Key Performance Metrics, also known as Key Performance Indicators (KPIs), will help you keep track of your business’s performance and goals. If you’ve crafted the perfect business plan to get your company where you want it to be in five years, not using metrics to keep track of your progress will make the plan useless. Even if you have done all of the appropriate B2B market research. Not to mention, KPMs allow you to figure out any issues and make changes to your plan before they become bigger.
Why are Metrics Important?
Metrics help you track the growth and performance of your business. The information you get is vital because it allows you to monitor the company’s progress toward its goals and address potential issues before they come up. Depending on what you need to do, you will use different KPMs.
7 KPMs to Know About
Many KPMs will help you keep track of certain aspects of your business, depending on your goal.
Sales Revenue
Sales are one of the most important metrics. It allows you to understand which products or services are doing well and focus on them. To determine your company’s sales revenue, you simply add up all the sales income and subtract any returned products.
Net Profit Margin
The net profit margin evaluates a business’s ability to generate a profit in contrast to its overall revenue. It is calculated by subtracting sales expenses from monthly revenue.
Gross Margin
Your business’s gross margin measures how much each sales dollar goes toward profit and other costs. Often expressed as a percentage, gross margin is calculated by subtracting the cost of goods from the total sales revenue and dividing the result by the total sales revenue.
Lead Conversion Rate
This metric helps determine how many of your potential customers decide to purchase your products or services. Potential customers are more likely to convert if you have quality products, an excellent sales staff, a user-friendly website, a good social media presence, and great customer reviews.
Website Traffic
Having a website has become standard for any industry. Some B2B market research can help you better understand what your clients look for in a website, but they will most likely look for something easy to navigate. By measuring the number of visitors to your website each month, you can gauge the success of your marketing efforts.
Retention Rate
Anyone with a business wants to have returning customers. Retention rate is an important metric because it shows how many customers are continuously purchasing from you and spreads the good word about your business to people they know.
Progress Toward Goals
Every
business has goals, whether you have created a business plan or not.
Therefore, it is important to have a way to track these goals and give
them deadlines if they require it. This metric can help solve issues of
low productivity, lack of resources, unreasonable expectations, and
insufficient staffing.