Quick definition: A small set of critical metrics that reveal what a business actually does. "Monthly active users" for example.
Properties of a good KPI
SMART rule: Specific, Measurable, Achievable, Relevant, Time-bound.
Example: "Increase customer satisfaction" is not a KPI — it's not measurable. "Move our monthly NPS from 45 to 60 by end of Q4" is.
Most companies track 30+ KPIs but truly focus on only 5–7. Too many KPIs is the same as no KPIs.
Sector examples
SaaS: MRR, ARR, churn, LTV, CAC, NPS.
E-commerce: Conversion rate, average basket size, returning customer rate.
Restaurant: Table turnover rate, average bill size, no-show rate.
Salon: Customer retention rate, revenue per staff member, appointment fill rate.
KPI vs OKR
KPI is a gauge — "where are we right now?". OKR is a goal — "where do we want to go?". They complement each other. Details on the OKR page.