If you’re wondering what the best business metrics to track are, you’ve come to the right place. Collecting data about various parts of your organization is a big step toward understanding what’s working well, and what isn’t. If you can gather and review important data on a regular basis, you’ll be more likely to see positive developments for your organization.
Curious to learn more? Read on to learn about 7 business metrics every company should track!
What Do You Need to Break Even?
While the ideal scenario is to gain profits and grow your business at a steady rate each quarter, the reality is that you’ll have some ups and downs. And you need to be ready for the low points when you’re planning your financial picture.
An important metric to look at early on is your break-even point. During those down months when you’re not rolling profits, how much money do you need to afford manufacturing or facility costs — or salaries? If you can determine this number, you’ll be able to plan for a brighter future without taking a hit during the slower times.
Look at Your Gross Profit Margin
One of the best metrics to measure company performance is the gross profit margin. Look at how much money is coming in, and how much you’re left with when you consider operational expenses. To find your gross profit margin, just deduct your expenses from your revenue, and divide that number by the revenue.
While it’s not unusual to have low or no profits as a fledgling business, you should see your profits start to grow each year. If you see several years with flatlining profits or a gross profit margin percentage in the single digits, then it’s time to make some changes.
How Many New Leads Do You Have?
And where are those leads coming from? Spend some time reviewing where you’re getting the most interest from potential clients. It could be that your email blasts are working well while paper ad campaigns are ineffective.
Don’t overlook the importance of finding out the best means of gaining new clients. If you can target your efforts on the most effective lead generators, you’ll save money. Look for ways to optimize your website to invite the most user-friendly experience — and more new clients.
Understand Your Cost of Customer Acquisition
The cost of customer acquisition (CAC) is another one of the critical business metrics. After all, you need customers in order to drive sales. So it’s wise to look at how you’re doing when it comes to attracting new customers.
The CAC metric looks at how much money you’re investing in marketing or other efforts to gain new clients, and divides that number by the total number of new clients. This equation gives you an average price that you’re paying to acquire a new client.
While it might seem scary to find out that you’re spending a lot on a new client, don’t let it be. If that client sticks with you over the long haul, it’s a worthy investment.
Business Metrics Always Include Growth in Sales
One of the best metrics to measure company performance is your year-to-date growth in sales. This metric will tell you when your best seasons for growth fall during the year — and when your weakest ones are. Since sales growth drives your business, you need to review your sales information frequently.
Look at the sales totals from each month and gauge that against how many new sales you’ve made with different clients. Are all of your sales still coming from existing clients? You’ll be more organized and efficient with your time if you know how to target new customers.
Look at the Effectiveness of Your Web Presence
Is your website working up to its potential? If people want to learn more about your product or service, they need a visually pleasing and up-to-date website to visit. Don’t assume that your current website is meeting your clients’ needs.
A website with dated visuals or big blocks of text can be offputting. You’ll want to keep it updated with the latest products, easy access to email sign-ups, and sharp visuals.
You can use online marketing tools to assess the performance of your website. You’ll be able to find out where your traffic is coming from, and how many new hits your website is getting each month. If traffic is low, that’s a sign that you should be investing more time and money in advertising or SEO optimization.
Don’t Overlook Employee Satisfaction
Are your employees happy with their jobs? Don’t assume that they are. In fact, you’ll be better off in the long run if you get some honest feedback from them that you can use to improve the company.
You can use online surveys or discussions with human resources professionals as a way to gather information. Spend some time with upper management reviewing the results. And to go one step further, spend some more time looking into how you can improve.
While you’re at, assess your own satisfaction. If your job is mentally draining, you may need to delegate more responsibilities or change up your personnel. Don’t just stick with the status quo.
Track the Right Metrics
Tracking your business metrics on a regular basis is the key to your success. You want to catch areas of weakness so you can strategize with your team members to make them better. And ultimately, you’ll build your profits and reputation over time.
To find more tips on how you can improve your business strategies, check back for new articles!