Top 5 key performance indicators to grow your business
Can you know how far you have moved forward on the road, if you do not know which way you are going or how to measure it? How can you do that, if you do not have any signposts or tools that can prompt that you are moving quite fast directly to the destination point? The same in business – if you have no idea how to measure your performance, you simply cannot decide what efforts and investments are good, and what are the stumbling block on your way to success. For that very reason – to reflect and explain a brand’s progress towards a specified goal, both non-financial and financial performance indicators were invented.
Despite of the fact that everyone understands what are performance indicators and how important they are, not everybody can properly apply them to own business. Though, even those, who know how to use them, sometimes fail to identify the most vital metrics. And instead of tracking really important data, collect and report a huge amount of the information, which is easy to measure, but useless. So how to choose the ones that fit your business most and contribute to prosperity? Here is a list of thoroughly chosen business performance indicators you should mind if you want to monitor your company health.
1. Customer profitability score. This performance indicator allows to measure the revenue, with costs spent on attracting and keeping customers happy with services, adverts, product information etc., deduced. That is very important to keep customers satisfied, but double check, whether expenses on that are well worth of being spent. It doesn’t mean you have to stop focusing on your customers, it just means that sometimes you can replace a costly ways of customer engagement and support by the cost-effective ones. Do you want a small secret? The latter will be no less effective, than the former. A good thing to think about, isn’t it? But don’t forget the saying:
2. Customer retention rate. The KPI, which monitors repeat customers, i.e. those, who return for more products and services from you. Except that, it helps to observe how loyal they are to your brand, entire organization and services you provide. Thus, by tracking the most successful interactions with customers, you can figure out and repeat the ideas that has worked out the best.
3. Conversion rate. This one belongs to quality performance indicators, which help to measure the transition of sales calls, enquiries, website views, social media activity into paying customers. As you can see, this metric allows to find out whether some of your activities and presence on various channel is reasonable or not. Also, it helps to track the efficiency of your call center (if you have any), sales team or customer support team. By seeing strong and weak points, you will be able to reorganize and forward all sales and marketing efforts to reaching the top performance. Mind, that in this case poor cases are of no less importance than the success stories.
4. Return on investment (ROI). For sure, one of the most commonly known and widespread financial performance indicators. It follows the revenue, generated by investment into some specific aspect of company’s business processes, in relation to the cost of that investment. To say it simple, this metric shows you whether expenses into some specific activity are effective or not, or helps to compare the efficiency of several investments to find out the most profitable one. In fact, it’s not so bad to make mistakes. What is much worse – not to drive the conclusions out of them and repeat them in the future.
5. Quality index. The last performance indicator for today allows estimating whether the quality of your products and services actually meets customer expectations. This metric enables to figure out what have gone wrong and make all the necessary improvements in order not only to satisfy customer needs, but even to anticipate and exceed them. Though, that doesn’t mean you have to do the impossible. You just have to do your best – always, everywhere.
Surely, that’s just a small part of all the existing KPIs. We will gladly answer all your questions on performance indicators and the ways to measure them – feel free to send us an email, marked “KPI”. You can also subscribe to our newsletter and follow the updates to get the next portion of information about business metrics.