If you’ve been a project manager for any amount of time, you’ve probably heard the term “KPI metrics.” While these two words are commonly put together, it might surprise you that KPI metrics don’t actually exist. In fact, KPI and metrics are two different ideas all together.
In this article, we’re going to define the line between KPI and metrics so that you can better understand how to use them both to your advantage.
What are KPIs?
KPI stands for key performance indicators. A KPI is a measurable value that companies use to represent how effectively they’re achieving their business objectives. Organizations use KPIs to measure their success at reaching different targets. KPIs can spread across industries, companies, departments, or even individual tasks.
Definitions are great, but examples are the best way to seal the deal. Let’s say that you’re a manager at a massive retail store, and you were short on product between the months of November and December of the previous year. A KPI could be the amount of people that came in the store versus the amount of people that actually bought an item. You could use this information to compare to other months, and order your new product accordingly.
Let’s translate this into a project manager’s role. Overall, KPIs typically fall into one of four categories
Budgeted cost of work scheduling, otherwise known as planned value, is the estimated cost for your project – pretty important for a project manager. This KPI allows you to identify where your project stands in regards to how much you’ve spent vs how much needed to be spent.
The most common KPI for a project manager’s timeline is planned hours vs worked hours. At the beginning of a project, you should have a pretty good idea at how many man hours it will take to complete.
KPIs far as income goes are pretty straight forward. The most common and arguably the most important is return of investment.
As a project manager, it’s important that your team is keeping to the time and budget estimates and report any variances.
In terms of KPIs, it’s best to use a combination so that you have as broad of a view as possible. Your KPIs should also be made clear to all team members and stakeholders from the beginning and communicated throughout the entirety of the process.
What is a metric?
While KPI and metrics are related, they are two different measurements. A metric is simply a number within a KPI to help track performance and progression. Metrics are used to track and assess the progression or status of a specific process. Like KPIs, metrics are quantifiable, and need to be defined well.
Just to get a better understanding, let’s use the examples of KPIs above, and list the metrics that fit within each one.
It sounds pretty complicated, so here’s an example. A common formula for helping identify the budgeted cost of work scheduling is (% of project completed) x (total budget). Now, let’s say your budget for the project is $100,000, and you’ve calculated that you’ve completed roughly 20% of the project so far. Your equation will then look like this: (0.20) x ($100,000) = $20,000. At this point, if you’ve spent more than $20,000, then you know you’re over budget.
This metric won’t come into play until the end of the project, but you’ll compare the planned hours vs the actual working hours of each team member. The number that you come up with is your metric. If you estimated accurately, there won’t be much of a difference between the two compared numbers. If you didn’t estimate accurately, then the numbers will vary wildly.
This formula is pretty simple. All you have to do is divide your total earned income by the total cost. If you’re in the negative, then something went terribly wrong along the way.
In order to keep track of your estimates, you can use schedule variance. This idea involves you taking your planned value (estimated budget divided by total planned hours) and subtracting it from your earned value (total cost so far divided by total hours worked so far).
Examples of metrics
As you can see, KPIs are metrics, but metrics are not KPIs. It can be confusing to think about, so let’s use another example:
Let’s say you have a goal to reach a specific monthly visitor count on your website. For the sake of this example, let’s use 10,000 visitors as our imaginary number. With that number in mind, all you have to do is track your progress using Google Analytics. Collect the traffic data, and use that number to measure your progress towards your goal. Now, the number that represents your monthly website visitors has become a metric.
Now that we have a better grasp of what KPI metrics mean, and the difference between the two ideas, let’s translate them into more specific industries:
Marketing itself is a very broad term, as there are a few different categories within the industry. That being said, there are a few usual KPI suspects that many experienced marketers will point out immediately:
- Sales revenue
- Costs per acquisition
- Costs per lead
Again, because marketing is such a big industry, the list of KPIs can be enormous, so these are just a few examples.
Now, let’s move on to metrics. Remember that metrics are a quantifiable measurement that helps you assess progression. Each of the points below will have numbers attached to them. Those numbers are you metrics.
- SEO traffic
SEO is a broad subject, so there can be a few different metrics attached to this one. For example, you can simply look at the number of unique views per month.
- Return of marketing investment
We hit on this topic a little above, and the same idea applies here: initial cost vs amount earned.
- Traffic by device
For a lot of businesses, they have a specific market. For example, for big businesses like Amazon, more than 70% of their users are using smartphones, and not computers. Numbers like that are very important to know because for Amazon, it’s definitely worth investing more into mobile advertising and optimization.
- Social traffic and conversion
For any business that owns a website, or any other form of advertisement, it’s important to know the exact number of people that visit your website or view your advertisement and then actually buy your products or services.
As a web design team, there are 4 key measures of KPIs:
- Error rate
- User satisfaction
A few metrics for web design include:
- Conversion rate
Again, this is the number that tells you how many people visit the website and compares it to the number of people that completed a desired action, like signing up for a newsletter or buying something.
- Total number of sessions/visits
Although they may not buy anything, it is still a good idea to track how many people are visiting your website. In addition to tracking the number of visitors, you might want to consider tracking how long each visitor spends on your webpage.
- Cost per conversion
Cost per conversion refers to how much you spent on advertising vs how much you’re earning. If you spend lots on advertising, and don’t really see any significant change in conversion rates, then it might be time to review your other advertising options.
Each one of these metrics play a key role in tracking performance and progression on the website overall.
We covered web design, so now lets cover graphic design. While the two industries are similar, and they have a few similar KPI metrics, there are also a few differences. Here are a few KPIs that set graphic design apart from web design:
- Lead time per project
- Estimated vs. actual project time
- Estimated vs. actual budget
- Client satisfaction
A few metrics for design agencies could be:
- Social media follows
Many designers nowadays make a killing on social media. It’s a great, free way to advertise your work. A great metric in this case is not only how many followers you have, but how fast you gain them.
- Social media shares
In very close relation to follows, shares are also important. Knowing the exact number of people that are sharing your content shows you how many people liked your work, and thought other people would, too.
- Traffic driven to your website from your social media
If you can track how many people are viewing your social media accounts, then you can track how many of those people are continuing to your website.
- Customer referrals
A customer referral is almost like a social media share, but in person. This is the number that represents how many people have used your services or bought your product, and then referred another person.
Most companies have a customer service department. Customer service is how customers, new and returning, contact your company. It’s important for the people in charge of customer service to keep track of KPIs and metrics for the sake of customer satisfaction. Let’s start with some KPIs:
- Customer satisfaction score
- Net promoter score
- First response time
- Customer retention rate
- Employee engagement
As you can see, each of the KPIs listed directly relate the the overall satisfaction of your customers. This is important because a happy customer means a returning customer. With that in mind, here are a few metrics you should keep track of:
- Customer request volume
Customer service often deals with customer requests. If your company does not carry something specific that a customer is looking for, then that’s a metric worth tracking. If you have lots of requests, it might be worth investing some time and money into new products or services.
- Resolution rate (resolved requests)
In addition to keeping track of how many people are requesting new products, you should keep track of how many of those requests are filled.
- Average time to resolution
Customer service is the department that deals with all the issues customers face. Whether it’s a big or small issue, it’s worth keeping track of how long it takes for someone to resolve the issue.
- Customer satisfaction
Customer satisfaction is probably the single most important metric any company can keep track of. This metric is often tracked with online surveys or emails. You always want happy customers. If you can figure out how many are unhappy, and why they’re unhappy, then you can address and fix the problem.
How to keep track of your KPI metrics
Many teams use a simple Excel spreadsheet or Google sheet to track their KPIs and metrics. This is a solid strategy because it allows you to track these measurements over time and see your progress and growth.
For a more advanced strategy, consider including your KPIs on a project planning timeline. With Toggl Plan, you can use the milestone feature to mark your KPI goals.When you mark your goals, it appears on everyone’s timeline so that they know what they’re working towards.
In addition to the milestone feature, Toggl Plan also offers a checklist feature so that you can check off each step you need to take to reach your KPI goal Your team can even access these checklists, and you can create as many as you need and dedicate each checklist to an individual project.
In short, KPIs and metrics are very similar, but are, in fact, not the same. They are both quantifiable measurements, but KPIs are intended to help measure your success, and metrics are simply a number.
If you’d like help tracking your KPIs, consider giving Toggl Plan a try. Not only will you be able to better track your KPIs, but you’ll have access to lots of great features to make any project a breeze.