KPI (Key Performance Indicator)

Quantifiable and actionable measure used to evaluate the performance of an organization, product or action against its strategic objectives. KPIs are used to drive results, prioritize efforts, and make data-driven decisions, whether in marketing, product, finance or operations.

A good KPI is:

• Aligned with business objectives,
• Specific, measurable, achievable, relevant and time-bound (SMART),
• Understandable by all stakeholders,
• And tracked on a regular cadence to enable continuous optimization.

KPI challenges in a CRO approach:

In a conversion rate optimization strategy, the choice of KPI is central, because it:

• defines the success of a test or experiment,
• determines the duration of the A/B test, through its influence on the Minimum Detectable Effect (MDE),
• guides the measurement and analysis strategy (quantitative, qualitative or hybrid).

Leading vs Lagging KPIs:

• Leading KPI: An indicator upstream in the user journey, which reacts quickly to a variation.
  E.g.: click on a CTA, add to cart, starting to fill out a form.
  ➤ Advantage: observable over a larger volume, thus helping to reduce test duration.
  ➤ Limitation: does not guarantee an impact on final conversion.
• Lagging KPI: A final or macro indicator, directly linked to the business objective.
  E.g.: final purchase, form completion, subscription sign-up.
  ➤ Advantage: measures the real business value, but requires more data to reach significance.

Best practices:

• Always align the test's main KPI with the site's strategic objective (e.g.: sales, leads, retention),
• When using a leading KPI as the primary objective (e.g.: click-through rate), it is recommended to track a lagging KPI as secondary, to ensure that the intermediate optimization does lead to the final impact.

Examples:

• E-commerce site
  • Leading KPI: add-to-cart rate
  • Lagging KPI: final order rate
• SaaS site
  • Leading KPI: click on “Request a demo”
  • Lagging KPI: paid plan subscription rate