Avinash Kaushik, a personal hero of mine, gives the best definition I’ve ever heard of the difference between a KPI (key performance indicator) and a metric.
A KPI has a direct line of sight toward the bottom line. A metric is useful for tracking and evaluating specific tactics.
Revenue is usually a KPI. Bounce Rate usually isn’t.
One KPI that I am quite fond of is measuring Share of Search, it is inspired from the traditional supermarket metric “share of shelf”. Google, Microsoft, Yahoo are the virtual “supermarket” now given how much they influence users. So measure Share of Search.
You don’t need a lot of metrics, but you do need to carefully select, report and take action from the handful you choose. Let’s break down this definition so it’s useful for your business, especially considering the guideposts available on the internet.
When using the right set of metrics, you also need to know whether or not you have just the right balance between cost and service. There are other aspects that you need to consider, such as how to optimize supply chain performance; improvement of your supply chain’s logistics management and measurement of backorders, fill rate or inventory turns.
Saying it the other way round, one is supposed to organize the various aspects involved during project management by using a measurement instrument. BSC (Balanced Scorecard) can be the missing piece in this puzzle of tracking and monitoring.