Featured image by Mohamed_Hassan via Pixabay
Metrics for your business are also called key performance indicators for a reason. They’re the data you should be looking at to determine the overall health of your business. They also help you determine whether you’re heading in the right direction toward your business goals. Monitoring these important figures using KPI management software is an essential way for your modern business to stay the course in achieving its strategic goals and objectives.
But not everyone knows what those metrics are supposed to be. So here are the top five key metrics you should be looking at for your business.
RELATED ARTICLE: 5 POINTERS FOR HAVING A THRIVING STARTUP
1. Sales Revenue
When taking a look at your business intelligence analytics, one of the key metrics you should be looking at is your sales revenue. By looking at your sales, you can see how well your products and services are doing. You’ll also be able to tell which ones aren’t doing so well. That way, you can make better decisions on where you should be focusing your attention.
You can calculate your sales revenue by adding up the income from sales and subtracting your costs related to undelivered or returned products.
2. Lead Conversion Rates
This metric tells you how many of your potential customers have decided to choose your product or service. This is basically your conversion rate. It tells you how many potential customers become actual customers.
You can increase your conversion rate by providing quality products, having an excellent sales and customer staff, and having a well-designed website.
The more leads you have, the more attention you’re going to get. But having too many could be spreading yourself too thin. So identify which leads are actually increasing your conversion rate and focus more on those.
3. Net Profit Margin
The net profit margin determines the company’s ability to generate profit in comparison with its overall revenue.
You calculate this metric by subtracting your sales expenses from the monthly revenue. The number you get is your true profit. If the number ends up being negative, then you really need to rethink the structure of your business operations.
4. Retention Rate
Another word for this metric is “brand loyalty.” In other words, how many customers are you actually keeping? How many are coming back again and again to purchase your products?
Brand loyalty also involves how many of those customers are telling others about your products and services. These loyal customers help you can gain new customers.
The best way to develop retention is to provide products and services that are of good quality. Additionally, provide excellent customer service.
5. Gross Margin
A business’s gross margin is a measure of how much of each sales dollar goes toward profit and other costs. It’s expressed as a percentage.
You calculate your company’s gross margin by subtracting the costs of goods from the total sales revenue, and then dividing the result by the total sales revenue.
The higher the percentage, the more of each sales dollar your company retains. This is an important metric for new companies to track because it reflects the efficiency of productivity and the company’s processes.
RELATED ARTICLE: BOOST PRODUCTIVITY AND INCREASE SALES FOR YOUR STARTUP COMPANY
Take External Factors into Account When Examining Your Company’s Metrics
Be sure to exercise care when examining these metrics, as there are external factors you may not be taking into account, such as customer buying practices and the current market climate.
For more inspiration to help you start and run your business, be sure to visit our blog often.