What Is a Key Performance Indicator (KPI)? Definition, Framework, Resources, and 1000+ Examples

Written by Len on September 3, 2026. Posted in Articles, KPI

A Key Performance Indicator (KPI) is a measurable expression of the achievement of a desired level of results in an area relevant to the evaluated entity’s activity. This is the definition used by The KPI Institute, a global research, training, and consultancy organization with more than 22 years of experience in performance management.

In practical terms, a KPI is a measure used to evaluate progress toward an important organizational, departmental, team, or individual objective. A KPI is not simply any number an organization can track; it is a measure selected for its relevance to a desired result and its usefulness in evaluating and improving performance.

This guide examines:

What makes a measure a KPI and how the concept is defined within The KPI Institute’s performance management framework
How KPIs differ from metrics, measures, Performance Indicators (PIs), and Key Risk Indicators (KRIs)
How KPIs operate at corporate, departmental, team, and individual levels and connect performance to organizational objectives
Why KPIs matter for clarity, focus, improvement, engagement, communication, and organizational learning
The different types of KPIs, including leading and lagging indicators, strategic and operational KPIs, and count, percentage, and monetary measures
How KPIs fit within the Balanced Scorecard and its four perspectives for measuring and managing organizational performance
How to formulate a good KPI, from defining the objective to applying SMART criteria
How the KPI lifecycle works, including the establishment, use, review, and evolution of KPIs
Practical KPI examples by department, covering finance, human resources, sales and marketing, operations, and IT and service management
Common KPI mistakes and the performance management practices that can help organizations avoid them

What Is a Key Performance Indicator (KPI)?

The most cited definition of a KPI comes from The KPI Institute. The Institute defines a KPI as “a measurable expression for the achievement of a desired level of results in an area relevant to the evaluated entity’s activity.”

Break that down and three things stand out. First, a KPI has to be measurable. Second, it points to a desired result, not just an observation. Third, it only counts if it sits in an area that matters to whoever is being measured, whether that’s a company, a department, a team, or a single employee.

A KPI is not a stand-in for “anything you can count.” Website visits, email opens, or the number of meetings held in a week are data points. They only become KPIs once they connect to a specific objective and someone acts on the result. That connection to strategy is what separates a KPI from ordinary business data, and it’s also the single most common thing organizations get wrong.

KPIs Operate at Multiple Levels

A KPI rarely stands alone. It usually sits inside a chain that runs from the boardroom down to a single desk.

Corporate level: KPIs here back strategic alignment and executive decisions. Think $ Revenue Growth or % Market Share.
Departmental level: KPIs guide functional effectiveness inside a single team, such as % On-Time Delivery in operations or % Retention Rate in HR.
Individual level: Personal KPIs connect one person’s work to the bigger goal, such as # Projects De9/3/2026Slivered On Time for a project manager.

When these three levels are built correctly, a frontline employee can trace a straight line from their own KPI to a strategic objective on the board’s scorecard. That line of sight is one of the clearest signs of a mature performance system, and its absence is one of the clearest signs of a broken one.

KPI vs. Metric vs. Measure vs. Indicator

These four words get used as if they mean the same thing. They don’t, and mixing them up is one of the fastest ways to end up with a bloated, confusing dashboard.

Data moves up this chain: from raw measure, to metric, to indicator, to KPI. Most organizations track hundreds of metrics. Very few of those metrics deserve KPI status, because a KPI is reserved for the handful of numbers senior leadership actually uses to make decisions.

Where KRAs, PIs, and KRIs Fit In

The KPI Institute’s Body of Knowledge places KPIs inside a wider hierarchy of performance terms. Getting this right matters for anyone building a scorecard or a reporting structure.

Key Result Area (KRA): A broad domain where an organization has to perform well, such as Customer Experience or Operational Efficiency. A KRA is not measurable on its own; it needs indicators underneath it.
Key Performance Indicator (KPI): A high-priority, strategically significant measure tied to a KRA and reported to senior leadership.
Performance Indicator (PI): A supporting measure, relevant at the team or process level but not critical enough to reach the executive scorecard. Think # Daily Orders Processed rather than % Customer Retention Rate.
Key Risk Indicator (KRI): A forward-looking measure that flags a threat before it damages performance. Where a KPI asks “are we hitting our goals,” a KRI asks “what could stop us.”

Together, these terms form a structure that runs from strategic intent down to the data behind a single report. Companies that skip this structure tend to end up with dashboards full of numbers nobody uses.

Why KPIs Matter

A KPI is worth building only if it changes behavior. The KPI Institute’s research points to six areas where well-designed KPIs pay off.

Clarity. A KPI turns a vague ambition like “get better at customer service” into something concrete, such as % First Call Resolution. Teams stop guessing at what success looks like. Example: a retail chain that tracks $ Sales per Square Foot gets a single number that lines up real estate, merchandising, and store operations around one shared measure of location performance.
Focus. With a small set of KPIs in place, attention goes to what actually drives results instead of spreading across everything that can be counted. Example: a hospital that tracks # Average Patient Wait Time channels staff effort into the specific process fixes that shorten delays.
Improvement. A KPI trending in the wrong direction is a prompt for action, whether that means a root-cause review or a new initiative. Example: a software company watching # Issue Resolution Time climb can launch a code review process before customer satisfaction takes the hit.
Engagement. Employees who can see how their daily work moves a KPI tend to feel more ownership over the outcome than employees who only hear about targets secondhand. Example: a call center agent measured on % First Call Resolution understands their effect on customer loyalty, not just call volume.
Communication. KPIs give departments and executives a common language, which cuts down on the back-and-forth that happens when everyone reports numbers differently. Example: an ESG report built around # CO₂ Emissions per Product tells shareholders and customers a consistent story about environmental performance.
Learning. Over time, KPI trends and benchmarks become a record of what worked and what didn’t, and that record is worth more the longer an organization keeps it. Example: a marketing team reviewing a falling $ Cost per Lead across several campaigns can trace which tactics worked and repeat them.

Types of KPIs

KPIs get classified a few different ways, and it helps to know all three.

By timing. Leading indicators predict future performance (# Sales Pipeline Opportunities). Lagging indicators confirm what already happened (% Net Profit Margin). A balanced scorecard needs both, because leading indicators alone can be unreliable, and lagging indicators alone arrive too late to act on.

By scope. Strategic KPIs sit at the corporate level and matter to the board. Operational KPIs track a specific process or team, often on a weekly or monthly cycle, and roll up into the strategic picture.

By format. The KPI Institute’s naming convention tags every KPI with a symbol that signals what kind of number sits behind it:

# (count): # New Clients, # Incidents Resolved
% (rate or proportion): % Customer Satisfaction, % Employee Turnover
$ (monetary figure): $ Revenue per Employee, $ Cost per Unit

This small convention does a lot of work. Anyone who looks at a dashboard can tell at a glance whether they’re looking at a count, a rate, or a dollar figure, without reading the full label.

The Balanced Scorecard: Where Most KPIs Live

Kaplan and Norton introduced the Balanced Scorecard in a 1992 Harvard Business Review article as a way to measure performance beyond financial results alone. It groups KPIs into four perspectives:

Financial: Revenue Growth Rate, Net Profit Margin, Return on Investment
Customer: Customer Satisfaction, Net Promoter Score, Customer Retention Rate
Internal Process: Process Cycle Time, Error Rate, Time to Market
People, Learning & Growth: Employee Engagement Score, Training Hours per Employee, Internal Promotion Rate

By 1996 the same framework had already expanded from measurement into strategy execution. Most modern KPI frameworks, including The KPI Institute’s own, still lean on this four-perspective structure because it forces a company to look past the income statement.

How to Write a Good KPI

The KPI Institute recommends a consistent naming pattern that keeps objectives, KPIs, and initiatives from blurring together:

Once the objective is set, the KPI itself should meet the SMART test:

Specific: It measures one clear thing, not a vague ambition.
Measurable: The data behind it can be collected consistently.
Achievable: The target is a stretch, not a fantasy.
Relevant: It ties back to a real strategic priority, not a number that’s just easy to pull.
Time-bound: It has a reporting frequency and a deadline attached.

A KPI that fails even one of these tests tends to get ignored within a quarter.

The KPI Lifecycle

KPIs are not set-and-forget. The KPI Institute’s Body of Knowledge describes three stages every KPI moves through:

Establishment. The organization selects the KPI, documents it, and puts data collection in place.
Use. Data flows in on a regular cadence, and the KPI feeds into real decisions and reporting.
Evolution. Over time, a KPI is kept as-is, refreshed to stay relevant, suspended once it stops adding anything useful, or replaced by a more advanced measure. % Customer Satisfaction, for example, is often superseded by # Net Promoter Score as an organization matures.

Many companies skip the evolution stage, and that’s one of the most common mistakes in performance management. Plenty of organizations still track KPIs that made sense five years ago and haven’t been reviewed since.

KPI Examples by Department

Most of these work best in combination rather than alone. Tracking # Tasks Completed alongside % Tasks Completed on Time and $ Value Generated per Task gives a fuller read on performance than any single number can.

Performance Measurement vs. Performance Management

These two terms get treated as synonyms, and they shouldn’t be. Neely et al. (1995) define a performance measurement system as a set of metrics used to quantify the efficiency and effectiveness of actions. Forza and Salvador (2000) go further, describing it as an information system that supports two functions: structuring communication around target setting, and collecting, processing, and delivering data on how people, processes, and business units are performing.

Performance measurement deals with the evaluation of results. Performance management deals with what happens next: the decisions, initiatives, and behavior changes built on top of that evaluation. One tracks the score. The other decides what to do about it.

The Balanced Scorecard is a good illustration of how the two ideas merge over time. Kaplan and Norton introduced it as a measurement tool in 1992. By 1996 it had grown into a strategic management system. By 2008 it sat inside a wider system for planning, execution, and organizational learning. A tool built to measure performance turned, over 16 years, into a system built to manage it.

Common KPI Mistakes

A few problems show up in nearly every organization that struggles with KPIs:

Measuring everything. Dashboards that carry 40 metrics dilute attention instead of sharpening it. A KPI list should be short enough that people remember it without looking it up.
Skipping alignment. When department KPIs aren’t linked to corporate objectives, teams end up optimizing for numbers that don’t move the business forward as a whole.
Weak documentation. A KPI without a documented formula, data source, owner, and reporting frequency is open to different interpretations by different people, and that alone can undermine trust in the number.
Stale data. A KPI that shows up weeks after the fact turns into a post-mortem rather than a tool for a live decision.
No data governance. Someone has to own data quality for each KPI, from the source system down to how often it gets refreshed. Without a named data custodian, small errors in a spreadsheet quietly turn into board-level decisions built on bad numbers.

Most of these mistakes trace back to the same root cause: a KPI system built around what’s easy to pull from an existing report, rather than what the organization actually needs to know.

Frequently Asked Questions

What does KPI stand for? KPI stands for Key Performance Indicator: a measurable value linked to a specific strategic or operational objective.
What is the difference between a KPI and a metric? A metric is any calculated figure built from raw data. A KPI is a small subset of metrics selected because it ties directly to a strategic goal and gets used by decision-makers. Every KPI is a metric, but not every metric is a KPI.
How many KPIs should an organization track? There’s no fixed number, but most performance management practitioners recommend keeping the list short, often somewhere between five and fifteen at the corporate level. More than that and the system tends to lose focus.
What makes a good KPI? A good KPI is specific, measurable, tied to a real objective, and something the organization can act on. If a KPI can’t change a decision, it’s not doing its job.
Is revenue a KPI? Revenue can be a KPI if it’s tied to a specific strategic target, such as $ Revenue Growth against a year-end goal. Without a target or an owner, it’s closer to a raw financial metric.
Who is responsible for setting KPIs in an organization? Top management sets the strategic direction and signs off on major KPIs, but the day-to-day design usually sits with a strategy or performance office, and department heads take ownership of the KPIs specific to their teams.
What is the difference between a KPI and a KRI? A KPI tracks progress toward a goal. A Key Risk Indicator (KRI) tracks the likelihood of something going wrong before it happens. Mature performance systems track both side by side.
What is the difference between a leading and a lagging KPI? A leading KPI predicts future performance, such as # Sales Pipeline Opportunities. A lagging KPI confirms a result that already happened, such as % Net Profit Margin. Leading indicators give teams time to act; lagging indicators tell them whether that action worked.
Can a KPI change over time? Yes, and it usually should. The KPI lifecycle covers exactly this: a KPI gets maintained while it’s still relevant, refreshed when its calculation needs adjusting, suspended once it stops adding anything useful, or replaced by a more advanced measure as an organization matures.
What is the difference between a KRA and a KPI? A Key Result Area (KRA) is a broad domain, such as Customer Experience or Financial Performance. It isn’t measurable by itself. A KPI is the specific, quantifiable measure placed underneath a KRA to track progress inside that domain.

Where to Go From Here

For a deeper look at any single part of KPI management, from documentation templates to lifecycle management to industry-specific examples, see:

[Watch] Key Performance Indicators: The Core of Performance Management Systems – Compare KPIs and other performance evaluation criteria, identify the common KPI pitfalls, and discover how to use KPIs to create synergies between departments.
How Can You Improve the Data Gathering Process for Your KPIs? – “An important component of performance measurement is represented by the data collection capability. However, when applied in the organizational context, this process is neither easy nor lacking obstacles, as practitioners often discover.”
How Can We Ensure Our KPIs Are Aligned With the Strategy? – “In many cases, the key performance indicators (KPIs) monitored do not seem relevant as they are not connected to the strategy. To better understand how this problem can be addressed, we must first identify its possible causes.”
How to Implement a KPI Measurement Framework – “A KPI implementation project plan provides a structure for the implementation of an organization’s performance management system. Once the project plan is set, all types of activities would have a clear deadline and designated responsibilities.”
Project Plan: Developing a Performance Management System Based on KPIs – “When formalizing and implementing a performance management system (PMS) based on key performance indicators (KPIs), there are multiple activities to be considered and many stakeholders to be engaged in the process. Therefore, you’ll need a project plan to make performance management an ongoing process within your organization.”
[Watch] KPI Selection Techniques – “Learn how KPI selection techniques can be implemented in practice and gain insights into the best practices for selecting KPIs.”
Advice on KPI Selection – “KPI selection is a process which seems simple, yet is inherently complex, due to the interdependencies involved. Here are 15 things to consider before embarking on this journey.”
[Watch] Overcoming KPI Selection Challenges: Applying KPI Selection Techniques – “What are the most important guidelines to follow when selecting KPIs for strategic objectives? What are the most efficient KPI Selection techniques, most recommended KPI selection environments, and some Value Flow Analysis technique examples?”

Additional Resources: KPI Examples

KPIs are not just about understanding and working with numbers. Using KPIs requires stakeholders to fulfill a vision and commit to ensuring success across all levels of their organization. If you would like to learn how to select the right KPIs for your organization, sign up for The KPI Institute’s Certified KPI Professional and Practitioner live online course today.

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Editor’s Note: This guide draws on The KPI Institute’s more than 20 years of research, expertise, and practical experience in performance management. Its core definitions, terminology, and frameworks are grounded in the Institute’s forthcoming KPI Body of Knowledge, developed under the leadership of Marcela Presecan, Head of Research at The KPI Institute.

Integrating KRIs and KPIs for comprehensive performance and risk management

Written by Contributor on April 3, 2024. Posted in Articles, KPI

Imagine a manufacturing plant aiming to maintain operational excellence while facing potential safety hazards every day. In such a scenario, tracking key performance indicators (KPIs) such as production efficiency and output is needed for assessing performance. However, without considering key risk indicators (KRIs) like workplace incidents or equipment failure rates, the plant may overlook critical safety concerns until they become costly disruptions or accidents.

Integrating KPIs and KRIs enables the plant to proactively manage both performance and risk and ensure smooth operations while prioritizing employee safety. Overall, this integration is essential for promoting ongoing improvement and awareness of risks within the organization.

The KPI Institute defines KPI as a measurable expression for the achievement of a desired level of results in an area relevant to the evaluated entity’s activity. KRI is a measure used to evaluate the likelihood of an event’s probability and consequences that could exceed the organization’s risk appetite and significantly harm the success of the organization.

While most organizations rely heavily on KPIs, rooted in historical data, these may offer limited insight into future threats. KRIs modify the narrative by beginning with a proactive framework for risk management and developing measurements around prospective pitfalls in the future.

Improving risk management

Utilizing both KPIs and KRIs would provide a more systematic approach to risk management compared to relying solely on KPIs. For instance, within the supply chain context, KRIs may cover aspects, such as supplier performance, reporting accuracy, and emerging industry trends. This gives the organization a clear picture of all possible hazards and enables it to foresee and handle issues before they have an adverse effect on operations. Here are the overarching benefits of using KRIs in risk management:

Proactive identification: With KRIs, organizations can proactively detect potential risks before they occur. For example, by monitoring supplier performance to anticipate supply chain disruptions or analyzing industry trends to predict market shifts, organizations can minimize possible harm. This proactive approach enables early intervention and allows the organization to implement preventive measures.
Root cause analysis: KRIs encourage delving deeper than immediate events to identify the underlying root causes behind potential risks. For example, rather than simply reacting to a decrease in supplier performance, KRIs can signal organizations to uncover the reasons behind it, whether due to internal issues, external market forces, or other factors. By addressing root causes, organizations can develop more effective risk management strategies and prevent similar issues from recurring in the future.
Decisions based on data: Integrating risk assessment into current data streams allows organizations to make informed decisions in real-time. By leveraging KRIs and building alerts or other KRI-based solutions, organizations can access timely and pertinent information to guide decision-making processes. For instance, by monitoring relevant data points, such as financial indicators, organizations can quickly identify emerging risks and take appropriate actions to manage them. This allows organizations to be resilient and agile in the face of uncertainty.

Implementing KRIs

Organizations must understand the relationship between risk and performance to improve cross-functional collaboration and incorporate risk concerns into business decisions. For the integration to be successful, KRIs should be reported and communicated effectively. To create KRIs and corresponding mitigation plans, the individual who oversees the Enterprise Risk Management (ERM) process should work with the risk owners. The “risk owners,” who can effectively oversee their business units in line with their individual units’ risk goals, are the main benefactors of KRIs.

Risk owners must evaluate KRI data pertaining to risks that impact their units on a frequent basis. It is important to acknowledge that the different methods for reviewing KRI data also depend on an organization’s functions. In addition, successful identification and implementation of KRIs also requires a structured approach with the following key steps: identifying key metrics, assessing gaps, improving metrics, validating and setting trigger levels, and establishing a risk control plan.

Harnessing the power of KRIs alongside KPIs emphasizes the link between successful risk management and successful organization outcomes. This encourages a proactive attitude to risk, in which mitigating risk is viewed as an investment in accomplishing corporate objectives rather than as a cost.

For further insight into KPIs and KRIs, consider exploring The KPI Institute’s Live Online Certified KPI Professional and Live Online Certified OKR Professional courses.

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About the author

Nawaf Al Omari boasts over a decade of experience in optimizing teams and driving project management success. He excels at forecasting staffing needs, resource management, and fostering collaborations, with a 40% increase in stakeholder satisfaction. Prioritizing data-driven decision-making, he is adept at mitigating risks, tracking KPIs, and achieving cost reductions. Nawaf is strongly committed to delivering results and operational excellence.

What KPIs are a MUST in reporting sustainability matters?

Written by Teodora Gorski on March 13, 2024. Posted in Articles, KPI

The popularity of sustainability has surged in recent years, causing organizations to grapple with balancing short-term profits with long-term sustainable practices. This has led to concepts like shared value and corporate social responsibility, with companies aiming to create economic and social value while reducing their environmental impact. The movement has sparked active efforts, with social innovators, policymakers, investors, and academics all striving to measure sustainability.

In today’s world, companies must move beyond outdated economic metrics and adopt KPIs that consider the triple bottom line, including social, economic, and environmental aspects of their operations, all while promoting sustainable human well-being.

However, sustainability is a constantly evolving concept that adapts to context and cannot be measured with a single yardstick. The balance between social, economic, and environmental considerations is crucial to achieving sustainability. It is like walking on a tightrope, requiring constant adjustments to maintain equilibrium in a changing world. Each context requires a unique approach, with varying weights and measures for different factors. Customized solutions are needed that address stakeholder needs while maintaining long-term balance, as a one-size-fits-all formula won’t work.

About the Expert

• As a Managing Director, Teodora leads development initiatives to support and enhance the organization’s strategic plan and manages the development and growth of the MENA branch of The KPI Institute.

• An expert researcher, consultant and practitioner with six years of experience in the deployment and implementation of KPI Management Frameworks.

• Pursuing a PhD. in Management on the topic: Rethinking the Performance Management Systems to ensure organizational sustainability, Lucian Blaga University, Romania

• Postgraduate Program in Entrepreneurship and Venture Creation, ISCTE Business School Lisbon, Portugal

• Master’s Degree in Project Management, Romanian-German University, Romania

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This article was originally published in the PERFORMANCE MAGAZINE Issue No. 26, 2023 – Sustainability Edition for the Ask Our Experts section.

Measuring customer experience: 5 CX KPIs to keep an eye on

Written by Fady Ayad on October 31, 2023. Posted in Articles, KPI

Image source: grapestock from Getty Images | Canva

In modern business, focusing on customer experience (CX) is no longer a nice-to-have, but rather a necessity for businesses of all sizes. However, defining a successful customer experience can be difficult because many touch points form the customer journey. By using online surveys, companies can gain quantitative information about the customer experience to actively monitor trends that develop over time. Based on customer feedback, organizations can identify areas for improvement, adjust their strategies accordingly, set better goals for their key performance indicators (KPIs), and strive to deliver the seamless experiences that today’s consumers expect.

Customer experience KPIs

Research shows that CX is now competing with traditional factors such as price and quality in influencing customer loyalty and advocacy. According to Forbes, 77% of consumers consider CX just as important as the main product or service itself. PWC reported that even beloved brands risk losing 32% of their customers after one negative interaction. In addition, poor CX burdens the company with costs. To address this, this article outlines five critical CX KPIs that can be systematically monitored, evaluated, and optimized to help address customer service problems and strengthen a company’s connections with its customer base.

1. % Customer satisfaction score (CSAT)

This KPI measures how customers rate particular interactions with a company, such as getting a response from customer care or processing a return. Users can score their satisfaction with the experience on a scale from “very dissatisfied” to “very satisfied” by responding to an automated questionnaire sent to them. Monitoring the ratings depends on a company’s objectives, but the general rule is that anything above 85% is excellent, and anything below 60% requires rapid attention.

Calculation: CSAT = (Number of Positive Responses / Total Number of Responses) x 100

2. # Net promoter score (NPS)

The NPS, considered the most famous CX KPI, reflects the willingness of consumers to recommend a product to friends and acquaintances. To calculate NPS, a company can conduct a survey of customers from one query: “What is the probability that you will recommend the product to your friends?” The answer is given on a 10-point scale, where 0 is “I will not recommend it in any case” and 10 is “I will definitely recommend.” The respondents can be divided into three groups depending on the scores obtained: promoters, passives, and detractors. The majority of companies consider a score above 80 as excellent, a score between 50 and 80 as very good, and a score below 50 as good.

Calculation: NPS = % Promoters – % Detractors.

3. % Word of Mouth Index (WoMI)

An extension of the NPS index, the creation of the WoMI was motivated by criticism towards the traditional NPS. Researchers believed that the NPS made the incorrect assumption that if a customer does not recommend a product or service, then they are automatically considered detractors. This led researchers to make adjustments to the KPI in order to better reflect reality. It tracks the recommendation, but from the opposite perspective: “What is the probability that you will discourage people from doing business with the company?” This can be rated on a scale of 0 to 10. Those who choose 9-10 on the scale of “dissuading” are categorized as “true detractors.” The threshold varies from one industry to another. It is better to have a lower score, as the target for most companies is less than 10%. To gain a comprehensive understanding of your company’s position among customers, we suggest employing both approaches to obtain a complete picture.

WoMI = (Number of Promoters – Number of Detractors) / Number of Respondents * 100.

4. Consumer Effort Score (CES)

The CES index, which was developed in 2010, is related to the idea that the more effort the product or service requires from customers, the less likely they are to stay with the company. As cited in an article, research by the Corporate Executive Board (CEB) shows that 94% of customers who have an effortless experience are likely to make repeat purchases. The KPI could be measured by the customer’s response to a statement like: “Thanks to the service/product of company X. I was able to easily cope with my problem.” with a rating scale of 1 to 7. Most companies typically receive CES scores ranging from 5 to 5.5. A score exceeding 6 is generally considered above average.

CES = (Sum of response scores) ÷ (Number of responses)

5. Customer churn rate

Simply put, the churn rate is the number of users who stop any interaction with the company. Depending on the industry, this could mean that customers deleted their account, did not re-buy, or simply decided to switch to a competitor. In its simplest form, customer churn can be calculated by comparing the number of customers lost to the total number of customers. By dividing one metric by another, one can get the customer churn rate as a percentage of the total base. The most common acceptable churn rate is 5-7% annually.

Enabling effective CX measurement

KPIs must be monitored and measured in order to improve CX. To do so effectively, a system that accurately collects data from all channels should be considered. This allows requests to be categorized and common issues to be identified. In-depth interviews with both loyal and dissatisfied customers should be conducted to understand the root cause of any problems, as some of which could be related to support services. Consistency in tracking and improving CX KPIs is the key to ensuring decisions and actions in customer service adapt to changing customer sentiment and meeting their needs.

Take your CX to the next level! Visit smartKPIs.com for a comprehensive, 360-degree view of CX KPIs.

Measuring corporate sustainability using the ROSI™ framework and % ROI

Written by andreana.dumitrescu on August 14, 2023. Posted in Articles, KPI, Organisational performance

Image Source: Gino Crescoli | Pixabay

Corporate sustainability (CS) represents a business approach that creates long-term shareholder value by embracing opportunities and managing risks derived from economic, environmental, and social developments, Yale University states. Organizations are increasingly realizing that their long-term success and profitability depend on measuring the financial impact of CS initiatives for several reasons: enhanced risk management, increased cost efficiency, greater investor demand, and improved brand reputation—ideas that were highlighted in a 2022 paper from the International Journal of Economics and Management.

The NYU Stern Center for Sustainable Business developed the Return on Sustainable Investment (ROSI™) framework as a methodology used to evaluate the financial performance and returns generated from sustainability initiatives. It aims to measure the economic benefits derived from sustainability investments and assess the value created for the organization.

ROSI™ assists decision-making processes, resource allocation, and the prioritization of sustainability investments based on their potential financial returns. The framework also facilitates communication with stakeholders (i.e. investors, customers, and employees) by quantifying the financial value created through sustainable practices. The sustainability drivers of financial performance and competitive advantage based on ROSI™ methodology can be consulted below (see Figure 1).

Figure 1 – The ROSI™ Framework | Source: NYU Stern Center for Sustainable Business

Entities need to follow a clear set of steps to implement the ROSI™ methodology, per The NYU Stern Center for Sustainable Business:

Identify material sustainability practices.
Determine the potential benefits that might drive financial and societal value from sustainability-focused practices.
Quantify benefits derived from the sustainability practices.
Derive a monetary value for the benefits.

The main advantage that ROSI™ brings is helping companies make a compelling business case for sustainability, driving both financial value and positive societal impact while advancing sustainability goals, as NYU Stern concludes in a report published in 2021.

HSBC Bank USA and the NYU Stern Center have launched the Food and Agriculture Sustainability Strategies Framework, based on ROSI™ to help food and agriculture companies make a business case for sustainable initiatives that deliver financial value and societal impact. The framework identifies twelve sustainable strategies and describes practical suggestions for calculating returns. It serves as a strategic tool for unlocking the advantages of sustainability and driving real change in the industry.

According to Forbes—and adapted to adhere to The KPI Institute’s KPI naming standards—% Return on investment (% ROI) is a KPI that measures the efficiency or profitability of an investment or compares the efficiency of several different investments. This metric is also used to measure and evaluate the financial impact of organizational sustainability initiatives, making it easier to understand the value proposition of certain environmental, social, and governance (ESG) criteria used in socially responsible investing. A positive % ROI score indicates a profitable outcome, as the gains generated from the investment exceed the costs incurred (see Figure 2).

Figure 2 – ROI KPI calculation | Source: Adapted from smartKPIs.com

An article from Brightest presented findings based on data gathered between 2020 – 2023 from five top companies that measure the ROI of sustainability. It stated that companies like HP Inc. ($3.5B), Unilever ($1.2B), McKesson ($227M), Nike ($50M), Anheuser-Busch ($7.5M), and Medtronic ($2.2M) earned extensive profit from internal cost savings actions based on sustainability criteria like energy efficiency or waste reducing. By demonstrating the financial value of sustainable practices, % ROI enhances the business case for social investment and encourages stronger ESG administration, balancing monetary performance with social and environmental impact.

ROSI™ and % ROI are valuable tools for measuring the financial impact of sustainability initiatives. ROSI™ goes beyond traditional metrics, helping companies understand the value of sustainability strategies. Meanwhile, % ROI quantifies the fiscal returns generated, enabling data-driven decision-making. Together, they support making informed choices, practicing accountability, and leaving behind a positive environmental and societal impact while delivering long-term financial value.