Key performance indicators (KPIs) are quantifiable measures that track progress toward specific business objectives. They differ from ordinary metrics in one important way: a metric measures what’s happening, while a KPI measures whether it matters strategically. Every business tracks dozens of numbers, but only a handful truly signal whether the organization is winning or losing. Those are your KPIs.
The right KPIs depend entirely on your industry, department, and goals. Below you’ll find concrete examples organized by function, along with guidance on choosing the ones that actually fit your business.
Leading vs. Lagging KPIs
Before diving into specific examples, it helps to understand the two broad categories every KPI falls into. Leading indicators predict future performance and help you adjust course day to day. Lagging indicators reflect past performance and tell you whether your strategy worked.
A sales team might track the number of sales calls booked as a leading indicator. More calls should eventually produce more revenue. The actual revenue that shows up weeks or months later, often measured as monthly recurring revenue (MRR) or annual recurring revenue (ARR), is the lagging indicator. You need both types. Lagging KPIs confirm results; leading KPIs give you time to change them.
Other common leading indicators include session duration (how long a customer spends using your product), number of sessions per user, and new leads entering the pipeline. Lagging examples include average revenue per user (ARPU), which you calculate by dividing total revenue by the number of users in the same period, and net revenue retention, which captures the total revenue you generated, lost, and kept over a set timeframe.
Sales KPIs
Sales teams live and die by a relatively short list of numbers. The most critical ones track how deals move through the pipeline, how efficiently reps close, and how much revenue each customer represents over time.
- Conversion rate (win rate): The percentage of leads a rep turns into closed deals. Calculate it by dividing deals closed during a quarter by total leads in the pipeline, then multiplying by 100.
- Customer lifetime value (CLV): The total value of all purchases, upsells, cross-sells, and renewals a customer makes over the entire relationship. Multiply average purchase value per year by average purchases per year, then by average customer lifespan in years.
- New leads in pipeline: The raw count of new leads added to each rep’s pipeline in a quarter. A shrinking pipeline today means fewer closed deals next quarter.
- Average age of leads in pipeline: How long leads sit without converting. Stale leads clog the funnel and waste rep time. Divide the total age of all active leads by the number of active leads to get this number.
- Customer retention rate: The percentage of existing customers who keep buying. Take total customers at year-end, subtract net new customers acquired during the year, then divide by total customers at the start of the year.
- Annual contract value (ACV): The average revenue from a customer contract over one year. Divide total contract value for the year by the number of contracts.
- Referrals: The number of new-customer referrals each rep secures from existing customers in a quarter. High referral numbers often signal strong customer satisfaction without requiring a separate survey.
Two internal KPIs also deserve attention. Rep retention tells you what percentage of your salespeople stay with the company over a set period, which matters because replacing experienced reps is expensive. Average rep ramp time measures how many days it takes a new hire to go from day one to first prospect outreach, giving you a realistic picture of how quickly new reps become productive.
Marketing KPIs
Marketing KPIs bridge the gap between brand activity and revenue. The most useful ones tie spending directly to customer acquisition and engagement rather than vanity metrics like page views alone.
- Customer acquisition cost (CAC): Total cost of sales and marketing divided by the number of new customers gained. If you spent $50,000 last month on marketing and sales and acquired 500 customers, your CAC is $100.
- Conversion rate to customer: For businesses offering free trials or freemium products, this tracks the percentage of free users who upgrade to paid. Divide paid conversions by total free users and multiply by 100.
- Net Promoter Score (NPS): A snapshot of customer sentiment. Survey respondents rate how likely they are to recommend your company on a 0-to-10 scale. Subtract the percentage of detractors (those scoring 0 through 6) from the percentage of promoters (9 or 10). A positive NPS means more fans than critics.
- Viral coefficient: Measures organic growth by calculating how many new users each existing user brings in. Multiply invitations sent by current users by the conversion percentage. A coefficient above 1.0 means the product is spreading on its own.
Finance KPIs
Finance teams focus on the health and sustainability of the business. Some of these KPIs overlap with what executives and investors watch most closely.
- Monthly recurring revenue (MRR) and annual recurring revenue (ARR): The predictable revenue stream from subscriptions or contracts. MRR equals total accounts multiplied by the rate per account. ARR is MRR times 12.
- Net revenue retention (NRR): Captures whether existing customers are spending more or less over time. The formula starts with beginning-of-period MRR, adds expansion and upgrade revenue, subtracts downgrades and churn, then divides by starting MRR. An NRR above 100% means your existing customer base is growing even without new sales.
- Net burn rate: Especially relevant for startups, this is gross spending minus MRR. It tells you how fast you’re consuming cash reserves.
- Average revenue per account (ARPA): MRR divided by total accounts. Useful for spotting whether you’re attracting higher-value or lower-value customers over time.
HR and Employee Performance KPIs
People metrics have become more sophisticated as remote and hybrid work models spread. The best employee KPIs go beyond simple output counts and measure engagement, growth, and collaboration.
Employee engagement score (eNPS) works like the customer NPS. Ask employees how likely they are to recommend the company on a 0-to-10 scale, then subtract the detractor percentage from the promoter percentage. Engagement correlates strongly with retention, so a declining eNPS often predicts a wave of departures before it shows up in turnover numbers.
Productivity efficiency measures the volume of work completed within a standard work week while maintaining quality. Track time-to-completion for repeatable tasks, then divide total output by total hours worked. Output can be defined to fit the role: revenue generated, support tickets closed, or projects delivered.
Skills acquisition and certification progress reveals whether employees are developing alongside the business. Divide completed certifications or training modules by the total assigned in a given period. Pairing completion data with an application check, such as whether the employee used the new skill on a live project, confirms the learning is translating into real capability.
Managerial effectiveness blends several inputs into a single index for leaders. Average a team’s retention rate, the share of direct reports meeting goals, and anonymous upward-feedback scores. This gives a more complete picture than any single survey question.
Collaboration and team contributions tracks an employee’s willingness to share knowledge and participate in cross-functional projects. In remote and hybrid environments where visibility is lower, this metric helps identify people who add value beyond their individual task list.
SaaS-Specific KPIs
Software-as-a-service companies have a distinct set of KPIs shaped by subscription economics. Two stand out as especially diagnostic.
Churn rate measures the percentage of customers who cancel during a period. Divide customers lost by total customers at the start of the period and multiply by 100. Revenue churn does the same calculation with dollars instead of headcount, which is more telling because losing one enterprise client may hurt more than losing ten small ones.
The Rule of 40 is a benchmark investors and leadership teams use to assess overall health. Add your revenue growth rate to your profit margin (typically EBITDA or operating margin). If the sum hits at least 40%, the company is considered to be balancing growth and profitability well. A company growing at 60% with a negative 25% margin still passes (35% miss), but one growing at 25% with a 20% margin clears it comfortably.
The SaaS quick ratio offers another lens: divide MRR added plus expansion MRR by MRR lost to downgrades and churn. A ratio above 4.0 generally indicates efficient growth, meaning you’re adding revenue far faster than you’re losing it.
Support-side KPIs matter too. Support ticket volume tracks total tickets received in a period, while average resolution time divides total time spent resolving tickets by the number resolved. Rising ticket volume paired with lengthening resolution times is an early warning sign of product or staffing problems.
How to Choose the Right KPIs
The most common mistake is tracking too many KPIs, which dilutes focus and turns dashboards into noise. A KPI should be tied directly to a strategic goal. If your company’s top priority this year is reducing customer churn, then churn rate, NPS, and support resolution time are KPIs. Website traffic might be a useful metric, but it’s not a KPI unless it connects to a goal you’re actively managing toward.
Effective KPIs share a few characteristics. They’re quantifiable, so there’s no ambiguity about whether performance improved. They’re actionable, meaning the team tracking them can actually influence the number. And they’re aligned across levels: a company-wide KPI like ARR should break down into departmental KPIs (new leads for marketing, conversion rate for sales, NRR for customer success) that each team can own.
Start with three to five KPIs per team. Review them quarterly. If a KPI hasn’t prompted a single decision or conversation in three months, replace it with one that will.