Beginner level · Module 1: KPIs and Performance Measurement · Lesson 3 of 3
KPI Trees and Drivers
Break a goal into the measurable drivers that produce it.
In this lesson you will
- Build a KPI tree from a goal
- Use a driver tree to find where to act
Key concepts
KPI treedriversdecompositionlevers
The lesson
A KPI tree breaks a result into its parts. Revenue = number of customers × visits per customer × average basket size; profit = revenue − costs.
Each branch is a lever: if revenue falls, the tree shows whether fewer customers came, they came less often or they spent less.
Build trees with the people who run the operation; they know which levers they can actually pull.
Step by step
- Write the shop's profit as a formula of drivers.
- Draw the tree to three levels.
- Mark the levers staff control.
- Calculate the effect of improving one lever.
A shop's revenue as a tree of drivers
Breaking monthly revenue into customers, visits and basket size — and why improvements compound.
| Item | Working | Amount |
|---|---|---|
| Customers per month | from receipts | 400 |
| Visits per customer | from receipts | 2.5 |
| Average basket | sales ÷ visits | 1,200 SSP |
| Monthly revenue | 400 × 2.5 × 1,200 | 1,200,000 SSP |
| Basket up 10% only | 400 × 2.5 × 1,320 | 1,320,000 SSP |
| All three drivers up 10% | 440 × 2.75 × 1,320 | 1,597,200 SSP |
Explanation
Improving any one driver by 10% adds 120,000 SSP (10%). The tree shows staff which lever they are pulling: more customers, more frequent visits or larger baskets.
Improving all three by 10% raises revenue by 33.1%, not 30%, because the drivers multiply: 1.1 × 1.1 × 1.1 = 1.331.
Check your understanding
1,200,000 × 1.331 = 1,597,200.
Practice activity
Complete the KPI tree from the practical activity.
Expected result: A tree linking profit to measurable drivers and controllable levers.
Check your understanding
-
What does a KPI tree show?
Show answer
How a result breaks down into the drivers that produce it.
-
Write revenue as drivers.
Show answer
Customers × visits per customer × average basket.
Taught live by an instructor — online or in person. Free course lessons are for self-study and do not lead to a certificate — see registration options.