Key points in 30 seconds
- A KPI is an indicator tied to an objective, with a target and an owner.
- Most dashboards measure past results; you need to add leading indicators.
- An average often hides what matters most: segment your data.
- Any indicator that becomes a target can be gamed: pair it with a quality indicator.
What a real KPI is
A KPI (key performance indicator) is not just any number. It is an indicator tied to a strategic objective, with a target value, a tracking frequency and an owner. A dashboard with forty indicators usually contains only five or six that deserve the name.
Limit 1: it looks in the rear-view mirror
Revenue, margin or customer count are lagging indicators: by the time they drop, the problem started weeks earlier. Complement them with leading indicators that signal future results.
| Lagging indicator | Related leading indicator |
|---|---|
| Quarterly revenue | Weighted pipeline value |
| Number of new customers | Qualified meetings held per week |
| Churn rate | Customers with no contact for 60 days |
| Annual satisfaction | Response time to requests |
Limit 2: averages mislead
An average conversion rate of 20% can hide one segment at 40% and another at 5%. An average payment period can mask a large customer paying at 120 days. Segment by customer, offer, sales rep and source before drawing conclusions.
Limit 3: what gets measured gets optimised, sometimes at the expense of everything else
Measure the number of calls and you get calls, not necessarily sales. Measure ticket closure time and you get tickets closed too quickly. Pair every volume indicator with a quality indicator.
Limit 4: qualitative insight is missing
A dashboard does not tell you why a customer left, why a competitor wins tenders, or how the team is coping with the workload. This information comes from customer interviews, sales feedback and conversations with teams. Build them into your management routines.
Limit 5: the data is not always reliable
A poorly maintained CRM produces a wrong dashboard with great apparent precision. Before managing by the numbers, check data quality: required fields, data entry rules, regular audits.
Building a useful dashboard
- Start from the year's three to five strategic objectives.
- For each, choose one outcome indicator and one leading indicator.
- Set a target, a frequency and an owner.
- Automate data collection to avoid manual consolidation.
- Devote each review to three questions: where are we, why, and what do we decide?
AI can now generate the dashboard automatically, along with commentary on significant variances. It does not replace the discussion about causes and decisions.
Frequently asked questions
What is a KPI?
A KPI (Key Performance Indicator) is an indicator tied to a strategic objective, with a target value, a tracking frequency and an owner.
How many KPIs should an SME track?
Five to ten at leadership level is usually enough: one outcome indicator and one leading indicator for each of the year's three to five strategic objectives.
What is the difference between a lagging and a leading indicator?
A lagging indicator measures a result already achieved, such as revenue. A leading indicator signals a future result, such as pipeline value or the number of qualified meetings.