What is Key Performance Indicator (KPI)?
Nexa Consultancy | Startup & Finance Glossary
A Key Performance Indicator (KPI) is a measurable value that demonstrates how effectively a company is achieving its key business objectives. KPIs are used to evaluate the success of an organization at reaching its targets. They provide a focus for strategic and operational improvement, create an analytical basis for decision-making, and help focus attention on what matters most.
For Startups: For a startup, tracking the right KPIs is crucial for monitoring health and growth. Generic financial metrics are not enough. A SaaS startup needs to track KPIs like MRR, Churn Rate, and LTV:CAC. A D2C startup will focus on AOV and ROAS. A virtual CFO helps identify and build dashboards for the KPIs that are most relevant to a specific business model.
Example: A subscription box company sets a KPI to reduce its monthly customer churn rate from 5% to 3% within six months.