KPI development: A step-by-step guide to setting and tracking high-impact goals

Key performance indicators (KPIs) are used widely across various industries, but most companies get them wrong. That's a problem because vague, misaligned, or unrealistic KPIs waste time and stall growth.

While some KPIs are universal, others should be tailored to your business. Relevant KPIs provide clear insights into performance, while the wrong ones distract from your strategic objectives.

In this guide, we’ll walk you through how to develop and track KPIs that drive real results.

Let’s dive in!

What are key performance indicators?

A key performance indicator is a measurable metric that tracks progress toward a specific business goal. The right KPIs give you a clear picture of performance, helping you make smarter decisions that drive real results.

Developing the right KPIs—and consistently monitoring them—ensures you’re focusing on what truly moves the needle. With the right insights, you can optimize processes, stay on track, and continuously improve performance.

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KPIs vs. goals

Goals and KPIs are closely related—both help guide business success, but they serve different purposes. A goal is the broad outcome you want to achieve, while a KPI is a specific, actionable metric that measures progress toward that goal.

For example:

• Goal: Increase customer satisfaction
• KPI: Achieve a Customer Satisfaction (CSAT) score of 85% or higher by the end of the quarter

Goals provide direction for strategic objectives, while KPIs define measurable steps to track success and drive action.

What is KPI development?

KPI development is the process of determining the most important metrics to reach your business goals and which indicators quantify those metrics.

For example, your goal might be to boost employee engagement levels in the workplace. Using employee satisfaction scores and annual employee turnover rates as key performance indicators can help you focus on increasing engagement levels in a more targeted way.

Similarly, if your goal is to increase sales growth, key indicators could include monthly revenue, quarter-over-quarter sales increase, and average deal size to measure progress.

Why KPI development fails (and how to fix it)

Not all KPIs are created equal, and not all companies see success with their chosen KPIs. In fact, many organizations struggle to develop effective KPIs that align with their goals and drive meaningful results. The most common reasons for failure in KPI development are:

• Unclear objectives: A vague strategic objective makes it hard to quantify progress. It's essential to have clear and specific goals in place before developing KPIs.
• Misaligned metrics: Misalignment is what happens when you use the wrong indicator to measure an aspect of your business (such as using revenue to measure employee engagement). Be sure to select indicators that are directly related to your objectives.
• Lack of tracking: Setting KPIs isn’t enough—you need a way to track and monitor them regularly. Without proper tracking, you won’t know if you’re making progress or need to adjust your strategy. KPI dashboards help you visualize and share key metrics in real time, so you can stay on top of performance. Tools like Streak help you track KPIs directly in your CRM - like average deal size, time to close, or number of calls made per week.
• Too many KPIs: It's tempting to try and measure everything, but too many KPIs can cause confusion and dilute focus. Instead, focus on developing meaningful KPIs. Remember that it's about quality over quantity.

How to write good KPIs: A step-by-step process

Now that we've covered the typical pitfalls to avoid when developing KPIs, here's exactly how to write KPIs that drive results and align with your business objectives.

1. Define clear business goals

What are you trying to achieve in the next quarter or year? What matters most to your brand's success? If you're unsure, list the pain points in your business and set goals to address them. Clarity about your business goals now will help you align your KPIs with them later.

2. Use the SMART Framework

The best way to turn your business goals into clear, actionable KPIs is by using the SMART framework. SMART KPIs ensure your goals are well-defined and structured for success.

After setting your business goals, you want to frame them as fleshed-out, intended results or performance measures, and what better way to do that than the SMART framework? Your goals should be:

• Specific: KPIs must be clearly defined. For example, instead of "increase sales," a specific KPI would be "increase monthly sales by 10%."
• Measurable: KPIs should be quantifiable so you can track progress and know when you've hit your target.
• Achievable: Set realistic expectations. Big, ambitious KPIs may look good on paper, but they should still be within reach to drive real progress.
• Relevant: Your KPIs should directly support your overall business goals and keep you focused on what matters.
• Time-bound: Set a clear timeframe with a start date and deadline to create urgency and track progress effectively.

3. Identify the right metrics

There’s no one-size-fits-all KPI—your metrics should align with your specific business goals. Start by identifying:

• The key performance metrics that indicate progress toward your goal
• The data points that have the biggest impact on business outcomes
• The tools required to track and measure these metrics effectively

Not all KPIs measure progress the same way. Some help you anticipate future performance, while others assess past results or track the effort put into a process. Using the right mix ensures you’re capturing the full picture and making informed decisions.

• Leading indicators - predict future performance and help you take proactive action. Example: Website traffic can indicate future lead generation and sales.
• Lagging indicators - measure past performance and show the results of your efforts. Example: Customer retention rate reveals how well you've maintained long-term relationships.
• Input indicators - track the resources and effort put into a process. Example: Number of sales calls made shows how much effort a team is putting into outreach.
• Output indicators - measure the direct results of an action. Example: Deals closed reflects the outcome of those sales calls.

Most goals require tracking multiple KPIs, but not all are equally important. Focus on the ones with the biggest impact.

For example, if your goal is to increase revenue, conversion rate is a more critical KPI than total website traffic because it measures how many visitors actually become paying customers. A high number of website visitors means little if they aren’t converting. Prioritizing the right metrics ensures you're focusing on what truly drives business growth.

4. Assign ownership

Every KPI needs a dedicated owner responsible for monitoring, analyzing, and driving action. This person oversees the data, understands how the domain functions, and communicates insights to key stakeholders. More importantly, they have the authority to make decisions and meaningful measures that improve performance.

Assigning clear ownership ensures accountability and keeps KPIs from being overlooked.

5. Set milestones and checkpoints

Breaking big goals into milestones makes progress easier to track. Set checkpoints where your team can review KPIs and assess performance.

Establish a reporting schedule—whether weekly, monthly, or quarterly—to monitor progress. Regular check-ins help identify setbacks early, allowing you to adjust strategies and stay on track.

6. Use real-time tracking tools

To effectively monitor KPIs, you need the right tools to track progress and generate real-time reports. KPI dashboards help visualize key metrics at a glance, making it easier to spot trends and adjust strategies. Popular dashboard tools like Google Sheets, Tableau, and Looker Studio allow you to build custom dashboards and automate reporting.

Some project management tools and CRMs, like Streak, let you track KPIs directly within your workflows. In Streak, you can create funnel reports, interaction reports, and more to monitor key business processes like sales, hiring, and customer success. You can also export data into Google Sheets to build KPI dashboards or use it as a live data source for Tableau and Looker Studio for deeper analysis.

By using real-time tracking tools, your team gains up-to-date insights to make informed decisions and stay on track with business goals.

7. Review and adjust regularly

KPIs aren’t set in stone—they should evolve with your business. Even if your initial targets and strategies seem right, they may need adjustments over time.

Regular KPI reports help you analyze performance, identify inefficiencies, and spot trends. By reviewing your data consistently, you can refine your goals, make informed decisions, and adapt your strategies to stay aligned with business objectives.

Examples of well-written KPIs

Strong KPIs are clear, measurable, and directly tied to business goals. They define success with specific targets and timeframes, making it easier to track progress and adjust strategies. Here’s how different teams can set effective KPIs:

Sales KPIs

Sales KPIs measure revenue growth, efficiency, and profitability within the sales process. A well-defined KPI should focus on specific targets. For example:

• Increase net profit margins by 37% during the Black Friday season while keeping customer acquisition costs under $50 per sale.
• Shorten the average sales cycle from 45 days to 30 days to improve efficiency and close deals faster.

These sales metrics ensure sales efforts are both effective and cost-conscious.

Marketing KPIs

Marketing teams need to track performance throughout the customer funnel, from awareness to conversion. A strong KPI should measure engagement and lead generation:

• Increase social media engagement (likes, shares, and comments) by 20% over the next month.
• Boost website conversion rate from 3% to 5% within the next quarter.

These KPIs go beyond vanity metrics, focusing on meaningful interactions and conversions.

Customer Success KPIs

Customer success KPIs help businesses retain customers and maximize customer lifetime value. Instead of simply tracking revenue, a well-structured KPI should focus on retention and profitability:

• Reduce average time to resolution from 12 hours to 6 hours within the next three months to improve customer support efficiency.
• Increase customer retention rate from 75% to 85% over the next six months.

These KPIs ensure that customer support efforts drive both satisfaction and financial sustainability.

Financial KPIs

Financial KPIs measure a company's financial health, profitability, and efficiency. These metrics help businesses track revenue, control costs, and ensure long-term sustainability.

• Gross profit margin – Increase gross profit margin from 50% to 55% within the next two quarters by optimizing production costs.
• Net profit margin – Improve net profit margin from 20% to 25% over the next year by reducing overhead expenses.
• Revenue growth – Achieve a 15% year-over-year revenue increase by expanding into new markets.
• Customer acquisition cost (CAC) – Decrease CAC from $200 to $150 within six months by improving marketing efficiency.

Tracking these KPIs helps businesses make data-driven financial decisions, maximize profitability, and maintain stability.

Each of these KPIs includes a clear objective, measurable outcome, and defined timeframe, ensuring teams stay focused on driving meaningful results.

Best practices for developing effective KPIs

Your approach to developing KPIs directly impacts performance. Follow these best practices to ensure your KPIs are clear, actionable, and aligned with business goals:

• Focus on five or fewer high-impact KPIs – Tracking too many KPIs at once can be overwhelming, especially at the start. Prioritize the most critical ones by assigning each a score based on importance.
• Align KPIs with business objectives – Whether tracking sales, customer success, or employee performance, ensure your KPIs directly measure progress toward broader company goals.
• Keep KPIs simple and clearly defined – Avoid overly complex or jargon-heavy KPIs. Use a consistent format, define key metrics, and specify how data is collected and evaluated.
• Track progress on a regular schedule – Establish a reporting cadence—weekly, monthly, or quarterly—to ensure you have the data needed to refine your strategy.
• Recognize and celebrate milestones – When you hit key targets, acknowledge the team members responsible. Recognizing progress boosts morale and keeps everyone motivated.

How Streak simplifies KPI development and tracking

Developing and tracking KPIs becomes easier when you use the right tools. With Streak, you can set clear KPIs, track them in real-time, and simplify your reporting.

Here’s how Streak helps teams develop and track KPIs:

• Customizable pipelines: Visualize your KPIs directly within Gmail. Customize pipelines to track key processes—like leads, sales opportunities, customer accounts, or hiring stages—and monitor progress in a structured, spreadsheet-like view.
• CRM and email outreach automation: Keep your team focused by automating follow-ups, reminders, and recurring tasks. Automation helps your team stay on schedule and ensures you consistently receive up-to-date KPI data and real-time reports.
• Collaboration – Use Streak’s shared pipelines to assign deals and tasks, ensuring your team stays on track toward its goals. Leave notes, ask questions, and collaborate directly within the CRM to keep workflows efficient and projects moving forward.
• Templates: Pipeline templates – Streak offers customizable pipeline templates to help you quickly set up workflows tailored to your processes. These templates come with predefined stages and data columns, allowing you to track essential KPIs effectively. Whether you're managing sales, hiring, or support, you can customize a pipeline template to fit your specific needs, ensuring all critical metrics are monitored.

Many of the most important KPIs—like sales cycle length, customer retention, and deal conversion rates—are tracked directly within your CRM. Streak helps you manage these metrics by tracking your data in Gmail, automating reports, and keeping your team aligned.

Try Streak today to simplify KPI tracking and improve your workflow.