KPIs (Key Performance Indicators)
Quantifiable metrics that track the performance and health of a business over time.
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Definition
Key Performance Indicators (KPIs) are the quantifiable metrics that measure a business's performance against its objectives. Unlike OKRs (which are time-bound goals), KPIs are ongoing metrics that are continuously monitored.
Effective KPIs are specific, measurable, relevant, and actionable. They should directly connect to business outcomes and be within the team's ability to influence. Vanity metrics (page views without context) are not good KPIs; actionable metrics (conversion rate) are.
Startups typically track 5-10 core KPIs that span growth (MRR, user count), retention (churn, NRR), efficiency (CAC, LTV:CAC), and engagement (DAU/MAU, activation rate). The specific KPIs depend on business model and stage.
Why It Matters for Founders
KPIs translate business strategy into measurable outcomes. Without KPIs, teams operate on intuition rather than data, making it impossible to identify problems early or measure the impact of improvements.
For startups, choosing the right KPIs is as important as tracking them. Focusing on the wrong metrics can lead to optimizing for the wrong outcomes. The best approach is to identify 3-5 critical KPIs that most directly reflect business health and growth.
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Real-World Example
A SaaS startup tracks these KPIs: MRR ($50K), MRR growth (12%/mo), churn (3%/mo), CAC ($350), LTV ($4,200), NPS (52), and DAU/MAU ratio (24%).
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Frequently Asked Questions
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