What Are Key Performance Indicators (KPIs)?

Key performance indicators, also known as KPIs or KPI metrics, are specific and measurable goals that focus on the bigger picture for your business.

They help you evaluate whether your business is on track for achieving success. And are actionable, attainable, and time-bound.

An example of a KPI is, “Rank within the top 10 results on Google for all target keywords within six months.”

Which is a goal that directly contributes to your larger business success.

KPIs allow you to understand your current performance. So you can tell how well you’re doing against your most important targets and objectives.

What Are Metrics?

Metrics are quantitative data points that help you monitor and analyze your performance for specific business activities. Rather than an overarching goal.

You can use them to gauge the effectiveness of day-to-day operations and procedures. That contributes to the success of wider goals and KPIs. 

Metrics can be classified into four categories, depending on what they measure and how they’re used:

1. Input metrics: The resources, efforts, or investments that go into an activity. For example, the amount of money spent on marketing campaigns or the number of hours worked by an employee.
2. Output metrics: The direct results or products generated. For example, the number of products manufactured in a day or the volume of sales generated.
3. Outcome metrics: The broader impact of your achieved results. These metrics assess the overall effect on the business or a specific goal. For example, the increase in customer satisfaction scores after implementing a new customer service strategy.
4. Process metrics: The efficiency, effectiveness, or performance of the various stages within a process. For example, the average response time to customer inquiries or the number of issues resolved per hour.

Another example of an outcome metric is your domain’s Authority Score. Which you can find in Semrush’s Domain Overview.

This data point considers various factors like backlink profiles and organic search data to reflect the overall credibility of your website in search engine rankings.

Tracking this metric tells you how your SEO efforts are impacting your site’s perceived trustworthiness in the eyes of search engines. Which is key to improving your website’s overall performance in search rankings.

The Difference Between KPIs & Metrics: A Side-by-Side Comparison

KPIs are directly relevant to your company’s overarching goals. While metrics are tied to business processes rather than goals.

More specifically, there are three main differences between KPIs and metrics:

1. Strategic alignment. KPIs align with your overall organizational goals. While metrics are more for monitoring specific processes and outcomes.
2. Actionability. KPIs are more actionable because they lead your efforts toward a specific outcome. Whereas metrics lack context unless they’re tied to a specific KPI.
3. Relevance. KPIs are more relevant to top-level decision-makers who are focused on overall organizational strategy. While metrics are more relevant to employees who need to monitor performance and identify areas for improvement. 

Let's illustrate the difference between KPIs and metrics with an example.

Imagine your main goal this year is to enhance your brand’s online visibility and drive more leads to your website.

Your KPI should align with your overall business goal of gaining more revenue. So your KPI might be: “Gain 20% more organic visitors over the next six months.”

Some metrics you would track to measure your progress toward that KPI could include:

1. Organic positions
2. Total keywords
3. Traffic sources
4. Backlinks leading to your domain
5. The number of unique referring domains
6. Monthly changes in the number of backlinks you’ve gained and lost

Those metrics, on their own, are just numbers. But tied to a KPI, they suddenly have meaning within the larger picture of your organization.

Let’s take a look at the organic positions metric using Semrush’s Position Tracking tool.

First, open the tool and select an existing project, or click on “Create project” to add a new one. 

If you’re starting with a project from scratch, check out our guide to configuring Position Tracking to get started.

Once your report is ready, head over to the “Overview” tab. Here, you can see a breakdown of metrics like organic visibility, estimated traffic, and rankings overview for your top keywords.

Knowing how highly a keyword ranks on the search engine results pages (SERPs) can tell you about the visibility and relevance of your content for specific search queries. 

Which ties back to your main KPI of gaining more organic visitors.

So while the two are clearly different, they work together to give you a full picture of your company’s or team’s performance.

How to Create the Right KPIs & Metrics

Selecting the right KPIs and metrics helps you stay on track and focus your efforts on the highest-impact activities. 

Here’s what you should keep in mind when setting your KPIs and metrics.

Best Practices for Setting KPIs

When considering how to create KPI metrics, first make sure they’re aligned with your company’s strategic goals. 

Here’s how:

• Identify core strategic goals: Start by clearly defining your company's vision, mission, and values. Break these down into more detailed and quantifiable targets. For example, if your company's mission is to become a leader in customer service, a specific, measurable objective could be achieving a customer satisfaction score of 90% or higher.
• Engage with stakeholders: Gather input from key stakeholders, including customers, to understand their priorities and expectations. For instance, in a retail business, ask if they value a wide range of products or fast shipping. Use their responses to tailor your KPIs, like measuring product variety or delivery speed.
• Create direct links: For each strategic goal, develop one or more KPIs that directly measure success toward that goal. So if your goal is to expand market presence, a relevant KPI could be to increase market share by 10% by the end of the year.

To be effective, your KPIs should also be SMART. Meaning:

• Specific: A KPI is specific when it clearly defines what is to be achieved, with precise targets and measurable outcomes. Establish what success looks like for that KPI, and how you’ll know when you’ve achieved it.
• Measurable: Make sure you have a consistent and reliable source of data to help you verify and validate your progress. Consider what information you’d need to monitor and make sure you have the tools to help you do that.
• Achievable: Set KPIs that are realistic and attainable within your resources and constraints. The goals should challenge your team but remain within reach. For example, if you have a limited budget, set your KPI to grow the customer base by a realistic 5%, not 30%.
• Relevant: Choose KPIs that directly impact your core business activities and outcomes. They should measure what matters most and what can be influenced or controlled by you and your teams. For instance, for your customer success team, a relevant KPI could be the rate of repeat customer purchases.
• Time-bound: Establish a clear time frame or deadline for achieving your KPIs. This keeps you accountable and makes it easier to track progress. For instance, set a goal to reduce customer support response times by 20% within the next three months

Best Practices for Setting Relevant Metrics

To make sure your metrics are both actionable and relevant:

• Start with a clear objective: Your metrics should reflect what your KPI and project aim to achieve and how they’ll achieve it. For example, if your KPI is increasing website conversions, some relevant metrics include conversion rate, bounce rate, and average session duration.
• Use industry benchmarks: Compare your performance with industry averages and competitor data to set realistic and relevant metrics. For example, if you're tracking organic traffic, use Semrush's Traffic Analytics tool to discover traffic metrics for your closest competitors and set a target to match or exceed their performance.

• Implement a pilot test: Before fully integrating a new metric into your KPIs, run a pilot test. Let’s say you're considering adding “average customer support response time” as a metric. Track and analyze its impact on customer satisfaction for a month. If it’s positive, consider integrating it into your metrics for regular monitoring.
• Keep it simple: Don’t overwhelm yourself and your teams with too many metrics. Instead, focus on a select few that are most relevant to your goals.
• Stay away from vanity metrics: These data points (e.g., views, likes, etc.) might look impressive, but they don’t actually offer any actionable insight. While they look good on paper, they don’t directly contribute to strategic goals like revenue growth or customer satisfaction.
• Choose a balanced set of metrics: Select a mix of metrics that cover different aspects of your performance and provide a well-rounded view of your operations. Don't focus solely on one type of metric, like financial or customer metrics.
• Understand your audience: Consider which individual or team will be using these metrics. Different teams will have different needs. For example, the marketing team will need metrics related to campaign reach and engagement, but the sales team will focus more on lead conversion rates and sales volume
• Review and revise regularly: Set a specific schedule, like quarterly reviews, to assess and update your metrics. And make sure the ones you’ve chosen are still relevant to your KPI and overall goals.
• Communicate metrics effectively: Make sure the people who need to understand and act on these metrics can easily access and interpret them. Use clear reporting and customizable dashboards to make this easier.

Leveraging KPIs and Metrics for Business Insight & Success

Once you’ve defined your KPIs and selected the metrics you need to track, you can set up a monitoring system.

Ongoing measurement and analysis give you real-time insights so you can identify trends and make timely adjustments to your strategies.

It also lets you assess the effectiveness of your strategies over time. This way, you can make decisions based on evidence, not assumptions. Here’s how Semrush’s toolkit helps you do that:

• Real-time insights: Semrush draws data on various aspects of your business including website traffic, keyword rankings, social media engagement, and backlinks, to give you access to the latest information, current trends, and user behavior.
• Competitive analysis: Track your rivals’ strategies and performance across organic search, paid search, and social media. Gain insight into their performance and give yourself an edge.
• Content optimization: Discover your competitors’ best keywords, uncover opportunities and gaps, and track changes in ranking with Semrush’s Position Tracking tool to understand where your tactics are winning and where you can improve.
• Tracking progress: See whether your SEO and marketing efforts are moving the needle in the right direction with tools like Organic Traffic Insights and SEO Dashboard
• Identifying issues: Identify technical issues on your website, like broken links, slow loading times, or mobile compatibility issues. Semrush’s Site Audit tool gives you a prioritized list of issues and recommendations so you can hit your targets more easily.

Regardless of the relevant KPIs and metrics you decide to track, it’s essential to keep an eye on their development consistently. This will help you continually evaluate your performance and demonstrate your progress to relevant stakeholders.