While creating visualizations showing the Key Performance Indicators (KPI’s) for any business, it is extremely important to understand that not all metrics are KPI’s and hence are not useful in evaluating the business.
What is the difference between metrics and KPI’s?
A metric denotes the numeric value of the measure, whereas a KPI explains what is being measured. A metric can be a calculation of different metrics eg average. KPI uses quantifiable metrics to evaluate the business goals. They help to make calculated business decisions based on the metrics obtained.
KPI helps business owners to understand basic business profits like break even points. A balanced scorecard can be created to evaluate the different operating elements like financial growth, customer satisfaction and business processes. This helps business owners to track the progress of their business.
KPI’s help the business owners in the following ways-
- Design good lead strategy
- Choose an effective marketing method which is cost effective
- Define an appropriate pricing strategy for its products.
By combining KPI’s with useful metrics a company can communicate its performance with the internal or external stakeholders. This helps them to identify the areas to work on and improve for the business to do better. It gives the picture of performance against the goals set by the company.
Sources- http://yourbusiness.azcentral.com/differences-between-kpi-metric-24392.html
http://experience.stratusinteractive.com/blog/whats-the-difference-between-a-metric-and-kpi
http://www.bscdesigner.com/quantification-measure-metric-kpi.htm