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What is Metrics Tracking – And Why is it Important?


If your company has decided to become more data-driven in its daily operations, you’ve probably come across the terms “KPI” and “metrics tracking.” These buzzwords are often used interchangeably, but there’s a difference. While all key performance indicators (KPIs) are metrics, not all metrics can be considered KPIs.

This article answers the question, “What is a key metric?” It also explains the difference between key metrics and KPIs – and provides helpful tips to help you choose the right parameters for your metrics tracking.

What is a key metric?

Most of the big data collected by today’s companies can be considered “metrics.” The term generally refers to a broad variety of data points generated from various systems – CRMs, accounting systems, and telephony systems are common sources of metrics data.

Key metrics drill down into this data to measure the effects of different business activities or processes. Businesses use these metrics to perform ongoing quantitative assessments and comparisons of crucial business areas. Unlike KPIs, which measure performance against targets, the main objective of metrics tracking is to provide context as to why the KPIs look as they do.

What’s the difference between metrics tracking and KPIs?

In simple terms, KPIs are the “what” and metrics are the “how.” For example, a marketing KPI could be to increase the number of inbound leads generated through the company’s website by 15% over the next quarter. If you were to track metrics in this scenario, you’d want to track the specific actions that should lead to the 15% increase – for example, online information and demo requests or newsletter subscriptions. When you track metrics like these, you can better understand which actions are moving you closer to your KPIs – and which ones you need to work on.

KPIs are used to measure and communicate progress toward, or performance against, goals or targets. Some examples of commonly tracked KPIs include sales growth, customer retention rates, net promoter scores (NPS), and customer acquisition costs. With effective KPI tracking, companies can identify what they’re doing well – and not so well. KPIs are the roadmap that helps companies progress toward their goals.

Metrics tracking measures the actual performance of specific business activities or processes and provides a lower-level perspective than KPIs. While KPIs are often strategic and relevant across multiple departments, metrics tracking is usually more tactical or operational and tends to be specific to departments or business areas – and it’s often done against internal, external, or industry-standard benchmarks.

While KPIs are always tied to a desired outcome, metrics tracking measures the everyday performance of the strategic actions you’ve defined to move you closer to your goals – or KPIs.

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Track Metrics that Matter

Now that you know the difference between KPIs and metrics, you might be wondering how to choose the best metrics to track.

The most important thing to keep in mind is that you should be crisp on which metrics you’re tracking and why. Tracking too many metrics is not only labor-intensive but can also lead to data fatigue and confusion – and end up doing more harm than good.

Choose a handful of KPIs that are critical to your business goals over the next year. A good initial target is 2–5 KPIs per business goal. If you’re not already tracking KPIs, this list of 100 Multi-Department KPIs is an excellent place to start. After you’ve chosen your KPIs, choose a few metrics that will be instrumental in moving your company toward those goals.

As you choose your metrics, consider whether each is significant and actionable. Many beginners fall into the trap of tracking “vanity metrics” – things that look good on paper but don’t actually deliver any real business value. For example, getting loads of new SoMe followers looks great on paper, but if they’re not buying or otherwise interacting with your company they’re of no business value and will not help you reach your goals. Likewise, if your new customer acquisition rate has been pretty much stagnant in recent years, setting a goal to increase it by 75% in the coming year probably isn’t a realistic goal. The whole point of incorporating KPIs and metrics into your operations is to become more data-driven – and hopefully more successful.

Track Metrics and KPIs Centrally Using Reports and Dashboards

Tracking a handful of the right KPIs and related metrics is a great first step toward a more data-driven approach to your business. With Plecto, you can schedule and generate automatic reports including custom KPIs and real-time data to help you keep on top of the metrics that are bringing you closer to your business goals.

Plecto also makes it easy to track KPIs and their related metrics using interactive real-time dashboards. Creating personal KPI dashboards for each employee along with departmental and company dashboards can increase motivation and help management keep an eye on performance. To find out more, check out our blog post about the benefits of using dashboards for metrics tracking.

Get started with metrics tracking today. Sign up for a free 14-day trial of Plecto!


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