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4 Min. Read

What Are Performance Metrics? Definition & Examples

What Are Performance Metrics? Definition & Examples

As a small business owner, you will always want to keep an eye on how your business is performing.

Whether that is keeping an eye on your sales, or your customer satisfaction or even your warehouse efficiency.

A business that is performing well, is a business that is making money.

But how do you measure performance? And what are performance metrics?

Let’s take a closer look.

Here’s What We’ll Cover:

What Are Performance Metrics?

What Is the Difference Between Performance Metrics and a KPI?

Why Track Performance Metrics?

What Types of Performance Metrics Should I Track?

Key Takeaways

What Are Performance Metrics?

Performance metrics are data used to track processes within a business.

This is achieved using activities, employee behavior and productivity as key metrics.

These metrics are then used by employers to evaluate performance.

This is in relation to an established goal such as employee productivity or sales objectives.

What Is the Difference Between Performance Metrics and a KPI?

Performance metrics, or PMs, are measured within a certain area of a business. This tends to be against a predesigned goal. That means that you receive a broader range of data than a key performance indicator, or KPI.

A KPI will use a specific metric to measure performance.

For example, a PM could measure the productivity of the warehouse and shipping department compared to a set goal. Whereas a KPI would measure how fast the warehouse and shipping department can turn an order into a delivery.

Why Track Performance Metrics?

Tracking performance metrics is important because they provide valuable information to your business.

The data that these metrics provide can be used to grow your business and increase your profits.

They also help put strategies in place for meeting various objectives. This can be across any aspect of your business.

You can plan for improvements, adjustments and any changes to the processes your business has in place to meet various goals.

What Types of Performance Metrics Should I Track?

Businesses use performance metrics to measure various aspects of their business.

This can include sales, project management, employee productivity and their overall business processes.

These metrics can be grouped into four different categories:

  • Business performance
  • Sales performance
  • Project management performance
  • Employee performance

Business Performance

Business performance metrics track and assess how your business is performing. This is in sales, the marketing department and overall profitability.

These metrics help businesses decide where to make various improvements and adjustments. This is with the aim to help boost performance and growth.

They will tend to look at things such as the return on investment and the profitability of certain aspects. It also focuses on productivity within the overall business.

Sales Performance

The sales metrics measure a team or an individual’s performance in the sales department.

These metrics can be measured against the target's sales actions, lead generation and lead retention. It can also look at key performance metrics such as total revenue and customer reach.

These metrics are then weighed up against the goals that were originally set. This enables you as a business owner to see any trends of overperformance or underperformance.

Project Management

These metrics are used to track and measure the effectiveness and profitability of various projects.

Each stage of the project is tracked and measured against the goals that the project set out to achieve.

The data compiled from the metrics can be used to plan future projects and gives insight on how to make projects more efficient.

Employee Performance

The final performance metric is related to employee performance.

If your employees aren’t performing to the standards set, then your business will suffer.

However, this may not always be a case of an employee not doing their job properly. Sometimes they are not supplied with the correct tools to successfully complete their tasks.

Therefore these metrics can show you how to adjust or make necessary improvements to help employees reach their goals.

You can measure an employee’s performance by the quality, quantity, efficiency and productivity of their work.

Key Takeaways

Performance metrics is a key tool for any business owner to finely tune their business and streamline their processes.

To create an efficient and profitable business, it is key that everything is running smoothly and at an acceptable level.

Are you looking for more business advice on everything from starting a new business to new business practices?


Then check out the FreshBooks resource hub.


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