As a business owner, tracking your progress is important. Monitoring how well your company is doing in each area helps you to allocate resources and improve operational efficiency.
Assessing the market is a vital part of running a business and you need to keep track of where the consumer demand is heading. By looking at your metrics, you can see where your business is thriving and where you might need to make improvements.
For example, you can calculate your profit margin and expenses each year to make accurate financial projections or figure out the customer acquisition costs (CAC) to determine where you can minimize your CAC in the future.
As a business owner, you may wish to track metrics to compare your numbers to those of your competitors to identify your success in the current market.
What Are Business Metrics?
Business metrics are sometimes called key performance indicators (KPIs). They are an effective way to measure your progress towards certain business goals.
The growth or change in business metrics is compared from one point in time to another. There is a wide variety of different metrics that you can measure but you don’t need to measure every single one of them.
Defining Your Business Metrics
Depending on your business goals and your current operations, you might want to track a certain set of metrics to determine how well your company is doing. Tracking irrelevant business metrics can overwhelm you and your team, and may distract you from the important KPIs.
The metrics that you track will determine the future direction of your company. Depending on whether you see the results that you want in each of your performance indicators, you may choose to adapt or change certain functions in your business.
Most companies track a range of financial metrics to measure profits and losses but there are also industry specific measurements, such as loyalty card sign-ups, qualified leads, and website traffic.
Here are some of the many metrics that you can choose to track within your business, split into categories:
- Net profit margin
- Gross profit margin
- Sales growth compared to last year
- Total losses
- Customer lifetime value (CLV)
- Customer acquisition costs (CAC)
- Leads generated
- Lead to sale conversion rate
- Customer loyalty or retention
- Loyalty card or email sign-ups
Website and Social Media
- Website traffic each month
- Social media followers
- Leads generated on social media
- Sales generated from paid social media ads
- Total products shipped
- Total products damaged or lost
- Cost of transportation
- Number of deadlines met each month
You don’t need to measure metrics in every category. It depends on your business goals and the type of business you run. Most companies track the important financial metrics to measure performance but the customer-related and operational metrics can vary significantly from business to business.
For example, a retailer will want to track net profits and losses but may also want to look at metrics that focus on customer satisfaction and retention. They might measure the costs of customer acquisition and the number of total sales each month.