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KPI: Key Performance Indicator

Business Academy

Businesses thrive on data. You need to be carefully tracking everything from the efficacy of your marketing campaigns to how much revenue you’re generating month-over-month. 

When you’re trying to assess progress, growth, or even the status of your business’s financial well-being, however, you need to know exactly which data to focus on. Looking at everything all at once won’t help you make sense of anything, so you’ll need to know which specific metrics to focus on at any given point in time.

That’s where key performance indicators (KPIs) become invaluable for businesses. 

Want to get more out of your metrics with actionable insights and analytics? Get started with a free 14-day trial of Baremetrics now. 

What is a Key Performance Indicator (KPI)? 

A Key Performance Indicator (KPI) is a metric that has been singled out to demonstrate how effectively a company is achieving key objectives.

KPIs are used by different teams in a company to evaluate the success of specific objectives. 

Sales will focus on KPIs reflecting how many deals they’re closing successfully, for example. 

Customer service teams will focus on KPIs around customer satisfaction. 

Business owners and Chief Financial Officers (CFOs) will look at KPIs reflecting the revenue and growth of a business.

Why KPIs Matter 

There are a staggering number of metrics for any team to review at any point in time, which is why KPIs are essential. When you’ve strategically and correctly chosen which data points to focus on, you’ll be able to better measure success over time. 

The reality is that some data doesn’t matter much. Other data does matter, but isn’t important when you’re assessing progress toward and prioritizing a certain goal. 

Here’s an example: 

If marketing cares more about generating high-quality leads, for example, they’ll look at average order value, conversion rate, and pipeline velocity instead of customer acquisition costs (CAC). 

This doesn’t mean that CAC doesn’t matter; they’ll still look at that information, too, because the cost of acquiring high-value customers absolutely does matter for a variety of reasons. It impacts scalability, for example, and is needed when calculating marketing budgets and developing strategies. 

But it won’t be a KPI that they focus on as a core metric of success when assessing how much they’re progressing towards their goal of more high-cost sales faster. In fact, they may even be willing to spend more intentionally to reach those goals. 

Paralysis by analysis is a real thing. You can get lost in the weeds if you don’t know what to focus on, which can end up causing you to miss business objectives by course-correcting in the wrong direction or missing vital information in the process. 

How KPIs Matter for SMART Objectives

SMART objectives are often used in business because they’re easy to understand and prioritize. They have the following traits:

  • Specific: What specific goal do you want to accomplish? “Growth” doesn’t count; do you want to acquire new customers? Increase retention? Increase your average order value? 
  • Measurable: How are we going to measure progress towards the specific objective? 
  • Achievable: Is this something you can realistically achieve? “Best business ever” as a goal, probably not; a 4.5 customer happiness score on G2, that's absolutely possible. 
  • Realistic: How much growth can we achieve in a set time frame?
  • Time-specific: What timeline do you want to achieve this goal within? 

Let’s say, for example, you want to gain 100 customers in the next 4 months by retargeting ads to customers who visited our landing page

We’ll measure KPIs like the following:

  • Customer acquisition 
  • Conversion rates 
  • CAC 
  • Landing page visits 

Throughout that 4 month period, you’ll want to check in regularly— at least monthly. Take a look at your KPIs to see how much you’ve progressed towards your goal. Note what you’re doing to achieve that goal, and consider whether or not you need to pivot.

You may realize, for example, that after month 1 you’ve only gotten 5 leads. Sometimes it takes time to build momentum with new campaigns due to pipeline velocity, so that’s not necessarily world-ending. But maybe it’s a sign you also want to test another version of your landing page, test a new audience, or increase your ad spend to boost visibility. 

Choosing Which KPIs to Measure 

Each business (and each team within that business) will select its own KPIs based specifically on the goals in question. 

Marketing teams, for example, often focus on metrics like the following:

  • Impressions
  • Click-through rate
  • Number of leads generated
  • Customer acquisition cost (CAC)
  • Conversion rate

Sales teams are going to look at metrics like these:

  • Pipeline velocity
  • Number of new leads acquired
  • Number of demos booked
  • Win/loss rate
  • Monthly revenue 

Customer service teams will look at metrics like the following:

  • Average resolution time
  • Customer satisfaction rates 
  • Customer churn
  • Cost per resolution 
  • Average response time 

When choosing your KPIs, do the following:

    • Consider what business objective you want to measure. Let’s say you want to boost engagement by delivering stronger customer experiences. This is a specific objective: Creating better experiences. 
  • Consider what data you can measure. Many brands find it helpful to review all the data available to them through their analytics software. Review different metrics that you can track.  
  • Consider what data best shows success. Narrow down the KPIs to only the ones relevant to this specific goal. First-call resolution is a great metric because no customer wants to call back more than once; average resolution time is also a great one to look at.
    Meanwhile, cost per resolution likely wouldn’t be relevant here, because it does not help you track whether or not the customer experience has been improved. It’s still important to track in terms of how much your customer success teams are spending, but it would not be a KPI for this particular objective, and focusing on it could prevent objective success. 

Critical Revenue KPIs for Subscription-Based Businesses 

As a subscription-based business, there are certain revenue KPIs that you’ll almost always want to track to assess revenue. While it may vary depending on your specific business goals, these are typically the revenue KPIs that subscription businesses need to track: 

Many subscription-based businesses also want to keep a close eye on customer satisfaction and engagement rates to find ways to increase their revenue by improving the customer experience. These KPIs can help you measure customer satisfaction: 

  • Net Promoter Score (which is a Baremetrics rating each customer gives you and serves as a benchmark for customer loyalty)
  • Retention rates
  • Average sessions per user 
  • Number of support tickets filed 
  • Customer usage 

So How Do I Measure KPIs? 

You can’t track progress if you don’t have the right tools in place to collect the data you need for your KPIs. 

Measuring KPIs comes down to using the right analytics software that has these core traits:

  • Provides the data you need to track your chosen KPIs 
  • Is consistently reliable and accurate (the importance of this cannot be overstated)
  • Has an easy-to-use interface with transparent data that tracks trends over time


Baremetrics can help with this. We offer 26 different revenue and engagement metrics that are immediately relevant for subscription-based businesses. We also pride ourselves on consistency, reliability, and accuracy.

Unlike most other tools, for example, we don’t add customers with paused or delinquent accounts in your monthly recurring revenue metric; we only provide MRR for active, paying customers with accounts in good standing so you have an accurate look at your real revenue.

We’ll help you track data over time so you can assess KPI data, track growth, and spot opportunities for optimization. 

We also offer forecasting features to help you plan for the future (which can help you determine new objectives and future KPIs, too), as well as specialized metrics that can help you actually meet your business objectives in and of themselves. Our Recover feature, for example, can help you recover failed payments to reduce churn before it happens. 

Want to check it out? Get started with a free 14-day trial of Baremetrics now. 

Final Thoughts 

Setting and tracking KPIs strategically is the only way to effectively track how well you’re progressing toward your business goals. 

It doesn’t matter whether your goal is to lower your customer acquisition costs or to acquire more customers faster— you need to choose the right KPIs to help you assess whether or not you’re actually making progress toward that goal. If you don’t, you risk either missing the forest for the trees by focusing on the wrong data or getting bogged down by just too much data.

The right analytics software makes KPI management and assessment much easier. Choose a tool that aligns with your immediate and future needs, and always prioritizes reliability above all else.

Ready to start setting KPIs so you can measure (and crush!) your goals? Get started with Baremetrics free here

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