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Metrics and KPIs are often used interchangeably, leading to a lot of confusion and misinterpretation in the workplace.

Don’t overthink it.

Both performance metrics and key performance indicators (KPIs) serve distinct purposes and provide different insight into your company’s performance. If you are looking to get a better picture of your financial and operational “health”, they’ll be important tools in driving informed decision-making and creating strategic plans. 

Ultimately, an understanding of financial metrics and KPIs can help you drive profitability and operational excellence within your organization.

In this post, we’re going to: 

1) Define a KPI

2) Define a Metric 

3) Discover the difference between the two 

4) Learn why both are important to the success of a business. 

What is a Key Performance Indicator (KPI)?

A Key Performance Indicator, or KPI, is exactly how it sounds. It is a quantifiable measure of how a business unit, team, or business feature is performing towards achieving a goal. Think of a KPI as tracking PROGRESS towards these goal(s). 

We once had a mentor explain it to us like this: 

“In a game of soccer, your team’s objective is to win. So a KPI your team would have – tracking your progress towards winning the game – would be something like how many goals you have scored.” 

With that in mind, let’s think about customer satisfaction. Your mission as an organization is to keep your customers happy. A standard KPI would be something like google reviews. You can measure how many 5-star reviews your organization has received vs. how many 1-star reviews you have, and then decide as a business how much you have succeeded in keeping your customers happy. 

When creating them, remember that your KPI measurements should be S.M.A.R.T!

S.M.A.R.T Metrics are specific, measurable, achievable, relevant, and time based.

Image credit: Indeed

Keep in mind that because KPIs measure your success/failure of business goals, you should always be monitoring these indicators. Most companies fall into the trap of reporting monthly, quarterly, or yearly – which could potentially be catastrophic if there is a performance issue. 

Next generation business planning and analysis tools, like Pluvo by Rain Technologies, allow for decision makers to instantly refresh this data within customizable dashboards – so that no KPI is forgotten about until it’s too late. 

Here are some common KPIs for SaaS companies: 

– New User sign-ups

– New paying users 

– Net Revenue Retention

What is a Performance Metric?

Okay, so a KPI is an indicator of progress towards a certain goal. Great. What the hell is a performance metric, then? 

Let’s revisit our soccer analogy from earlier. 

If scoring goals is your KPI (towards winning the game), then your metrics would be something like:

  1. The amount of shots your team has taken


  1. The time your team has controlled the ball throughout the match. 

The important thing to note about financial metrics is that they often assess PERFORMANCE rather than SUCCESS. You cannot score a goal without taking a shot, so it’s important to note (statistically) how many shots you have taken, and how many of those shots turned into goals – so that you can improve your odds by changing your strategy. 

Let’s talk about what a financial metric would look like in the business world:

Returning to the customer satisfaction example from above… a metric would be how many phone calls your customer service department fielded within a period of time, and how long those calls were. 

If there were only a few calls that lasted for a short amount of time before being rectified, you could then reference that with the amount of 5-star reviews you have received recently and then assess that your metrics indicate that the customer service department is performing well. 

Inversely, if there are a lot of calls that last long before resolution AND you have poor ratings online, it could be a sign that your customer service department is not performing well or that they do not have the tools they need to succeed.

Read more about metrics, here:

Performance Metrics for a SaaS company could include:
– Site traffic
– Time on site
– Time between sign-up & becoming a paying user
– # of Sessions

The difference between KPIs and Performance Metrics

Don’t overthink it. A KPI measures progress towards a goal, and a metric measures your performance as you progress towards the goal.

Strategic vs. Operational focus

KPIs are primarily strategic indicators that reflect your overarching goals and objectives. In contrast, performance metrics often have a more operational focus, measuring specific aspects of organizational performance such as revenue growth, profit margins, and return on investment.

Qualitative vs. Quantitative

KPIs tend to emphasize qualitative factors such as customer satisfaction, employee engagement, and brand reputation. These factors are essential for driving your long-term success but may not always be directly tied to financial outcomes. Performance metrics, on the other hand, are predominantly quantitative in nature, focusing on numerical data to support performance analysis.

Leading vs. Lagging Indicators

KPIs are often leading indicators, meaning they provide insights into your business’s future performance and potential areas of improvement. By tracking KPIs, you can identify trends and make proactive strategy adjustments. Performance metrics, on the other hand, are frequently lagging indicators, reflecting past performance and historical data. While they are essential for assessing operational health, they may not always provide you with timely insights for decision-making.

Customization and context

KPIs are highly customizable and tailored to the specific goals and objectives you have. They require careful selection and consideration to ensure they accurately reflect your company’s strategic priorities. Performance metrics, while still customizable to some extent, are more standardized and widely used across industries. However, the interpretation of metrics often requires context and understanding of a company’s unique business model and industry dynamics.

KPIs and Metrics: Best Practices

  1. Align your Metrics with Strategic Objectives: Ensure that KPIs are directly linked to your organization’s strategic goals and objectives. This alignment ensures that efforts are focused on driving meaningful outcomes that contribute to long-term success.
  1. Focus on Actionable Insights: Choose KPIs and performance metrics that provide actionable insights and drive informed decision-making. Avoid metrics that are overly complex or difficult to influence, as they may not provide practical guidance for improvement.
  1. Regular Monitoring and Review: Establish a cadence for monitoring and reviewing KPIs and metrics on a regular basis. This ongoing evaluation allows you to adjust strategies and initiatives based on emerging trends and performance indicators.
  1. Combine Quantitative and Qualitative Data: Consider incorporating both quantitative and qualitative data into performance analysis. While financial metrics provide numerical insights, qualitative factors such as customer feedback and market sentiment can offer valuable context and perspective.
  1. Invest in Analytical Tools and Technologies: Leverage advanced analytical tools and technologies to streamline data collection, analysis, and reporting processes. These tools enable more efficient and accurate performance monitoring, allowing for faster decision-making and response to changing market conditions.

How To Track KPIs and Performance Metrics

If you think that tracking metrics and KPIs are good for your business – you’re right. If you think it should be done monthly, quarterly, or even annually – you’re wrong. Stay on top of your performance and constantly drive success with Pluvo. 

Our custom built reporting and AI powered analysis tools can tell you (based on past historical data and future predictive analysis) where to go, when to pivot, and what to do to drive profit. 

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John Burnside

John Burnside!