What are KPIs? Definition and examples

by Michael Cheary

Keep getting questioned about your KPIs? You’re not alone.

In the world of work, we love an acronym. From ASAP and EOP to TBC and TBA, it can sometimes feel like you need a secret decoder ring just to get through a Tuesday morning meeting. But there is one acronym that holds a little more weight than the rest: KPIs.

Being able to demonstrate you’ve hit your KPIs in your previous or current job could be the key to finding your next perfect position. They are the numbers that back up your claims, and the stats that make Hiring Managers sit up and pay attention. But if you’re not entirely sure what they are - or how to use them on your CV - don’t panic. We’ve got you covered.

Here’s everything you need to know about KPIs:

What is a KPI?

KPI stands for Key Performance Indicator.

In simple terms, KPIs are measurable goals set by your employer (or yourself) which help track your progress in a particular position - and will tell you if you’re heading in the right direction or if you’ve veered off course.

As well as matching your personal progress, KPIs should always align with and reflect the business’ goals. They bridge the gap between your daily to-do list and the company’s overall mission.

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Why are KPIs important?

You might be thinking, ‘Do I really need another target to worry about?’. The short answer is yes.

KPIs work as measures for one main reason - they are quantifiable.

Rather than being set a fairly generic task which may be hard to define and justify, such as ‘increase sales’ or ‘do better marketing’, your Key Performance Indicators will set you measurable targets to aim for.

These targets can then be monitored throughout the year, presenting areas in which you can improve and allowing the business to see how they can support you more effectively.

What’s more, KPIs can be extremely useful at demonstrating your previous success stories - something which can really help when it comes to applying for a new job. Telling a recruiter you’re ‘hardworking’ is fine. Telling them you ‘exceeded your annual sales KPI by 25%’ is infinitely better.

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How to set effective KPIs

Setting a KPI isn’t just about picking a random number out of thin air. To be effective, a typical KPI needs to have a solid framework.

We recommend following the SMART formula. This ensures that every goal you set is:

• S - Specific
• M - Measurable
• A - Achievable
• R - Relevant
• T - Time-bound

For example, instead of saying ‘I want to grow the email list’, a SMART KPI would be: ‘Grow the subscriber email list by 15% within Q3 by launching a new lead magnet campaign’.

If you want to dive deeper into this framework, check out our guide on how to set SMART goals.

Types of KPIs

Not all KPIs are created equal. Depending on your seniority, your sector, or specific department, the 'key' in Key Performance Indicator can mean very different things.

Here are a few common categories you might encounter:

Strategic vs. Operational

• Strategic KPIs: These focus on the long-term goals and overall health of the organisation. They are typically monitored by senior executives (e.g., CEOs, Directors) to assess progress toward high-level objectives, such as increasing market share, improving profitability, or achieving sustainable growth. Strategic KPIs provide a "big picture" view and guide decision-making at the organisational level.
• Operational KPIs: These are short-term, tactical metrics that track the performance of day-to-day activities. They are often used by managers and team leaders to monitor specific processes or tasks, such as daily sales figures, monthly website traffic, or average ticket resolution time. Operational KPIs ensure that the organisation is running efficiently and meeting immediate goals.

Leading vs. Lagging

• Leading KPIs: These are immediate, actionable metrics that indicate what is happening right now or in the near future. They are often used to influence or predict outcomes. For example, the number of new leads generated this week could indicate potential sales growth in the coming months.
• Lagging KPIs: These are results-oriented metrics that reflect the outcomes of actions taken earlier. They take time to quantify because they measure the impact of leading indicators. For instance, an increase in sales revenue (a lagging KPI) might result from the number of new leads generated earlier (a leading KPI).

Levels of KPIs

Just as KPIs vary by type, they also function at different levels within an organisation. Understanding where your targets fit in can help you see the bigger picture.

• Company-wide KPIs: Everyone in the business is ultimately working towards these. If the company goal is ‘profitability’, every department’s efforts should funnel up to this.
• Department-wide KPIs: These drill down into specifics for teams like Marketing, Finance, or IT. For a Customer Service Manager, a department-wide KPI might be ‘maintain a customer satisfaction score of 95%’.
• Project-level KPIs: These are temporary targets tied to a specific initiative. If you’re launching a new product, the KPIs here might be ‘complete launch by X date’ or ‘stay within X budget’.

Common KPI examples

The specific metrics you track will depend heavily on your role and sector. To spark some ideas, here are common KPI examples by category. Each section covers both the must-haves (and a few curveballs), plus a practical example to show you what these look like in action.

Financial KPIs

Financial KPIs shine a spotlight on the health of company finances, so you can see if you're heading for a celebration or a budget chat.

• Net profit margin: The percentage of revenue left as profit after expenses. The bottom line, literally.
• Current ratio: Current assets divided by current liabilities. Basically, can you cover your short-term bills without sweating?
• Total-debt-to-total-assets ratio: Compares what you owe against your assets—think of it as a check on how deep you are in the red.
• Inventory turnover: How often you replace your inventory in a set period. No one wants shelves full of unsold fidget spinners.
• Profitability ratios: Such as return on investment (ROI), which helps you figure out if those big spends really pay off.

Example KPI: Increase the company’s net profit margin from 15% to 18% within the next financial year by reducing supplier costs and streamlining operations.

Marketing KPIs

Marketing isn't just about nice looking ads and clever copy - these KPIs go behind the scenes to show what works and what doesn’t.

• Cost per acquisition (CPA): Every new customer comes at a price. How much is it?
• Traffic sources: Track organic and paid traffic to measure the effectiveness of SEO and advertising efforts.
• Social media engagement rate: Who's actually liking, sharing, or commenting?
• Website conversion rate: Turning visitors into action-takers.
• Marketing qualified leads (MQLs): Leads who might actually buy, not just window-shop.
• Return on ad spend (ROAS): For every pound you spend on ads, how much do you make back?
• Click-through rate (CTR): Out of everyone who saw your campaign, how many engaged and clicked through to your website?

Example KPI: Increase organic traffic by 25% over the next quarter by optimising high-performing blog posts and targeting new keywords.

Sales KPIs

These KPIs measure performance from first pitch to signed deal.

• Monthly recurring revenue (MRR): The predictable revenue that you count on each month.
• Average deal size: Are you focusing on big wins or fast, smaller sales?
• Sales conversion rate: Leads that turn into paying customers.
• Number of calls/meetings booked: Because you’ve got to be in it to win it.
• Customer Lifetime Value (CLV): The total worth of a customer over the life of their relationship with you.
• Customer Acquisition Cost (CAC): What it costs to sign up each new customer—great paired with CLV for measuring profitability.
• Average contract value: The average value of closed deals. Helpful for forecasting.
• Average conversion time: How long it takes to turn a maybe into a yes.
• Number of engaged leads: People you’ve connected with who are likely to respond.

Example KPI: Increase monthly recurring revenue (MRR) to £100,000 by the end of Q3 through upselling to existing clients and securing 20 new accounts per quarter.

Customer Experience KPIs

These KPIs help you measure and improve every stage of the customer journey.

• Number of new support tickets: How many fresh requests are coming in? A surge could mean something’s up.
• Number of resolved tickets: Are you actually solving problems or creating more?
• Average resolution time: Resolve issues quickly and customers will notice.
• Average response time: How quickly do you acknowledge a customer’s request?
• Customer satisfaction score (CSAT): Find out how customers really feel.

Example KPI: Maintain an average customer satisfaction score (CSAT) of 90% or higher each month by improving first-contact resolution rates.

HR KPIs

HR KPIs help you keep your best team members happy, motivated, and present.

• Employee turnover rate: Who’s leaving, and how often? Great for spotting issues.
• Average time to hire: How long it takes to fill those open desks.
• Employee satisfaction score (eNPS): Are people singing your praises or plotting an exit?
• Absenteeism rate: Frequent ‘sick days’ or genuine illness?
• Training completion rate: Are staff actually learning, or just clicking through slides?
• Number of overtime hours worked: Helpful for catching burnout before it hits.
• Employee retention rate: Are people sticking around, or is there a revolving door?
• Number of applicants per role: Is your employer brand attracting enough attention?
• Department-specific turnover: Pinpoints which teams might need extra TLC.

Example KPI: Reduce employee turnover rate from 18% to 12% over 12 months by enhancing onboarding processes and offering new wellness initiatives.

Ecommerce KPIs

If you work in eCommerce, these KPIs help you see the story behind every sale.

• Shopping cart abandonment rate: How many people bail out right before buying?
• Average order value (AOV): Are customers buying a little or a lot each time?
• Customer return rate: Are customers happy enough to come back for more?
• Net Promoter Score (NPS): The number of customers willing to recommend you to others.
• Traffic source breakdown: Which channels are driving the most visitors (organic vs. paid)?

Example KPI: Decrease shopping cart abandonment rate to under 60% by introducing remarketing emails and simplifying the checkout process.

Manufacturing KPIs

If your world revolves around production lines or widgets, these KPIs help you spot kinks (and smooth them out).

• Cycle time: How long does it take to get from start to finish?
• Overall equipment effectiveness (OEE): Is your machinery earning its keep?
• Defect density: Don’t ship the wobbly tables (seriously).
• Capacity utilisation: Running at full tilt or barely ticking over?
• Downtime percentage: Time machines spend out of action.
• Production efficiency: Are resources spent wisely or wasted on avoidable delays?
• Throughput: Units produced in an hour (or day, or week).
• Error rate: Proportion of products failing quality control.
• Quality rate: Percentage of items that pass inspection.

Example KPI: Increase production efficiency by 15% by reducing downtime through predictive maintenance.

Process Performance KPIs

For those who love finding a better way - these KPIs reveal how efficiently processes actually run.

• Total cycle time: The clock from first step to the last. Shorter is usually sweeter.
• Bottleneck analysis: Where’s everything grinding to a halt?
• Process throughput: How many completed units make it to the end step in a set period?

Example KPI: Reduce total cycle time by 20% by streamlining bottleneck processes.

IT KPIs

These KPIs help tech teams stay on top of the chaos (and maybe get some thanks).

• Total system downtime: How long are your tools out of action for upgrades or emergencies?
• Number of support tickets resolved: Proof that the team is hard at work.
• Number of developed features: Fresh updates and improvements released.
• Critical bugs fixed: Fewer bugs means smoother sailing all round.
• Backup frequency: How regularly data gets safely stored.

Example KPI: Resolve 95% of support tickets within 24 hours to improve user satisfaction.

How to measure and track KPIs

Setting the goal is the easy part. Tracking it is where the real work happens.

If you don’t monitor your progress, you won’t know you’re falling behind until it’s too late. Fortunately, you don’t need to rely on a scrap of paper and a calculator.

Most businesses use specialised tools to keep an eye on things:

• Dashboards: Tools like Tableau, Power BI, or Google Analytics provide real-time visuals of how you’re doing.
• CRM software: For sales and customer service roles, platforms like Salesforce or HubSpot track client interactions and deal stages automatically.
• Project management tools: Apps like Asana or Trello are great for tracking project-level completion rates.

The trick is consistency. Review your KPIs weekly or monthly - not just at your annual appraisal.

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Advantages and limitations of KPIs

Like anything in business, KPIs have their pros and cons.

The advantages:

• Clarity: Everyone knows exactly what is expected of them.
• Motivation: Hitting a tangible target gives a great sense of achievement (and often, a bonus).
• Accountability: They remove the guesswork from performance reviews.

The limitations:

• Tunnel vision: Employees might focus so hard on hitting a specific number that they neglect other important tasks (like helping colleagues).
• Manipulation: If a target is poorly defined, people might find ‘creative’ ways to hit the number without actually adding value.
• Rigidity: business moves fast. A KPI set in January might be completely irrelevant by July if the market changes.

SLAs and KPIs: What is the difference?

You might hear these two terms thrown around in the same meeting, but they aren’t the same thing.

A KPI (Key Performance Indicator) measures how well you are performing against your internal business goals. It’s aspirational.

An SLA (Service Level Agreement) is a commitment between a service provider and a client. It’s contractual.

For example, an IT company might have an SLA that guarantees they will respond to support tickets within 4 hours. Their internal KPI, however, might be to respond within 2 hours to ensure they are consistently beating that expectation.

Think of the SLA as the ‘minimum standard required’ and the KPI as the ‘target for success’.

How do you demonstrate KPIs in your CV?

Throughout your CV, your KPIs can be used to make the most of your achievements.

Whether it’s in your ‘Key Skills’ section, or demonstrating your successes during previous periods of employment, including your previous KPIs and how you hit them will be much more effective than simply outlining your previous duties.

For example:

• Instead of: 'Responsible for sales.'
• Try: 'Exceeded annual sales KPI of £50,000 by 20% in 2025.'

To learn more about how to include your achievements in your CV, read our CV advice before downloading our free CV template.

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Frequently asked questions

What makes a good KPI?

A good KPI is simple, relevant, and actionable. If you can’t explain it to someone outside of your team in one sentence, it’s probably too complicated. It must also be directly actionable - meaning you actually have the power to influence the result.

Can KPIs be non-financial?

Absolutely. While revenue is important, non-financial KPIs like employee satisfaction, customer retention, and brand awareness are vital for long-term health.

How many KPIs should I have?

Less is often more. If you have 20 priorities, you have no priorities. Aim for 3-5 core KPIs that really move the needle for your role.

What if I miss my KPI?

Don’t hide it. Be honest about why it was missed. Was the target unrealistic? Did the market change? Use the data to adjust your strategy for next time.

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