A KPI is a number attached to a decision
KPI means key performance indicator. You can measure hundreds of things; only a few should guide this month’s work. For a small consulting service, qualified inquiries and suitable booked calls may matter most. For a paid membership, first-value completion and renewal may matter more than additional signups. Choose a primary outcome, two supporting measures, and a quality guardrail.
Keep this glossary beside your dashboard
| KPI | Definition / formula | Use it to ask |
|---|---|---|
| Reach / impressions / frequency | Reach = people/accounts exposed under the platform definition. Impressions = displays. Frequency = impressions ÷ reach. | Are we reaching new people or repeatedly showing the same audience? |
| CTR | Destination clicks ÷ impressions × 100 | Does the message earn a relevant click? |
| CPC / CPM | Spend ÷ clicks; spend ÷ impressions × 1,000 | What does access to this audience cost? |
| Sessions / users / views | Visits / identified users under the reporting method / page or screen views | What unit is this report counting? |
| Conversion rate (CVR) | Defined conversions ÷ defined eligible population × 100 | Which action, denominator, and interval are being used? |
| CPL / CPA | Spend ÷ leads; spend ÷ specified acquisition actions | Are these ordinary leads, qualified leads, bookings, or customers? |
| CAC | Sales and marketing acquisition costs ÷ new customers acquired, using aligned periods/cohorts | What does a customer cost, including labour and tools? |
| ROAS / marketing ROI | Attributed revenue ÷ ad spend; incremental contribution after campaign cost ÷ campaign cost | Is revenue being confused with profit or attribution with causation? |
| AOV | Order revenue ÷ orders, using consistent refund/tax treatment | Is each transaction becoming more valuable? |
| Activation rate | Eligible new users reaching first value within a set window ÷ eligible new users | Are signups experiencing the promised value? |
| Retention / customer churn | Retained members of a starting cohort ÷ that cohort; lost customers ÷ customers at the start of the defined period | Do people return or stay? |
| LTV / payback | Estimated contribution over a customer relationship; time for contribution to recover CAC | Can the model support the acquisition cost? |
| Email click / unsubscribe rates | Unique clickers or unsubscribers ÷ the chosen delivered-message denominator | Does the message lead to useful action without damaging the relationship? |
| Social follow / action rates | New attributable follows or useful actions ÷ the relevant reach or profile visits | Does attention turn into a relevant relationship? |
Definitions vary across platforms. Write the exact calculation in your own scorecard. A platform’s conversion count may include calls, purchases, and form submissions; that is not the same as customers. A GA4 session key-event rate uses sessions containing a key event, rather than simply dividing every event occurrence by sessions.
Work through one complete PPC example
All numbers here are illustrative. You spend $300 for 30,000 impressions and 600 destination clicks. The website records 500 sessions, 25 leads, 10 qualified leads, and 5 new customers. Those customers produce $1,000 in revenue.
- CTR = 600 ÷ 30,000 = 2%. CPC = $300 ÷ 600 = $0.50. CPM = $300 ÷ 30,000 × 1,000 = $10.
- Session-to-lead conversion = 25 ÷ 500 = 5%. Cost per lead = $12; cost per qualified lead = $30.
- Media cost per new customer = $60. This is not full CAC if creative, labour, software, or sales costs are excluded.
- ROAS = $1,000 ÷ $300 = 3.33×. With $550 variable fulfilment costs and $100 other campaign costs, $50 remains after the $300 media spend, before fixed overhead.
These numbers do not prove that the campaign generated incremental sales. Some customers may have purchased anyway. Call the result attributed revenue unless you have a defensible incrementality design.
Set targets from your offer, not a generic benchmark
Suppose a sale contributes $80 before acquisition and you want $30 left after acquisition. You can afford at most $50 acquisition cost under that simplified model. If one in five qualified leads buys, the allowable qualified-lead cost is $10. If 4% of comparable clicks produce a qualified lead, allowable CPC is $0.40. The assumptions need evidence and may change as you scale.
A “good” click-through rate cannot rescue an unprofitable offer. Compare similar audiences, placements, countries, periods, and objectives. Keep the source of every assumption in your notes.
Build a five-column weekly scorecard
Use Metric, Definition, Current count and denominator, Comparable prior period, and Next action. Show “3 out of 40” beside “7.5%.” Going from one sale to two is a 100% increase, but still a tiny sample. Moving from 2% to 3% is one percentage point, or a 50% relative increase.
Calculate combined rates from summed numerators and denominators. Ten leads from 100 visits and ten from 1,000 visits combine to 20 ÷ 1,100 = 1.82%, not the average of 10% and 1%. Mark unavailable values as unknown. Review which customers those numbers represent before celebrating a trend.
Choose your first three numbers today
For a lead-generation website, begin with qualified visits where you can define them, qualified inquiries, and suitable booked calls. Add spend and sales outcome as they become available. For a community, use first contribution, useful replies, and return participation. For a shop, use completed purchases, contribution per order, and repeat purchase.
The useful test is simple: if this metric changed tomorrow, would you know what to investigate? If not, add a definition or move it out of the main scorecard.
Sources and further reading
Primary references checked October 11, 2026. Exercises, frameworks, and fictional examples are our teaching material; forecasts are labelled as scenarios.
Keep exploring
Campaign Studio explained: every field, every number, and your first campaign
How to read analytics reports: a visual walkthrough for beginners