Measuring What Matters: 6 Business Metrics Every Company Should Track
There are hundreds of different metrics you can use to see if your company hits your business goals. However, there is no use measuring all of those. Do not randomly select a number of metrics just for the sake of having them. Remember that whatever measures or KPIs (key performance indicators) you put in place must help you reach your most valuable business goals.
In line with that, here’s a list of business metrics crucial to almost every company today, shared by many business experts such as BDeWees Consulting:
1. Sales Revenue
Month-over-month sales revenues are probably the most important thing any business owner must measure. Sales revenue doesn’t only display how much your company makes, but it can tell a lot about your business. For instance, it could tell whether your current target demographic is interested in buying your products or not, or if your recent marketing efforts have paid off.
2. Net Profit Margin
Basically, net profit margins tell you how much of each dollar gained as revenue translates into profit. These also indicate whether your income exceeds the costs of operating your business or not. With these crucial data, you can efficiently see the current state of your company, as well as predict its long-term business growth.
3. Gross Margin
Gross margin is your total sales revenue less the cost of products sold, divided by the total sales revenue. To put it simply, the gross margin shows how productive your company is for a specified period. This metric is especially important for startups and mid-size enterprises, as it reflects their improved processes and output.
4. Cost of Customer Acquisition
Customers don’t just show up at your restaurant or shop — you have probably spent resources to reach and tell them about your business. It is crucial to calculate the amount of money you invest in acquiring every single, new customer. After all, you might not want to spend more than what you earn.
Here’s the rule of thumb: the value of one customer must be three times more than the cost of acquiring them. If your cost of acquisition ratio is 1:1, you might have to cut down some of your marketing expenditures.
5. Met and Overdue Milestones
If your company has been running for a few months or years now, you’ve probably met and missed some of your business goals. Check both of your met and overdue milestones to have a quick overview of your team’s capacity. If your company constantly fails to meet the milestones, you might want to start re-aligning your goals with reality. Work with business consultants as they will not only give you outside perspectives, but they can also help get your entire organization back on track.
6. Employee Happiness
Studies say that employees work more efficiently when they’re happy at work. Keep track of the satisfaction level of your employees using HR tools or team surveys. With metric results on hand, it’s easier to come up with programs or activities that can make your employees feel happy and rewarded for their work.
Tracking irrelevant metrics will distract you from focusing on the things that truly matter. You’ll end up stressing about numbers that have no direct impact on your company’s development. Instead, start measuring only the things that highly matter to you and the entire company.