KPI traffic light: red, amber and green zones for metrics
A KPI traffic light marks the state of a metric with a colour: green — on track, amber — a deviation worth a closer look, red — action needed. Thanks to colour a manager sees where the problem is in seconds without reading the numbers.
How the traffic light works
Each metric gets thresholds — the limits at which the colour changes. For example, for sales plan completion:
| Zone | Plan completion to date | What to do |
|---|---|---|
| Green | 100% or more | Keep the pace |
| Amber | від 90% до 100% | Break the gap down by manager and channel |
| Red | below 90% | Urgent action: promotions, reallocating resources |
For metrics where “more is worse” (costs, returns, days sales outstanding), the scale is reversed: the green zone is below the threshold.
How to choose thresholds
- From the target. Green is the target or better; amber is an acceptable deviation; red is unacceptable.
- From history. Look at how the metric fluctuated in past periods: normal fluctuations should not turn it red.
- From consequences. The more a deviation costs, the narrower the amber zone.
- The same for everyone. Thresholds are fixed in advance and not changed “to fit the result”.
Threshold examples
- Gross margin: green from 35%, amber from 30% to 35%, red below 30%.
- DSO: green up to 30 days, amber 30–45, red above 45.
- On-time delivery: green from 95%, amber 90–95%, red below 90%.
- SLA compliance: green from 98%, amber 95–98%, red below 95%.
The actual values depend on the industry and business model — take them from your plan and history.
The traffic light on a dashboard
On a dashboard the traffic light is usually shown as a gauge with coloured sectors, the colour of a number or card background, or icons in a table. In Dashboard the plan gauge shows the value against its limit, and colour thresholds can be sent together with the data from the accounting system — the dashboard then colours the gauge by them.
The main rule: keep colours few. If everything on the screen is red, the traffic light stops helping — revisit the thresholds or the set of metrics. More on choosing metrics: KPIs — key performance indicators and What is a dashboard.