What Makes a Good Metric? 7 KPI Design Principles
KPI design principles! Not everything that counts can be counted – but a well-designed KPI should be both measurable and meaningful. Here’s how to create KPIs that drive action, not confusion.
1. Aligned to Business Goals (The Golden Rule)
- ✅ Good: “Customer Retention Rate” for SaaS
- ❌ Bad: “Social Media Likes” (unless you’re Instagram)
2. Actionable (Triggers Decisions)
- Test: Can you change tactics based on this?
- Example:
- ✅ “Cart Abandonment Rate” → Improve checkout flow
- ❌ “Total Website Visits” → Too vague
3. Measurable (Quantifiable)
| Good Metric | Poor Metric |
|---|---|
| “30-day Active Users” | “Brand Awareness” |
| “Support Ticket Resolution Time” | “Customer Happiness” |
4. Comparable (Benchmarked)
- vs. Past performance
- vs. Industry standards
- Tools: Google Benchmark, Gartner reports
5. Timely (Fresh Data)
- Real-time: “Server Uptime %”
- Weekly: “New Trial Signups”
- Avoid: “Annual Customer Satisfaction” (too late to fix)
6. Simple (Easy to Understand)
- ❌ “Multi-Touch Attribution Weighted Score”
- ✅ “Lead-to-Customer Conversion Rate”
7. Cost-Effective to Track
- ROI test:
- Tracking cost: $500/month
- Potential savings: $50,000 → Worth it
KPI Design Checklist
✔ SMARTER (Specific, Measurable, Actionable, Relevant, Time-bound, Ethical, Reviewed)
✔ Owned by someone in the org
✔ Visualized in dashboards (Power BI/Tableau)
(Source: Harvard Business Review on KPIs)
Common KPI Pitfalls to Avoid
- Vanity metrics (“Total Downloads”)
- Overlapping metrics confusing teams
- Not revisiting KPIs quarterly
📊 Pro Tip: Use our Free KPI Template to get started!
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