Improvements in the amount of data available and the sophistication of reporting tools have provided marketers with a plethora of information they can comb through. But not everything that’s available is significant.
With so many metrics that you can look at, it can become easy to be overwhelmed and experience analysis paralysis.
The KPI, LPI and TPI reporting model enables you to clearly identify what metrics you should be tracking over the course of a project.
What Are KPIs, LPIs and TPIs?
A key performance indicator (KPI) is a metric used to measure progress toward a desired result. They should be more overarching metrics that are key to your strategy. KPIs should be measurable and attributable toward a goal, ideally a SMART goal.
A leading performance indicator (LPI) is a metric that captures the next best result if a KPI hasn’t occurred. This indicates progress is being made, even if a KPI isn’t changing. LPIs are leading indicators, meaning that changes to these metrics often precede changes in KPIs. Similar to KPIs, LPIs should be measurable and attributable toward a larger goal.
A tactical performance indicator (TPI) is a metric that indicates progress toward LPIs. These are the steps that precede movement in leading indicators, and they should also be measurable and attributable.
For example, if your goal is to increase the leads you generate from your website, your KPI would be the number of leads generated from digital sources. Your LPIs could include channel-specific traffic increases, session-to-contact rates and other conversion rates. Your TPIs would include CTA views, CTA clicks, landing page views and form views.
What differentiates KPIs, LPIs and TPIs is their relationship to each other and the broader goal you’re working toward. So there are metrics that can be used as KPIs in one report but LPIs in another.
How to Approach Setting KPI, LPIs and TPIs
When setting KPIs, LPIs and TPIs, start with the problem you’re looking to solve and the desired results you want to achieve.
Identify what you want to accomplish and turn that into a SMART goal. Then, work backward from your SMART goal to set KPIs, LPIs and TPIs.
Once you decide what your goal is, your KPI should be self-evident because it’s essentially the primary way to measure your goal. After establishing your KPI, you can identify significant LPIs by asking “What are actions we see that inform that KPI metric? What’s the next best thing that could happen prior to the KPI?” Then to pick TPIs, you break LPIs into subsets. What are the steps building up to an LPI?
However, when diving into LPIs and TPIs, you need to be cautious of becoming overly granular. The purpose of this reporting structure is to avoid analysis paralysis, so if you are tracking too many indicators, you can create the problem you’re trying to avoid.
We generally recommend that each goal should have one to three KPIs, each KPI should have five or fewer LPIs and each LPI should have five to eight TPIs.
Why is the KPI, LPI, TPI Reporting Structure Beneficial?
KPIs, LPIs and TPIs give you a framework for review. When you set them at the beginning of a project, you’ll be able to easily track what’s significant over the course of the launch and implementation. They provide clarity into the progress you’re making and keep you from getting lost in the available data.