What’s a KPI and How to Choose Yours

Written By Ema Oyeyiola

Published on: January 5th, 2026

Introduction: Metrics vs KPIs

Not every number is a KPI. A Key Performance Indicator (KPI) is a number that tracks performance, indicating progress towards crucial goals over time. 

A good KPI must have the following characteristics: 

Case Study: Bessie Chooses Her KPIs

Before
Bessie tracks:

  • Total sales

  • Number of orders

  • Instagram followers

But she feels stuck.

After
She narrows it down to 5 KPIs:

  • Monthly Revenue

  • Average Order Value

  • Repeat Customer Rate

  • Top Product by Profit

  • Inventory Turnover

Why this works
Each KPI answers a clear question and triggers action.

KPI Examples by Business Type

How to Choose Your Own KPIs

Here is a practical example of how to choose your  KPI:

Step 1: Identify one 1 business goal. For this purpose, let’s use “Increase profit”.

Step 2: Ask crucial questions to serve as a guide. For example, how can I identify improvement? 

Step 3: Choose 1–2 KPIs per goal. Try to limit it to 5 to avoid overwhelm. Remember, if you can’t take action on it, it is not a KPI.

Common KPI Mistakes to Avoid

  • Tracking too many KPIs

  • Tracking vanity metrics (likes, followers)

  • Never reviewing KPIs

  • Tracking KPIs without targets

Click on the button below to read earlier posts with more examples

Read more

Wrap-Up: Your KPI Starter Set

“You don’t need dashboards full of numbers. The most important requirement for creating a KPI is accountability. ”

Remember: 

  • Start small

  • Review weekly or monthly

  • Adjust the KPIs as the business grows

Ema Oyeyiola
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