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KPI (key performance indicator)

A KPI is a number a team tracks to know whether it's doing well at what matters most, like monthly sales or orders delivered on time. It only works if it's well defined, so two people who calculate it get the same answer.

Select any words here to ask your Maestro about them.

Ana and Luis calculate "March sales" from the same orders table. Do they get the same number?

Same orders table, same question: how much did we sell each month? Example data.

What it's for: letting a team see, in a single number, whether it's doing well at what matters most, so the conversation is about what to do next instead of where the number came from. KPI stands for key performance indicator.

Not every number is a KPI. You pick a KPI because someone will act when it moves: if on-time deliveries drop below 90%, the routes get reviewed. A dashboard with 40 numbers doesn't have 40 KPIs; it has a few, plus a lot of context.

What makes a KPI work is its definition sheet: the name, the exact formula (what counts and what doesn't), the source, the period, who owns it and the target. Write it before you draw the chart. It's also the first thing you hand an AI when you ask it to calculate the number.

You practice it in How do you define a KPI? Write its definition sheet.

How it's used

A KPI's definition sheet

Net monthly sales

  1. marked: Formula: sum of order totals for delivered orders, minus returns.Says what counts and what doesn't. This is where Ana and Luis's gap gets settled.
  2. Source: the orders table in the sales system, column total_with_tax.With or without sales tax changes the number too.
  3. Period: by delivery date, from the 1st to the last day of the month.
  4. Refresh: every Monday, with data through Sunday.
  5. Owner: the sales director; she decides if the formula changes.
  6. Target: $450K a month in the first half.
With this sheet, Ana and Luis get the same number. Without it, everyone has their own KPI and nobody knows which to believe.

When to look closer

Is every number on a dashboard a KPI?

The store's dashboard

  1. Site visits this month: 48,200
  2. Orders delivered on time: 87% (target 90%)
  3. Social followers: 12,400
  4. Net monthly sales: $447K (target $450K)
  5. Customers in the database: 31,900

Which of these five numbers do you think are KPIs?

Ask your Maestro about KPI

It answers from the free course page closest to this word, the way it answers while you study.

Example

You: What does "KPI" mean, in plain words?

Your Maestro: I'll explain it with a case of yours: it sticks better than a definition. Which number at your work do two people calculate differently?

Asking about: Answers from the page "Which numbers go on a dashboard? The three to five that matter"

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Related terms

  • Grain (of a table)

    What one row of a table stands for: a person, a transaction, a planet, a person per language. Counting rows counts what you want only if you know the grain.

  • Reconciliation

    Comparing a total you computed with the same total from an independent source, such as a bank statement or a register report, and explaining any difference.

  • Prompt

    A prompt is what you write to an AI model to ask it for something: the question or instruction, plus everything you give it to work with, like data, examples or the format you want back.

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