Skip to content

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:

ZonePlan completion to dateWhat to do
Green100% or moreKeep the pace
Amberвід 90% до 100%Break the gap down by manager and channel
Redbelow 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

  1. From the target. Green is the target or better; amber is an acceptable deviation; red is unacceptable.
  2. From history. Look at how the metric fluctuated in past periods: normal fluctuations should not turn it red.
  3. From consequences. The more a deviation costs, the narrower the amber zone.
  4. 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.

Questions and answers

What is a KPI traffic light?

Marking a metric’s state with a colour based on set thresholds: green — normal, amber — a deviation worth attention, red — action needed.

How do you choose traffic light thresholds?

From the metric’s target, its normal fluctuations in history and the cost of a deviation. Thresholds are fixed in advance and applied the same way to everyone.

What about metrics where more is worse?

Reverse the scale: for costs, returns or days sales outstanding the green zone is below the threshold and the red zone above it.