To obtain a high-level understanding of what constitutes a Key Performance Indicator (KPI), we first have to look at the so-called "anatomy" of a KPI (pictured below). This article is intended to inform you about the difference between a Key Metric and a Key Performance Indicator (KPI) and their relationship to each other.
What are KPIs?
To know if you are helping your organization achieve success, you need to measure how your website is contributing. KPIs are great for reporting to management on performance and ROI (Return on Investment) of your website. Key Performance Indicators (KPIs) are a group of indicators (Key Metrics) that help organizations assess progress to strategic objectives.
What are Key Metrics?
All Analytics data can be identified as metrics. Key Metrics, however, are the actual numbers and actions on your website that truly matter to reach your strategic objectives. Key Metrics are the tactical initiatives you and your web team identify for your website. These are the types of visitor actions that are helping your organization reach its overall objectives, whether that is lead generation, digital engagement, or customer satisfaction. Examples of Key Metrics could be a newsletter sign up or form completion, but the point is to identify if those actions truly matter for your organization.
How do KPIs and Key Metrics relate to each other?
To understand the exact actions that need to happen for each Key Metric to be successful, you need to identify triggers. This process is shown in the image below.
To put this into practice, let's look at an example of this process:
If you are a law firm, you might be interested to know:
a) how many visitors sign up for your newsletter or
b) how many visitors submit a request for retainer offers.
Strategic objective: Increase Lead generation
Key Metrics: a) Sign-ups for newsletter b) Requests for retainer offers
Trigger: What actions do your users need to perform on your website for the key metric to be successful?
a) Those that view the "Thank you for signing up for our newsletter" page, which indicates a completion
b) Those that click on the "Submit" button for requesting a retainer offer
KPI: By grouping, the Key Metrics "Newsletter Signups" and "Requests for retainer offers" you could name your KPI "Lead Generation" and see how those combined metrics are performing toward that objective.
In this example, the KPI is tracking the success of increasing lead generation at the law firm. By knowing how well your team is generating leads online through various Key Metrics, you can determine how successful the website is at reaching this specific strategic objective.