPI management methods that consider the evolution of business models throughout various lifecycle phases.

6 Conclusion

Our study analyzed the academic literature on business model KPIs and provides an overview of the state of research on this topic. For this purpose, we conducted a systematic literature review, resulting in a sample of 35 relevant publications. We identified the characteristics of the publications and classified them into a concept matrix consisting of five categories related to business models and KPI management. In addition, we analyzed the selected studies to identify KPIs related to business models and categorized them into a catalog. The catalog consists of 215 business model KPIs, including operationalizations, structured by four pillars and 12 dimensions related to business models.

Our literature review shows that existing studies on business model KPIs contribute mainly with KPIs, frameworks, or catalogs that aid KPI definition. They often focus on KPIs for specific types of business models. In addition, concerning business model KPIs referred to in the literature, we found that KPIs for the frontstage pillar of business models (i.e., value propositions, customer relationships, customer segments, channels) are mentioned the most. At the same time, less attention has been paid to KPIs related to environmental sustainability and the societal performance of business models.

In light of the knowledge gaps that we uncovered and the limitations of our study, potential avenues for further research include the development of methods for defining, selecting, and operationalizing business model KPIs. Additionally, further research can focus on developing software instantiations to support KPI management for business models and designing integrated approaches for different business model contexts that support all phases of the KPI management lifecycle. Furthermore, the catalog of KPIs developed in our study can be empirically validated in different business model contexts and domains. Other opportunities for further research include developing structured guidelines for using the catalog throughout the business model management lifecycle, investigating KPIs for the dimensions that are least covered in the catalog, such as environmental sustainability and societal performance, and keeping the catalog up to date for continued relevancy and usefulness.

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Each author made a signification contribution to the reported work. Conceptualization, MV and PLM; Methodology, MV and PLM; Literature review, MV and PLM; Catalog development, MV and PLM; Writing—original draft, MV and PLM; Writing—review and editing, supervision, AA, BA and OT All authors have read and agreed to the published version of the manuscript.

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This review article is an expanded version of the peer-reviewed and published conference paper: van de Ven, M., Lara Machado, P., Athanasopoulou, A., Aysolmaz, B., & Turetken, O. (2022). Key Performance Indicators for Business Models: A Review of Literature. In 30th European Conference on Information Systems (ECIS 2022): New Horizons in Digitally United Societies. AIS Electronic Library. We declare that this research is not under consideration for publication elsewhere, that its publication is approved by all authors and tacitly or explicitly by the responsible authorities where the work was carried out, and that, if accepted, it will not be published elsewhere in the same form, in English or in any other language, including electronically without the written consent of the copyright holder.

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van de Ven, M., Lara Machado, P., Athanasopoulou, A. et al. Key performance indicators for business models: a systematic review and catalog. Inf Syst E-Bus Manage 21 , 753–794 (2023). https://doi.org/10.1007/s10257-023-00650-2

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Received : 16 August 2022

Revised : 04 August 2023

Accepted : 16 August 2023

Published : 19 September 2023

Issue Date : September 2023

DOI : https://doi.org/10.1007/s10257-023-00650-2

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What To Do When Your Strategic Plan Doesn’t Work Out

Are you someone who’s had a bad experience or limited success with strategic planning?

Are you wondering if the process really works? Should you give it another go?

More importantly, what can you do to ensure a better result the next time?

First off, let me say that I understand your frustration. Anyone who’s been in business for any length of time can attest to the fact that not all of our ideas and initiatives work out as planned. But don’t give up on a time tested, proven approach just because you weren’t successful the first time.

Just as you would do with any other component of your business, try to figure out what went wrong, learn what you can from the experience and then try again. See what you can do to get back on track as quickly as possible.

Some of the most common reasons strategic plans don’t work:

Poorly facilitated planning event.

• Choosing wrong strategies or positioning
• Marginally effective management team

Let’s look into each one of these separately to see where you may be struggling and why. Then we’ll discuss what you can do to start getting better results as quickly as possible.

Your strategic plan is derived from your planning event. If your planning meetings were led by an inexperienced or ineffective facilitator, then your chances for success are quite low. Here are some of the ways a poor facilitator can negatively impact your results:

• Shallow or incomplete SWOT analysis
• Acceptance of superficial answers to probing questions
• Standing by while naysayers or dominant personalities take over the event
• Limiting the discussion to a narrow set of parameters
• Allowing the process to drag out for weeks or months

Any of these scenarios can make it much more difficult to come up with an effective, well-thought-out strategy for your business. Other possible problems: you may not have clearly defined your vision or outlined the most important tasks that needed to be accomplished in order to reach your goal.

Choosing a strategy that’s wrong for your business

• Your short term goals may be too grandiose and you may have been unrealistic about what you could actually accomplish in a particular time frame.
• Another possibility: you may have focused on the wrong numbers or you didn’t have a clear understanding of what actually drives customer behavior.
• As a result, your strategy might not be in sync with what’s actually going on in your market segment or in your industry at large.
• You may also be moving into areas that are beyond your core competencies and this can create numerous problems for any business.

Your management team

The simple truth is that if you don’t have the right management team, you’ll have limited success with your strategic planning efforts.

Basically, you shouldn’t even be thinking about strategic planning until you have a solid executive team in place. Mediocre managers can make you want to pull your hair out due to their numerous, unexpected “surprises” and their inconsistent levels of performance.

Here are some of the many ways they can dilute your results:

•  During planning sessions you’ll get basic input, not thoughtful analysis or new ideas
•  They can’t manage people or priorities very well
•  They’re not usually financially astute
•  There’s no real sense of teamwork
•  Inconsistent performance means you can never really trust anything will be done properly or within the specified timeframe

Ask yourself these questions to get back on track:

• Was your initial analysis thorough?
• Were you wrong about market trends?
• Have you defined your ideal customer correctly?
• Is your vision realistic and attainable?
• Have you clearly outlined responsibilities and ownership over tasks?
• Are you reviewing and updating your plan on a regular basis?

Reevaluate your current strategy:

• What do your customers care most about? Be careful about assumptions here.
• What do they NOT care about?
• Always keep in mind how you uniquely provide value to your customer.
• Match your strategies to your values and strengths.
• Separate good ideas from good strategy. Your strategy is a plan of action to reach a particular goal.
• Don’t try to do too many things at once.
• Only 1 or 2 strategic initiatives per year.

 Assess your management team’s capabilities:

• Review each management team member and his/her performance over the past year.
• Have you been clear about your expectations and priorities and are they realistic?
• Do they all have excellent project management skills?
• Do they all live up to your company values?
• Do you truly have an executive team or is this just a group of individuals?
• Can they debate and disagree but still come together when a decision is made?
• Are they able to consistently communicate and implement your vision?
• If you’re not satisfied with performance, have you considered executive coaching? It can make a world of difference to individual and team success.

 If you’re considering bringing in a professional consultant:

• Verify professional experience and ask for references.
• How long has the person been leading strategic planning events?
• Has he/she tried a variety of plans before?
• Has the person ever held a position with profit and loss responsibility?
• What were the results of the plans they created with their teams?

Hopefully, you now have some new insights into why your plan didn’t work out and also what you can do about it. Don’t be afraid to try again. Strategic planning really does work!

Image Credit: Samuel Zeller

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