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What are KPIs in business? Types, examples, and importance

Running a successful small business frequently involves making tough decisions. When you have a limited amount of time and budget to spend, each choice you make is a big deal. While sometimes going with your gut can pay off, you’re likely to fare better if you approach business decisions in a more data-driven, strategic way. That’s where business KPIs come in.

What are KPIs in business, and why are they so important? We’ll cover all that and more in this article. While the details of selecting the right KPIs for each business may vary, including KPIs in your overall business strategy is a good idea no matter what kind of business you run.

What is a KPI?

KPI stands for “key performance indicator.” These are the metrics your business chooses to track and prioritize in order to understand how well you’re meeting your business goals. To be useful, KPIs must be quantifiable and tied to specific business objectives. They’re also metrics you want to track over time, so you can measure progress. Seeing how KPIs compare between weeks, months, quarters, or even years shows you whether your long-term efforts are headed in the right direction.

Why KPIs are important

For small business owners focused on the day to day, KPIs may sound like one more bit of business jargon meant more for big-business types. But KPIs really are important for all types of businesses, no matter the size, for a few main reasons:

KPIs help you better define and communicate your priorities

You want to be successful—every business has that goal in common. But what does that mean for your business specifically? The act of clarifying the KPIs most important to your business helps you define what success means to you. That then guides the decisions you make moving forward, so you can ensure that they support your main goals. KPIs can also serve as communication tools. Instead of expressing business goals and values in a general way, you can start to give people directives that are specific and measurable.

KPIs give employees something actionable to work toward

Having clear KPIs to communicate to employees gets them on the same page. For example, telling employees that you care about creating a great customer experience is good but general enough to potentially be interpreted in multiple ways. Identifying specific KPIs that relate to customer experience, like order speed or restaurant wait times, provides employees with more clarity in how to achieve that goal. And managers can use KPIs to incentivize employees. If you want to improve how fast orders are packaged and sent out, for instance, offering a bonus or other perk in exchange for meeting a set goal provides extra encouragement.

Tracking KPIs helps you spot issues early

When things aren’t running as they should, the sooner you identify the problem, the faster you can work to fix it. If your team is consistently tracking and checking in on your target KPIs, you’ll notice issues faster. That gives you the power to step in and fix them right away, before they become a bigger problem.

KPIs provide valuable data-backed insights

Running the business day to day, you probably get a pretty good feel for how things are going. But KPIs allow you to back up what you think with data. Sometimes that data will reinforce your feelings; other times, it will reveal insights you wouldn’t be able to see on your own. Either way, you can make sure you’re making business decisions based on what you know, instead of what you assume to be true.

Types of KPIs

Understanding how the various types of KPIs are different and where each one fits into the big picture is valuable. Here are a few of the main types of KPIs in business to have on your radar:

Quantitative and qualitative KPIs

Quantitative KPIs are based on numbers and data. A lot of the KPIs you find in your various software tools will be quantitative. Qualitative KPIs, in comparison, are those that tell more of the story behind the numbers.

A good example to better understand the difference between quantitative and qualitative KPIs is customer ratings versus customer reviews. Star ratings offer a clear numerical average that gives you an overall picture of how happy customers are. But to understand why the ratings look the way they do, you can dig into the reviews to see what customers are saying.

Lagging and leading KPIs

Lagging KPIs are those that help you measure past performance, while leading KPIs track factors likely to influence future performance. An example of a lagging KPI is the total amount of money customers in your loyalty program have spent with you in the last year. A leading KPI is seeing how many new signups you got for the program in the past month, which helps you predict how much money program members are likely to spend in the coming year.

Strategic versus operational KPIs

Strategic KPIs are the high-level indicators that help you gain a picture of the overall success of the business. Operational KPIs are those that relate more directly to the day-to-day running of the business. For example, overall revenue for the year to date is a strategic KPI. A metric like order speed, which affects customer satisfaction, is an operational KPI. Operational KPIs affect strategic ones, making both important to track.

How to define KPIs for your business

Each business will want to work out the most important KPIs to emphasize based on your particular priorities and needs. To define KPIs for your business, follow a few main steps:

1. Start with your goals

What values and priorities are most important for your business? Overall profitability is likely a top goal. But what are the business goals that help you achieve that? Do you want to be a business that customers recommend to all their friends and family? Do you want to be the best-known go-to solution for what you sell in your town? Do you want to make the most money with the least expenditure possible?

You may want all those things to some degree, but it’s best to focus on the goals that are most important to you.

2. Determine what metrics you can track

The good news is that data is easier to collect than ever before. Almost every piece of software you use for various aspects of your business will provide analytics data to you—much of it collected and organized automatically. Review the various products you use for business and the analytics features they provide.

Match the data they offer with the goals you established. If earning customer loyalty is one of your top goals, look for analytics that help you track repeat visits, loyalty program signups, and the amount of participation in your loyalty program. If brand awareness is a top concern, see which of your marketing platforms and channels provide data on impressions, and pay attention to marketing metrics like website visits and social media follows.

Knowing which metrics you already have easy access to will help you better understand your KPI options. For anything your software products don't track automatically, determine what steps you need to take to collect that data yourself. For example, you might decide to review feedback you receive on sites like Yelp, Google, or Tripadvisor once a month. If you have a goal to improve your overall ratings, you might repeat this process over a period of time to see if any of your efforts have paid off.

3. Identify which metrics are your priorities

The wealth of data that technology makes available comes with a downside: it's possible to have too much of it. If you try to pay close attention to all the analytics available to you and give equal importance to each, you’ll quickly be overwhelmed. And you may find that you end up focusing more on analytics that aren’t closely aligned with your goals.

If customer retention is a top priority, then worrying about how many social followers you’ve gained recently shouldn’t be a top concern. Don’t let easy metrics distract you from meaningful ones. Narrow your list of analytics based on those that are most important to understanding your top goals. Clarifying your priorities will ensure that you keep your focus on the right KPIs, and that the decisions you make in light of those metrics will follow your goals.

4. Communicate your KPIs to all stakeholders

KPIs aren’t just useful at the owner or manager level; they can be a tool to make sure everyone involved in the business understands your priorities. Everyone who has a role to play in helping you meet your targets should be well aware of those KPIs. Train your employees in what KPIs to focus on, and know how to check their progress as needed. In order to hold your employees accountable for doing their part toward achieving your goals, it’s only fair to keep them in the loop about what those goals are and how you measure them.

5. Update your KPIs as needed

One of the benefits of tracking KPIs is that you’ll gain insights about your business that enable you to make strategic changes as you go. If the data is telling you certain marketing channels aren’t worth the investment, or that customer retention pays off more for you than reaching new customers, you can shift your strategy accordingly. Based on what you learn, your goals and KPIs will change—and that’s good. Adaptability is an important skill in business success.

KPIs you can track with Uber Eats

Any businesses that use Uber Eats to provide more delivery options to customers can leverage an array of automated analytics within the platform. When you’re reviewing which metrics you have easy access to, don’t forget to take advantage of these.

Marketing KPIs

The Uber Eats platform provides numerous analytics to help you determine the success of your marketing efforts, including:


  • Menu views: See how many Uber Eats users have viewed your company’s menu, as well as how many items they added to an order (whether or not they checked out)

  • New customers: Track how many orders come from customers trying your business for the first time

  • Promotion results: For any promotions you offer on the platform, track how many customers take advantage of them and how much the promotion contributes to overall sales

  • Ad results: If you run ads on the platform, Uber Eats will provide analytics on ad performance so you can easily see how much business they help drive

Customer satisfaction KPIs

Earning new customers is important, but getting them to come back again is at least as important for long-term success. The Uber Eats platform also provides customer satisfaction metrics, such as:


  • Ratings: Uber Eats lets customers provide star ratings on their order experience, which help you gauge how happy customers are with your items

  • Feedback: Customers can also provide reviews and feedback along with the star rating, to give you more information on the why behind the data

  • Order issues: Uber Eats will also help you track order issues, so you can identify common themes and how to fix them for future orders

Sales and profitability KPIs

The Uber Eats platform also provides sales data to help you track the KPIs most related to your bottom line, including:

  • Total sales: See how many sales you’ve made through the app for a given period of time

  • Orders: Track the number of orders customers have made through the platform

  • Typical ticket size: Get data on the standard size an order made through the app is

Reviewing this data alongside other store analytics can help you better understand how your business is performing and how your efforts on Uber Eats are contributing to your overall results.

Frequently asked questions

If you could still use more information to understand the role of KPIs in business, here are some answers to common questions people have.

  • The list of potential KPIs to track for your business is long. Here are some examples of the types of KPIs many businesses consider important:

    • Total sales
    • Total profits
    • Number of new customers
    • Number of repeat customers
    • Typical order size
    • Number of website visitors
    • Ad/promotion response rate
    • Number of customer service questions or complaints
    • Typical response and resolution time Customer ratings and reviews
  • For most business KPIs, you can get automatic measurements from software products and platforms you use. For example, if you use a POS (point-of-sale) system, it likely generates reports providing analytics on all sales made through the system. You can find similar reports in any third-party delivery platforms, marketing software, social media platforms, and accounting software you use.

    On rare occasions, you may identify KPIs that need to be tracked manually, in which case you’ll need to develop a process for collecting the necessary data and train all relevant staff on it. But in modern business, most KPIs can be more easily measured with the help of technology.

  • KPIs are an important tool to understand how well your business is performing and identify any areas for improvement. By clarifying your main KPIs and keeping a close eye on them, you can keep your business on track and make sure you’re continually working toward your main goals.

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