KPI

KPI is the acronym for Key Performance Indicator. It is a quantifiable metric that a company uses to measure and evaluate the effectiveness of its activities against pre-established strategic and operational objectives. In short, KPIs answer the question: "Are we succeeding in reaching our goals?".

What it is Used For / Why it is Important

KPIs are essential monitoring tools for informed decision-making. They are used to understand the progress of a business process, identify what is and isn't working, and organise priorities. Without KPIs, a business operates "blindly," relying on feelings rather than objective data.

When it is Used / In What Context it is Useful

KPIs are used in every business sector (sales, finance, production, marketing). In Digital Marketing, they are fundamental for measuring the success of any activity. A KPI must always be relevant (tied to a business objective) and measurable.

Examples of common marketing KPIs:

• For an E-commerce business: Conversion Rate, Average Order Value (AOV), Cart Abandonment Rate, ROAS.

• For Lead Generation: Number of Leads, Cost Per Lead (CPL), Landing Page Conversion Rate.

• For Social Media: Engagement Rate, Number of Shares, Click-Through Rate (CTR).

• For General Strategy: Customer Acquisition Cost (CAC) and Customer Lifetime Value (LTV).

Practical Example

An e-commerce website's objective is "to increase sales." A simple figure like the "number of visitors" (a metric) is not a good KPI, because many visitors might not buy. An effective KPI is the "Conversion Rate" (the percentage of visitors who make a purchase), because it directly measures the success of the sales objective.