How to define your businesses quality metrics and KPI’s

The difference between KPIs and quality metrics

A common question we get is: what is the difference between key performance indicators (KPIs) and quality metrics? While they may seem similar, they serve different purposes. A KPI is a measurable value used to track your company’s progress towards specific goals. A quality indicator, on the other hand, measures how well your products or services meet customer and industry expectations.

Key considerations when defining your metrics

When setting up KPIs and quality metrics for your business, consider the following

• Focus on areas that directly influence your success

• Use a mix of lead and lag indicators. For example, budget adherence is a lag indicator, while customer satisfaction is a lead indicator

• Make sure all goals follow the SMART framework (Specific, Measurable, Achievable, Relevant, Time-bound)

• Set up a consistent tracking and review system

Choosing the right indicators for your business

There are many different metrics available. However, not all are useful to every business. Choose indicators that reflect your industry and goals. These typically fall into the categories below:

Quantitative indicators

These are numbers you can measure, such as ratios, percentages, or totals. They’re often used in financial tracking, digital marketing, or product delivery.

Qualitative indicators

These relate to feedback, themes or opinions. Use them to understand long-term performance, customer satisfaction, or staff morale.

Lag indicators

 These show past performance. They help you assess how well your planning worked. Most financial metrics fall into this group.

Lead indicators

These predict future performance. For example, if staff engagement is high in your surveys, your retention is likely to improve.

Input vs output indicators

Input indicators show what resources you used. Output indicators show how efficiently those resources produced results. For instance, in a bakery, 1 tonne of flour should produce 1,700 loaves. If you’re only getting 1,300, you may have efficiency issues. For services, if the target is 40 billable hours but the average is 30, the shortfall affects overall productivity.

Building your tracking system

 Once you choose a balance of metrics (lead and lag, input and output), you need a reliable way to track them. You can start with spreadsheets, but many businesses benefit from tools like project management or industry-specific software that offer dashboards and automation.

Tracking your metrics regularly helps you spot trends early. It also helps you remove any indicators that no longer add value.

Keep evolving your metrics 

Remember: as your business changes, so should your metrics. Review them often. This ensures you stay focused on the most relevant areas and make improvements where needed.

Need help?

If you are unsure on how to develop your KPIs, or you don’t know how to utilise your systems to do this properly, we have consultants who are able to conduct quality management process mapping workshops and provide recommendations on the metrics for your business.