What is the difference between a metric and a KPI? Give an example.
What the interviewer wants to hear
- A metric is any measured number
- A KPI is a small set of metrics tied to a goal
- KPIs have a target and an owner
- Gives a concrete example of each
Model answer
A metric is any number we measure, such as page views, average delivery time or number of support tickets. A KPI, or key performance indicator, is one of the few metrics the business has chosen to judge progress toward a specific goal. A KPI should have a clear definition, a target and an owner. For example, an online grocery company might track dozens of metrics, but if the goal this year is customer loyalty, one KPI could be the share of customers who order again within 30 days, with a target of 45% owned by the retention team. Delivery time is still a useful metric that helps explain the KPI, but it is not a KPI unless leadership has tied it to a goal. Keeping KPIs few makes dashboards focused.
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