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Whether it's a startup launching or a scaling company ramping up operations, tracking the right business metrics makes a huge difference. McKinsey recently posited that businesses that frequently assess their success metrics are 20% more likely to increase productivity. Tracking key business metrics can help your business grow smarter, not just faster, improve customer satisfaction, and boost employee performance. Let’s look at the top metrics of success to track for business growth this year.
Sales metrics are the lifeblood of every business. Some of the data to look at are things like conversion rate and customer acquisition costs. Each of these key business metrics is calculated using a universal mathematical formula. If you want to know your customer acquisition costs, you’ll need to divide the total number of new customers by the total marketing costs.
CAC = Total Customers Acquired / Total Marketing Costs
For instance, if a company spends $10,000 on marketing and acquires 100 customers, then the CAC is $100. By monitoring these KPIs, you’ll identify where your business needs to cut costs and ways to optimize sales, marketing, and advertising with the right methods.
Customer satisfaction KPIs are super important because they guarantee the success of the company in the long term. Companies like Zappos excel by tracking metrics such as the Net Promoter Score (NPS) to measure customer loyalty. This metric measures how likely customers are to recommend your products or services to other people. Here is the formula for calculating NPS:
Net Promoter Score + % of Promoters - % of Detractors
If, in a 100-person customer survey, you find 70% promoters and 30% detractors, the NPS score is 40% (70 minus 30). Companies with higher positive NPS scores witness 3x repeat customers. Tracking such business growth metrics can help you increase recurring revenue in the long run.
Your employees are the heart of your company. You need to monitor productivity rates, turnover, and employee engagement. Google proudly uses OKRs (Objectives and Key Results) to track performance among staff, and Gallup reports that companies that track metrics such as employee engagement have 42% lower turnover rates.
While there are many ways to compute employee engagement, one common way is to calculate the Employee Engagement Index, which aggregates the responses to different questions in a survey. Here's the simple formula:
Employee Engagement Index (EEI) = (Number of positive responses / Total number of responses) ×100
If you are not growing, then you are stagnating. Businesses must focus on growth through success metrics such as the revenue growth rate and market share. Netflix is an excellent example of a company that tracks its growth using subscriber numbers and recurring revenue. Revenue growth is ultimately the most critical business growth metric to track. The formula for calculating revenue growth rate is:
Revenue Growth Rate = (This year’s total revenue – Last year’s total revenue) / Last year’s revenue×100
For smooth business operations, you must track supply chain metrics like lead time, inventory turnover, and order accuracy. Supply chain metrics provide insights integral to any business. Tracking them maintains efficiency and cuts costs while ensuring customer satisfaction.
If you don't track supply chain metrics, delays, and stockouts may eventually lead to customer dissatisfaction. Inventory turnover, for example, can be tracked in order not to have too much stock on hand and to avoid unnecessary costs. Here is the formula for calculating inventory turnover:
Inventory Turnover = Cost of Goods Sold / Average Inventory
Tracking business growth metrics is vital in today’s competitive environment. Sometimes, it is as simple as monitoring customer satisfaction, while other times, it might be a question of tracking team performance. Many times, the highway to success lies in crunching hard numbers or employing computational software to understand the details. However, the real value is only truly unlocked when insights are turned into action.
Whether it's a startup launching or a scaling company ramping up operations, tracking the right business metrics makes a huge difference. McKinsey recently posited that businesses that frequently assess their success metrics are 20% more likely to increase productivity. Tracking key business metrics can help your business grow smarter, not just faster, improve customer satisfaction, and boost employee performance. Let’s look at the top metrics of success to track for business growth this year.
Sales metrics are the lifeblood of every business. Some of the data to look at are things like conversion rate and customer acquisition costs. Each of these key business metrics is calculated using a universal mathematical formula. If you want to know your customer acquisition costs, you’ll need to divide the total number of new customers by the total marketing costs.
CAC = Total Customers Acquired / Total Marketing Costs
For instance, if a company spends $10,000 on marketing and acquires 100 customers, then the CAC is $100. By monitoring these KPIs, you’ll identify where your business needs to cut costs and ways to optimize sales, marketing, and advertising with the right methods.
Customer satisfaction KPIs are super important because they guarantee the success of the company in the long term. Companies like Zappos excel by tracking metrics such as the Net Promoter Score (NPS) to measure customer loyalty. This metric measures how likely customers are to recommend your products or services to other people. Here is the formula for calculating NPS:
Net Promoter Score + % of Promoters - % of Detractors
If, in a 100-person customer survey, you find 70% promoters and 30% detractors, the NPS score is 40% (70 minus 30). Companies with higher positive NPS scores witness 3x repeat customers. Tracking such business growth metrics can help you increase recurring revenue in the long run.
Your employees are the heart of your company. You need to monitor productivity rates, turnover, and employee engagement. Google proudly uses OKRs (Objectives and Key Results) to track performance among staff, and Gallup reports that companies that track metrics such as employee engagement have 42% lower turnover rates.
While there are many ways to compute employee engagement, one common way is to calculate the Employee Engagement Index, which aggregates the responses to different questions in a survey. Here's the simple formula:
Employee Engagement Index (EEI) = (Number of positive responses / Total number of responses) ×100
If you are not growing, then you are stagnating. Businesses must focus on growth through success metrics such as the revenue growth rate and market share. Netflix is an excellent example of a company that tracks its growth using subscriber numbers and recurring revenue. Revenue growth is ultimately the most critical business growth metric to track. The formula for calculating revenue growth rate is:
Revenue Growth Rate = (This year’s total revenue – Last year’s total revenue) / Last year’s revenue×100
For smooth business operations, you must track supply chain metrics like lead time, inventory turnover, and order accuracy. Supply chain metrics provide insights integral to any business. Tracking them maintains efficiency and cuts costs while ensuring customer satisfaction.
If you don't track supply chain metrics, delays, and stockouts may eventually lead to customer dissatisfaction. Inventory turnover, for example, can be tracked in order not to have too much stock on hand and to avoid unnecessary costs. Here is the formula for calculating inventory turnover:
Inventory Turnover = Cost of Goods Sold / Average Inventory
Tracking business growth metrics is vital in today’s competitive environment. Sometimes, it is as simple as monitoring customer satisfaction, while other times, it might be a question of tracking team performance. Many times, the highway to success lies in crunching hard numbers or employing computational software to understand the details. However, the real value is only truly unlocked when insights are turned into action.
