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KPI's vs. Metrics - Is there a difference?

There are a fair few number of keywords repeatedly heard around the marketing world. Two of the most common keywords that often get lumped together are KPI's and Metrics. But what are KPI's and Metrics anyway? Is there a difference?

KPI's are a, "...way of measuring the effectiveness of an organization and its progress towards goals" (Maxwell, 2014). In essence, organisations use KPI's to measure their business goals. Take Netflix for example, an online media streaming service. Netflix relies on a large portion of its revenue from account subscriptions (Ciejka, 2018). As a result, a potential KPI that Netflix might decide on would be an objective to grow their subscriber base. Netflix would then come up with a KPI strategy to reach this objective.

A good KPI strategy will typically follow:

1. An iterative process - this is where a company will conduct a repeated cycle of function until eventually reaching their sought after business goals.

 2. The SMART or SMARTER criteria - this is a manner in which companies will evaluate the KPI's they have set out and plan to measure.


Now that we have a better understanding of KPI's and how they are used, let's talk about Metrics. Metrics are used by businesses to measure and track data. There are numerous analytic tools out there to do this. Just like how KPI's have a good KPI strategy, there is also a good and bad way to measure metrics. 

A good metric will typically be the following:

1. Comparative
2. Understandable
3. A Ratio - this is a comparative way of showing the relationship between two variables.
4. Change Behaviour - after receiving data on the goal they were tracking, businesses should adapt their behaviour to better suit the needs and wants of their customers.


KPI's and Metrics are inherently different. But, it is essential that they work hand in hand when it comes to setting up and executing company goals in order to reach them. 

 To better understand this, let's say I was the owner of a hot dog company and wanted to setup a KPI strategy. I might set my KPI objective as increasing hot dog sales. I would then write out a KPI strategy that outlines this objective and how I plan to achieve it. For example, I might specify that I want to increase hot dog sales by 15% by the end of the quarter. Then I would describe why I want to do this and how I plan to do it until I have a very specific plan laid out. Thereafter, I would use Metrics to help me track relative data in order to help me reach the goal I set out when writing out my KPI strategy.




 References:

 Ciejka, D. (2018). Worth Watching?: Assessing the Financial and Operational Health of Netflix. [online] Digitalcommons.assumption.edu. Available at: https://digitalcommons.assumption.edu/cgi/viewcontent.cgi?article=1039&context=honorstheses.


 Maxwell, K. (2014). Definition of KPI, BuzzWord from Macmillan Dictionary. [online] Macmillandictionary.com. Available at: https://www.macmillandictionary.com/buzzword/entries/KPI.html [Accessed 6 Oct. 2019].
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Location: Dublin, Ireland

Comments

  1. brisingr7/10/19

    Hey, really loved the whole layout of the blog, very easy to follow the comparative study between KPIs and Metrics. KPIs and Metrics makes monitoring the consumer behavior of your TA/TG a child's play. The hot dog company example made this topic so easy for me.....will surely use this example myself in the future:).

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