A Key Performance Indicator (KPI) is a measurable value that demonstrates how effectively a company is achieving key business objectives. Organizations use KPIs to evaluate their success at reaching targets. Learn more: What is a key performance indicator (KPI)?

Selecting the right one will depend on your industry and which part of the business you are looking to track. Each department will use different KPI types to measure success based on specific business goals and targets.

Once you’ve selected your key business metrics, you will want to track them in a real-time reporting tool. KPI management can be done using dashboard reporting software, giving your entire organization insights into your current performance.


In the context of products and services, adoption is the act of beginning to use something new. Considering new features and new users, there are four types of user adoption:

  1. Internal adoption: When existing users begin using new features. For example, the percentage of existing Instagram users who adopt a new story feature within 1, 7, or 30 days of its introduction.
  2. External adoption: When new users begin using existing features. For example, the mean number of days new Instagram users create their first story from when they opened their account.
  3. Adoption flags: When new users adopt new features. A green flag is raised if they’re successful, and no red flags are raised when they’re not.
  4. Routine adoption: Happens when existing users adopt existing features.

User adoption is an unbiased behavioral measurement and is therefore trustworthy, valid, and reliable

Number of New users / Total number of users) / Period of time

The Gender Ratio metric gives viewers insight into a key facet of diversity in the workplace: the female to male employee ratio. As society, and subsequently the workplace, becomes more and more focused on the importance of diversified workforces with varying perspectives being offered, this metric is paramount in assuring that the gender ratio of your employees is in good standing.

( # of employees of one gender / total # of employees ) * 100 = % of gender in the company

Customer Service

Customer retention rate is the percentage of existing customers who remain customers after a given period. Your customer retention rate can help you better understand what keeps customers with your company, and can also signal opportunities to improve customer service. Once you understand how well or poorly your company retains customers, you can work to improve your customer retention rate.

CRR = ((E-N)/S) X 100.

  • S = The number of customers (or amount of revenue) you had at the period’s start
  • E = The number of customers (or amount of revenue) at the period’s end
  • N= The number of new customers (or revenue)

The Sales Opportunity metric organizes prospects based on opportunity value and the probability of closing the sale. Each prospect has an estimated purchase value associated with them to help your team prioritize their efforts.

Prospects are sorted according to the likelihood of a win (stage) and the value of a win (estimated value). Each stage may have a weighted value associated with it to demonstrate the probability of making the sale. For example, a prospect rated as “negotiated” may have a weighted value of 0.5 applied to their estimated purchase value. Therefore, a prospect with a “negotiated” stage and an estimated purchase value of $10,000 will have a weighted value of $5,000.

Value of Sale * Opportunity Status Percentage

The Timeliness of Issue Resolution metric helps your team gain insight into how effective and efficient they are at addressing and fixing reported issues. While issues are bound to happen, it is important that they are resolve within a suitable period of time.

(Issues raised by customers that are resolved within a given time period / Total number of issues raised)x100


The Accounts Payable Turnover KPI measures the rate at which your company pays off suppliers and other expenses. This ratio is important for understanding the amount of cash that your business spends on suppliers during any given period. It shows how many times over the course of the year your business is able to pay off its accounts payable. Used in conjunction with Current Ratio or Quick Ratio, this financial metric shows your ability to meet your financial obligations

Total Supplied Purchases / Average Accounts Payable

Current Ratio measures the ability of your organization to pay all of your financial obligations in one year. This ratio accounts for your current assets, such as account receivables, and your current liabilities, such as account payables, to help you understand the solvency of your business. Generally speaking, a ratio between 1.5 and 3 is preferable and indicates strong financial performance.

A current ratio of less than 1 indicates that your organization would be unable to meet all of your financial obligations if they came due at the same time. While this certainly is not good, it’s not uncommon for organizations to operate in the red for short periods of time, especially if the business is funding growth by accumulating debt. On the other hand, a high current ratio may be mean that the business is sitting on a large amount of cash, instead of investing it back into the business.

Current Assets / Current Liabilities

The debt-to-capital ratio (D/C ratio) measures the financial leverage of a company by comparing its total liabilities to total capital. In other words, the debt-to-capital ratio formula measures the proportion of debt that a business uses to fund its ongoing operations as compared with capital. This financial metric can help you understand a range of things about your business, including capital structure and financial solvency. So, if you want to understand how well your business could handle a potential downturn in sales revenue, debt-to-capital ratio analysis could be ideal

The debt-to-capital ratio gives analysts and investors a better idea of a company’s financial structure and whether or not the company is a suitable investment. All else being equal, the higher the debt-to-capital ratio, the riskier the company. This is because a higher ratio, the more the company is funded by debt than equity, which means a higher liability to repay the debt and a greater risk of forfeiture on the loan if the debt cannot be paid timely.

Debt-to-Capital Ratio = Debt / Debt + Shareholder’s Equity

Quick Ratio measures the ability of your organization to meet any short-term financial obligations with assets that can be quickly converted into cash. This ratio offers a more conservative assessment of your fiscal health than the current ratio because it excludes inventories from your assets. Like your current ratio, a quick ratio greater than 1 indicates that your business is able to pay off all of your accounts payable.

(Current Assets – Inventory) / Current Liabilities

Human Resources

This metric helps your team gain insight into how effective and efficient they are at addressing and fixing reported issues. While issues are bound to happen, it is important that they are resolve within a suitable period of time.

KPI Formula
(Issues raised by customers that are resolved within a given time period / Total number of issues raised)x100

Quality of hire is the value a new hire adds to your company based on how much they contribute to your organization’s long term success in terms of their performance and tenure. The minimum baseline for a quality hire is that the value a person creates while employed at your company is greater than the cost of recruiting them. While quality of hire is mainly used as to measure how successful a new hire becomes, it’s also often used as a metric for the success of the recruiting function overall.

KPI Formula:
(Job Performance + Ramp-up Time + Employee Engagement + Cultural Fit) / N
N = number of indicators (in this case, N = 4)

Every job description in your organization should come with an attached salary band—a range of salaries appropriate for the role. While there may be occasional deviations from this range for exceptional candidates, this assigned band is the standard pay for this position. This range should stick with your hires throughout their duration of employment in this position. Using that assigned range, you can calculate their salary range penetration—meaning, how far they are into their range.

Let’s say we’re talking about Alicia, who’s on track to get a raise in the next quarter. Go Alicia! Her position’s salary range is $90,000-$115,000, and she’s being paid $108,000 .(108,000 – 90,000) / (115,000 – 90,000) = .72, or 72%. This means that Alicia is 72% percent into her salary range, and has 28% left to go until she needs to have her position, or range, re-examined.

KPI Formula
Salary Range Penetration
(salary – range minimum) / (range maximum – range minimum) = range penetration.

Training & Development Expense as a Percentage of Total Human Resources (HR) Expense measures the cost of developing, implementing and managing employee training programs relative to total HR spending over the same period of time. As with most cost-related metrics, a relatively low value is preferred for this metric, however any cost savings in this area must be weighed against the quality of the company’s talent development programs. Poorly developed (or non-existent) training programs can impact the bottom line in other ways – high turnover rates, low customer service levels, poor employee productivity and work quality can, in certain cases, may be tied to talent development practices. Furthermore, companies that are experiencing high growth (i.e., adding many new employees, opening new positions, etc.) can expect to spend considerably more on training and development than others.

KPI Formula:
(Training & Development Expense / Total Human Resources Expense) * 100


The Bradford factor is a formula used by HR departments to calculate the impact of employees’ absences on the organisation. It is based on the theory that short, frequent, unplanned absences are more disruptive to organisations than longer absences.

Bradford factor scores are based on the frequency and length of an employee’s absence during a defined period, usually 52 weeks.

KPI Formula
B= S² x D 

B = Bradford factor score
S = total number of spells (instances) of absence for that individual in the given period
D = total number of days the individual was absent during the given period

Employees should be viewed as prized long term assets. Resources should be dedicated to improving their engagement and satisfaction in the workplace.

With the right combination of systems in place, you will increase your employee engagement, and reduce your overall turnover.

Remember: Turnover in and of itself isn’t intrinsically harmful to a business. As can be seen above, several types of turnover can be beneficial, but the ones which cost billions of dollars a year are incredibly hurtful to businesses. So, be sure to invest in the right initiatives to stave off those negative forms.

KPI Formula
(total number of leavers / average number of employees) x 100.

Evaluation of the degree to which employees are content/happy in their work roles. This measure is considered of importance due to the causal link between happy/motivated employees who are more likely to deliver satisfaction to customers and drive successful business performance. Information is generally collected via a satisfaction survey, based upon a selection of key areas which combine to represent the overall experience of staff.

KPI Formula
Employees score answers to questions with 1 – 5, Strongly disagree (score 1) to Strongly agree (Score 5) Total the number of points for each respondent Total number of questions answered by respondent.

Employee Satisfaction Index (%) = (Total point score divided by Total questions) x 100

Ensuring you have the right people in the right jobs is hugely important. Competing for the best talent in a competitive market and getting it right therefore equally important. This starts by offering a competitive salary. All other things being equal, a competitive salary only needs to be slightly higher than the competition. By calculating your salary competitiveness ratio, you maintain your attractiveness to candidates, as well as your ability to retain your current employees, while ensuring healthy compensation within your specific market. 

KPI Formula
SCR (Salary Competitiveness Ratio) = Avg. company salary/Avg. Competitors salary * 100


Customer Acquisition Cost (CAC) is calculated by dividing all the Sales and Marketing costs involved to acquire a new customer within a certain timeframe. To get your customer acquisition cost (CAC), divide all sales and marketing costs by the number of customers acquired over a given time period. CAC is an important metric for growing companies to determine profitability and efficiency.

CAC = (total cost of sales and marketing) / (# of customers acquired)

A simple example would be, if Tommy spent $10 to market his lemonade stand and got 10 people to buy his product in a 1 week time period, his cost of acquisition for that week is $1.00.

The End Action Rate KPI measures how effective marketing campaigns are by monitoring the last action taken by your audience. This KPI may also incorporate non-sales related objectives such as contact requests or bounce rates.

The End Action Rate KPI is intended to provide your team with actionable information about your campaign performance. For example, if you are running a banner ad campaign with a specific landing page, you will want to monitor secondary metrics as well as goal completions. These secondary metrics will tell you how well the page resonates with your audience and if the campaign was generally well received

# of users that start activity / # of users that complete activity

The Funnel Conversion Rate metric helps your team understand and monitor how effective their efforts are in prompting leads to complete goals and move through to the end of funnel. Monitoring the funnel conversion rate gives your team valuable insight into the efficiency of their marketing efforts and into the volume trends of their funnel.

(Number of leads that have moved to the next stage in the funnel/Leads in funnel stage)x100

Lead conversion rate measures the percentage of your leads that end up converting to opportunities.  To calculate lead conversion rate, you take the number of leads converted to opportunities in a period, and divide that by the number of leads created in that period.

For example, if you had 100 leads that were created in March, and you had 18 leads converted to opportunities in March, then your lead conversion rate would be 18 / 100 = 18%

(Leads converted to Sales/Total Leads)x100

Project Management

Cost variance (CV), also known as budget variance, is the difference between the actual cost and the budgeted cost, or what you expected to spend versus what you actually spent. This formula helps project managers figure out if they are over or under budget. A positive CV shows that the project is under budget, and a negative CV shows that the project is over budget. If the calculated cost variance is zero (or very close to zero), you are on budget. In earned value management, value always comes down to money, whether the commodity is time or actual dollars spent. Earned value management (EVM) is a project management technique that combines scope, time, and costs to forecast in a project.

Cost Variance = Earned Value – Actual Cost

If both variances are positive, this means that your project is progressing well. However, something is wrong if either variance is negative and you have to take corrective action to bring the project back on track.

Utilization rates show how much of your team’s time is being spent on billable tasks, as well as how productive each team member is. Ultimately, these figures enable team leaders to measure billing efficiency and determine if you are pricing your projects correctly to cover your costs and make a profit.

That sweet spot, according to Gartner analyst Robert Handler, is between 70-80% utilization of a team member’s scheduled time. If team members are spending more than 80% of their time on billable tasks, they are less productive than they need be, and ultimately costing your agency time and money.

Total billable hours ÷ Total available working hours x 100

For Example
If a designer on your team works 8 hours a day, 5 days a week, then their availability is set to 40 hours per week. If 34 of those hours are considered billable, while 6 are left for other tasks (like administrative work), the calculation you make is 34 / 40 x 100 = 85. The designer’s utilization rate is 85%.

It’s important to note that utilization rates should be used as a baseline that can be tweaked according to your agency’s unique needs

The schedule performance index (SPI) is a measure of how close the project is to being completed compared to the schedule.

As a ratio it is calculated by dividing the budgeted cost of work performed, or earned value(EV), by the planned value(PV).


For example:
A project has a budgeted cost of £120,000.
According to the schedule, 15% of the project should have been completed after one month (planned value). That is £120,000 x 15 / 100 = £18,000.
But after a month, only 12% of the project has actually been completed (earned value). That is £120,000 x 12 / 100 = £14,400.
SPI = EV / PV = 14,400 / 18,000 = 0.8

This means that for every estimated hour of work, the project team is only completing 0.8 hours (just over 45 minutes).

If the ratio has a value higher than 1 this indicates the project is progressing well against the schedule. If the SPI is 1, then the project is progressing exactly as planned. If the SPI is less than 1 then the project is running behind schedule.

Schedule variance (SV) is calculated as the difference between earned value (EV) and planned value (PV). How much value have we earned in the project based on our budget at completion (BAC) and what percentage of work has been completed and how much did we plan to have spent by this point in the project?

SV = EV – PV

[hint: EV always comes first in the earned value calculations of CV, CPI, SV, and SPI]

If you have a negative balance in your bank account, is that good or bad? It’s bad, right? Remember that holds true with schedule variance as well. If we have a negative schedule variance it means that we are behind schedule.

A positive SV indicates that we are trending ahead of schedule. A variance of zero indicates the project is exactly on schedule (does that really happen?)


When talking about the Average Purchase Value, it is referred to the average sales value of each processed sales transaction. Basically, it shows you what’s the average amount that is currently spent on one of your products or services, in an individual transaction.

Depending on, for example, the length of the average contract or your business model, you can calculate the Average Purchase Value for a day, a week, a month, a year, or even in regard with the overall contract – in case there is one.

Total ($) Value of Orders / (#) of Orders over a Defined Period = ($) Average Purchase Value

Basically, this metric helps the team that manages a certain business to predict the future of their sales and come up with revenue projections as well. A careful analysis of the Average Purchase Value will reveal the purchasing behavior of your consumers.

A product line refers to a set of products that have similar uses and are generally marketed as a cluster. The Product-Line Profitability metric calculates the total amount of profit gained from all products within a product line, minus the expenses used to produce and sell them.

Product line revenue – Product line expenses

System & Processes

Process Cycle Efficiency, also known as “Flow Efficiency” or “Value Add Ratio,” is a measurement of the amount of value-add time in any process, relative to lead time (the time between the initiation and completion of a production process). The higher the ratio, the more efficient your process. This metric quantifies waste throughout a system of delivery. 

Process Cycle Efficiency = (Value-added Time / Cycle Time)