Quite often, I hear these terms are being used interchangeably.
Are there any differences between dimensions, measures, metrics and KPI (Key Performance Indicator)? Yes, there are!
Let’s take a simple example to know what these terms actually mean.
If you’re the Sales Leader of a company, you would be interested to know the performance of a particular product line in a certain year. Let’s say, the sales of a particular version of Mi Mobile is registered as 250,000 units on a flash sale held online. In this case, the dimension is referred to the product type which is Mi Mobile whereas 250,000 units is the measure (aka values).
How about Metrics (aka Business Metrics) and KPI?
Business sets a target/objective every year for its product lines. The idea is to create & drive its strategies to realize the objectives throughout the year. Metric is a way to assess the performance of a particular division or at the company level. #Revenue is one of the business metrics and is assessed by comparing against its previous year, industry standards (benchmarks), competitors.
There can be multiple metrics a company can devise and track during the year. However, there has to be certain “key” metrics which the business wants to keep a tab on a frequent basis. Those key performance metrics determine the health of the organization. In the event of any way off from the objectives, the business strives hard to do a course correction on its strategies.
KPI or simply a metric is a combination of 2 or more measures.
A simple KPI can be, #Sales of Mi Mobile in 2017 against the previous year. Assume the target set by the business in 2017 to be 500,000 units in a geographical location. The business can validate and see where they can invest further to grow their sales numbers. Popular Brands like Mi which sells primarily on online eCommerce websites have now ventured into offline stores for further growth.
For the Services industry, Customer Retention Rate would be the key. After all, retaining a customer costs relatively lesser than acquiring a new customer. Companies focus on retaining the most profitable customers as they bring in the maximum value for the top-line of the business.
Your KPI should be well defined and relevant to the business. Notably, the corresponding business stakeholders should be aligned on the same as well. A good KPI will definitely add value in measuring your performance of the business as it’s quantifiable. A bad KPI might mislead you from the focus & achieving your target.
A Scorecard or a Dashboard can be used to keep a track of the KPI metrics on a daily/weekly/monthly/quarterly/yearly basis. There are tools such as Tableau Public, MS Power BI to load your visualizations and share it among the stakeholders.