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kpi

KAY-PEE-EYE /ˌkeɪ piː ˈaɪ/

nounC1GMATCAT

Professional

Key Performance Indicator; a quantifiable measure used to evaluate the success of an organization or employee in meeting objectives.

A KPI must be measurable and directly related to a strategic goal.

The story behind the word. The term emerged in the mid-20th century as businesses sought more scientific ways to measure success beyond just 'profit'. It combines 'key' (most important), 'performance' (how well something is done), and 'indicator' (a sign that shows the condition of something).

Word relationships

metric: A metric is any standard of measurement; a KPI is a key metric that indicates success.
benchmark: A benchmark is a standard for comparison; a KPI is a target for your own performance.

vanity metric: A vanity metric looks good on paper but doesn't actually correlate with business success.

Commonly confused with

target: A target is the specific number you want to hit (e.g., 100 sales); the KPI is the category (e.g., Sales Volume).

Collocations

track a KPI
define KPIs
KPI dashboard
meet a KPI

Example sentences

"Our primary KPI for this quarter is a 15% increase in user retention." Business Management
"Employee turnover rate is a critical KPI for the HR department." Human Resources

Memory hook

Think of the 'Key' that unlocks the door to 'Performance'. KPI: Key Points of Interest.

When not to use

Don't call every number a KPI; only the most important ones that drive decision-making earn the 'Key' designation.

Fun facts

The most common KPI in the world is likely 'Net Promoter Score' (NPS), which measures customer loyalty.
In the 1990s, the 'Balanced Scorecard' popularized the use of multiple KPIs across different areas of a business.

kpi