Key Performance Indicator

A key performance indicator (KPI) is a single agreed number that shows whether an important part of the business is going well or badly. Rather than drowning in figures, a business picks a handful of these measures, such as monthly sales, repeat-customer rate or average delivery time, and watches them closely.

It works like the fuel and speed gauges on a car: you cannot watch every part of the engine, so you keep your eyes on the few dials that tell you something needs attention. Choosing the right key performance indicators matters because what you measure is what people work towards, and the wrong measure quietly pulls effort in the wrong direction.