What is KPI (Key Performance Indicator)?
A Key Performance Indicator (KPI) is a measurable value that shows how effectively a team or product is achieving a key objective. KPIs turn goals into trackable numbers, making progress visible and decisions accountable.
Strong KPIs are specific, measurable, and tied to an outcome that matters — activation rate, monthly retention, conversion rate, or average revenue per user, for example. They differ from vanity metrics (like raw pageviews) that look good but don't inform decisions. A useful test: would a change in this number actually change what you do?
PMs select KPIs that connect day-to-day work to strategic goals, set targets, and monitor them on dashboards. Choosing the right few KPIs — rather than tracking everything — is what keeps a team focused.
Examples
- A growth PM tracks "day-7 retention" and "activation rate" as the KPIs for an onboarding redesign.
- A team distinguishes its KPI (paid conversion rate) from a vanity metric (total signups).
Where PMs use this
Related terms
North Star Metric
The single metric that best captures the core value a product delivers to its customers.
Conversion Rate
The percentage of users who complete a desired action out of those who had the opportunity.
Retention
The degree to which users keep coming back to a product over time — the foundation of sustainable growth.
A/B Testing
A controlled experiment comparing two versions to see which performs better on a chosen metric.