Today’s professionals have a lot to consider when it comes to measuring success in their roles, departments, and organizations. As a global society, we have access to more data than ever before; and this has inspired businesses in nearly every industry to leverage that data to improve performance and make better decisions. Within organizations, data plays a pivotal role in how we engage with our work, navigate the workplace, and make important decisions.
One category of data that businesses rely on to optimize performance is key performance indicators, or KPIs. While it used to be that KPI data was siloed with managers and finance teams, the explosion in data-driven decision making has given more professionals access to these important business performance metrics. This increased access allows organizations to better align teams, work toward organizational goals, and make informed decisions.
What Are KPIs?
Key performance indicators are metrics used to systematically gauge success in pre-determined areas. Simply put, a KPI is a metric that demonstrates how much progress an individual, team, or organization has made on a goal. KPIs are more complicated than just how much money a business is making or how many products they’ve sold: they can measure success in nearly every area of a business and ensure personal/team alignment with broader company goals. No matter what business function they’re being used for, key performance indicators need to be measurable, consequential, and achievable to be effective.
Many organizations rely on the well-known SMART framework to develop meaningful and effective goals—and their associated KPIs. This framework, and others like it, are useful because performance metrics must be consistently measurable to ensure that the resulting data is accurate for decision-making. Each component of the SMART framework is important for a unique reason.
| Category | Ensures that goals are… |
|---|---|
| Specific | Measured without confusion |
| Measurable | Trackable and quantifiable |
| Achievable | Sustainable and possible |
| Relevant | Important to the organization’s overarching mission |
| Time-Bound | Effective over time |
For example, if you are measuring how many customers your company has acquired, the amount of time it took to do so is highly relevant—acquiring a hundred new customers over one year is very different from doing so over five years. Similarly, if you establish a KPI for customer acquisition that is much higher than any sales team has done in the past, you may be establishing an unachievable goal.
Who Can Use KPIs?
KPIs can help organizations in many industries come up with better goals, understand the capabilities of their team members and employees, and set individual development goals within teams. While you may think key performance indicators are only relevant or necessary in management and finance, KPIs can be extremely useful for professionals in a vast range of industries and roles: all you need to do is choose metrics that are relevant to specific teams and individuals.
Some examples of KPIs that companies might use outside of finance or management might include:
- Mean time to resolve: the average time it takes to fix a bug or error, especially in a programming or coding context
- Cycle time: how long it takes to complete a task
- Churn rate: how often customers leave a company or stop seeking its products
- Customer acquisition cost: how much the business spends for each customer it gains
Departments will rely on different KPIs depending on their goals and functions. For example, software development teams rely on a range of metrics rooted in coding-related tasks and respective metrics. On the other hand, sales teams rely on KPIs such as customer acquisition cost and lifetime customer value, which are more relevant to the costs and profitability of different customer segments.
One thing that all KPIs have in common is that they offer a means of objectively measuring success or performance in areas that impact the goals of the organization. As such, these metrics are important to many of today’s professionals, especially those who go above and beyond to improve business outcomes and navigate the dynamic work environment.
Example of KPIs
An organization’s overall mission and its industry are key to determining what metrics are most relevant to an organization. However, there are some common foundational KPIs that are relevant across industries, as well as emerging KPIs that reflect evolving business priorities like sustainability and digital engagement.
Foundational KPIs
Foundational key performance indicators are those that have been historically useful to many industries and organizations. These time-tested metrics focus on widely applicable success signals that can be relevant to a range of different departments, including finance, sales, and human resources. Some examples include:
Revenue Growth Rate
Revenue growth rate measures how much a company’s revenue changes month to month. This KPI is crucial for a few reasons. Mainly, organizations might look at gross or net revenue growth to gain a better understanding of how the business’ revenue has changed over time and how much the organization is growing.
If the revenue growth rate is high, that might indicate that the business is growing quickly. A low or negative revenue growth rate indicates that the business isn’t growing very well and that it might be time to reassess your strategies.
Customer Satisfaction Scores
Customer satisfaction scores include a variety of ways to measure how happy customers are with your organization. Dropping scores can indicate that there’s room for improvement, while increasing scores can provide data to support decision-making and ongoing initiatives. Some metrics that point to customer satisfaction include:
- Net promoter score: This measures how likely a customer is to recommend your brand to another, which helps businesses understand the effectiveness of their performance and marketing.
- Customer lifetime value: This identifies the revenue that each customer brings to the business, giving businesses data on which customers or customer segments represent the most profitable engagement efforts.
- Retention rates: This demonstrates how well a business is able to retain customers and prevent them from purchasing from competitors.
Satisfied customers are loyal customers, and businesses rely on customer satisfaction metrics to understand how well customer needs and expectations are being met. Customer satisfaction demonstrates purchase intention and customer loyalty, and while it isn’t an exact science, these things can help predict future business growth and revenue.
Employee Engagement
Employee engagement KPIs seek to measure if employees are satisfied and connected to their roles and the organization at large. While some managers and leaders may not consider employee engagement as important as revenue and growth, the fact is that you can’t have a company if you don’t have employees. If businesses do not nurture employee satisfaction, employees won’t be as motivated to work hard and make an impact, leading to poor performance.
Employee engagement can be measured qualitatively through interviews, surveys, and casual conversations, or it can be measured quantitatively through data that indicates engagement. Common quantitative metrics include:
- Turnover rates: Employee turnover rates indicate how often employees leave the company. This can be a signal of unsatisfied employees over time.
- Employee absenteeism rate: This metric measures how often employees are absent from work over a period of time, which can be important for measuring long-term engagement.
- Employee productivity rate: This metric looks at how much specific employees have contributed to the completion of goals and projects across the organization. Satisfied employees are far more productive, so measuring productivity can be a great indirect indicator of engagement.
KPI Trends for 2025
As organizations navigate an increasingly globalized, data-reliant business world, priorities are continuously shifting. As goals change, so do the KPIs that organizations prioritize. Some emerging KPI trends include digital engagement and sustainability.
Sustainability
With the threat of climate change necessitating a change in business practices, individuals and businesses alike care about the impact that they’re making on the world. Sustainability KPIs typically measure how much or how little environmental harm an organization is causing, but they could also measure operational or social sustainability. Some of the most common environmental sustainability KPIs include:
- Carbon footprint: This KPI measures how much CO2 is emitted as an organization operates. It can be measured per product or as a whole organization. Organizations might also measure other greenhouse gasses, such as methane.
- Energy intensity: Energy intensity measures how much energy is consumed per unit of output. This could be represented as energy per building square foot, per product, or another output. Understanding energy intensity allows businesses to understand how their energy use is changing over time and find ways to improve their energy efficiency.
Digital Engagement
We live in a digital-first world, and businesses will benefit from understanding that the market favors online communication and commerce. In order to keep up with these innovations, organizations should establish effective KPIs that help them understand their online and digital engagement success. These can be applied to social media platforms as well as more traditional digital channels like email and web traffic. Digital engagement KPIs can include:
- Click-through rate (CTR): A CTR measures the number of clicks an ad receives in comparison to the number of impressions, or people who see the ad. So, if your ad has 100 impressions and 3 clicks, you have a CTR of 3%.
- Unique visitors rate: This KPI measures how many new, individual users have accessed a page, site, or social media profile during a set period of time. Most organizations will want to see a unique visitors rate of about 70%, which can be a positive sign of growth, engagement, and visibility.
- Conversion rate: One of the primary goals of any company that sells products or services online is conversions, which is any time someone takes an action that is valuable to your business as a result of an ad or piece of marketing. For example, if your goal is to sell products, a conversion might be defined as when a customer clicks on your ad and then purchases the product. Essentially, conversion rates represent how well a business is able to turn visitors into customers.
Why KPIs Are Important
It’s difficult to understate how much the business world has changed as it has become more and more integrated with technology. In an increasingly interconnected and volatile market, data-driven decision making is more important than ever.
This is why KPIs, both foundational and innovative, are so important across teams, organizations, and even industries. By offering a systematic means of measuring impactful success signals and metrics, KPIs help organizations choose sustainable ventures and projects, with consistent data to inform their approach.
How Does a Bachelor’s in Business Administration Prepare You to Create and Meet KPIs?
Understanding what KPIs are and how to create relevant ones for your organization is just the beginning. The real work begins when you are able to take KPI data and transform it into meaningful business decisions that improve revenue, growth, and overall performance.
If you do not have a prior business education, an online Bachelor of Business Administration (BBA) in Business Studies can provide you with the knowledge and skills you need for a successful, long-term career in business. A BBA provides a thorough understanding of core business disciplines in addition to foundational skills, such as KPI development and data-driven decision making so that you’ll be prepared for a meaningful business career, or for advanced business education like a Master of Business Administration.
No matter what roles you choose after your BBA, you’ll be able to create meaningful KPIs that position you, your team, and your organization for sustained success in a complex market.
About the Pace University Online Bachelor of Business Administration in Business Studies with a Marketing and Management Concentration
The Marketing and Management concentration in the online BBA at Pace University teaches core principles like business law and strategy, along with courses in areas like organizational behavior and strategic Internet marketing. You can apply previous college credits and life experience to your marketing BBA degree, which reduces cost and time to completion. Students typically finish the online BBA in two to three years. The Lubin School of Business at Pace University is dually accredited in business and accounting by the AACSB International, a distinction shared by fewer than 2% of institutions worldwide that ensures a high standard of instruction. Our faculty’s substantial industry knowledge and connections mean that graduates enter the job market with a competitive edge. You’ll join a global network of Pace alumni in 80 countries. We are committed to helping you achieve professional success by offering personalized career guidance and practical opportunities for internships, independent study, and research.Request
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