To know how your business is performing across the board, start using business metrics to help you measure performance and monitor progress towards your goals.
Analytics | May 12
Jessica Malnik on November 11, 2020 (last modified on April 8, 2021) • 17 minute read
Have you ever set a goal at the start of the quarter, and then when you check on your progress three months later, you are not even close to completing it?
This usually happens when you set a goal in isolation without creating a detailed plan with KPIs to measure your progress (or lack thereof).
KPIs stands for Key Performance Indicators. They are important because they allow you to gauge your progress towards specific goals.
In this post, we’re going to take a look at the most important KPIs to track in your company, including:
Imagine you are taking a cross-country road trip from San Francisco to New York City.
The objective is to get to NYC on time.
And, all of the metrics on your car’s dashboard alongside the state signs you keep passing are your KPIs.
A great KPI is specific, measurable, and tied back to a specific outcome.
In fact, from sales and marketing to finance and customer success, every department in your company should have its own KPIs.
In fact, according to our recent survey, the marketing department tends to track the most KPIs.
Editor’s note: Did you know that with Databox, there is no need to manually share links to relevant KPI dashboards? Just schedule automated snapshots of your dashboards to any Slack channel. See how today.
Let’s take an example.
Say you work on a B2B SaaS company’s marketing team, your marketing department’s north star KPI might be New Monthly Leads.
This aligns your marketing team so that each individual can set their own KPIs that tie back to generating more leads.
For example, your social media manager’s individual KPIs may be social media reach, social shares, and referral traffic from social channels.
And, your content marketing manager’s individual KPIs may be website traffic, email subscribers, and click-through-rate (CTR).
Editor’s Note: It can be helpful to set a mix of outcome and output KPIs.
To choose KPIs, you first need to get alignment across the company. This is where implementing a framework – such as OKRs – can be beneficial.
When everyone in the company is on the same page, your key results can be KPIs.
Now that you know why KPIs are important, we’re going to look at some KPIs you can track across sales, marketing, finance, and customer success.
Editor’s note: Need a straigtforward way to track your most important KPIs? Create KPI Scorecards for high-level metrics and have a complete picture of how the business is performing at a glance.
Here are 11 key sales KPIs that you may want to track.
“Any business is only as good as the revenue it generates in sales,” says Russell Michelson of Upstart Epoxy.
“If all the metrics are in the green, but the cash isn’t in the till, something is wrong, and if not corrected, that business will fail, despite stellar KPIs and all the good intentions in creation. It is a small number of marketing efforts that drive the majority of sales, but the revenue generated is the true indication of a successful company.”
“For a SaaS business, the Monthly Recurring Revenue after the 90-day mark is the holiest of all sales metrics to measure,” says Dhaval Sarvaiya of Intelivita.
“MRR stands for Monthly Recurring Revenue, which measures the total amount of predictable revenue that a company expects on a monthly basis. MRR can be used as a basis to calculate the annual revenue or the Annual Recurring Revenue. MRR can be further analyzed for granular level understanding by analyzing the average deal size. A sizable average deal size indicates that the sales team is adept at growing the business at a steady rate. It also justifies the investment made in marketing efforts.”
Editor’s Note: Looking for a quick way to keep tabs on MRR and Churn? Check out this free Stripe MRR and Churn Dashboard.
“First Contact to Closed Deal — Sales begins once your marketing efforts have worked,” says Myles Daniel of Sell My House Fast Greenville. “We track the number of ’touches’ it takes to get a commitment from our client to work with us.”
“Our most important KPI changes throughout the year based on what the business needs the most focus on,” says Alexandra Marin of CodeCrew LLC.
“Currently, this is our Client Acquisition Rate. As we’re entering a slower time of year for client acquisition, we need to ensure that we’re able to match our efforts throughout the earlier parts of 2020 while ensuring that we can continue to serve our current clients as best as possible, especially during what is the busy season for most of them, with Black Friday and Cyber Monday fast approaching.”
“It’s the overarching key metric that every single division of the company should bear in mind,” says Domantas Gudeliauska of Zyro. “Whether you’re responsible for finance, or customer support, at the end of the day, new paid users are what will dictate overall success as a whole.”
“For us running an accountancy practice, our main KPI is new recurring fee work signed in the month,” says Paul Wareham of PS Accountants. “This gives us clarity of our business size and helps plan staffing levels over the medium term as this work will recur each year and needs employees in place to be processed.”
“I think that it’s a KPI that isn’t that popular, but I think that it’s one of the more important ones,” says Dima Suponau of Number For Live Person. “Repeat purchases generate a significant portion of our overall sales, so that’s something we like to be up to date with.”
“By having an idea for the average order price, we’re able to combine this with the average number of leads we get in a given timeframe so that we can then forecast the year’s revenue,” says Roy Thompson of Advanced Commercial Interiors (ACI).
“In doing this, we’re able to plan for certain activities and events or even look at when we’re financially able to take on another member of staff.”
“Opportunities created provide a good gauge on meaningful top of funnel health versus vanity metrics like social media impressions,” says David Garcia of ScoutLogic.
“Opportunity win rate then tells me how strong my value proposition is and if I need to address our conversion strategies & tactics.”
“It’s a great KPI for determining how much time a sales employee (or the overall team) spends on pursuing an opportunity,” says Shiv Gupta of Incrementors Web Solutions.
“A high Sales Closing Ratio signals that either the leads coming in are not quality leads and/or that the sales team is spending far too much time trying closing each deal.”
“Number of sales meetings held per month,” says Bruce Harpham of SaaS Marketing Services. “This KPI is a great leading indicator for revenue because few sales are going to happen without a sales call.”
Here are 12 key marketing KPIs that you may want to track.
“Too many marketing departments focus on vanity metrics such as followers, views, or traffic,” says Jonathan Aufray of Growth Hackers. “What you want is qualified and targeted traffic, and to measure that, you need to know how many leads you generate.”
Ryan Wright of Do Hard Money says, “Marketing generates leads who are potentially interested in our service and products, but more importantly we want leads to convert, which means sign a member application for pre-qualification form, and that’s how we make profits.”
Sasha Matviienko of Growth360 adds, “Leads is the ultimate KPI for most of our clients. We are often tasked with fully managing some of the marketing channels for our clients. As such, we are accountable for the results of these channels. Secondary KPIs help us understand if users can find our clients if they click-through to the site. However, being accountable means that we need to move the needle on leads and sales for our clients.”
“In an eCommerce business, it is essential to understand each customer’s financial value,” says Daniel Seeff of Foot Cardigan. “It allows us to forecast our future marketing activities better and improve our bottom line.
Since we started using this KPI, our profitability has increased by 7% in one year. We better control our marketing budget and other customer acquisition activities by investing less in acquiring lower CLV clients. We set loyalty objectives and focus our efforts on retaining customers and growing our referral network to increase our CLV.”
“Customer Acquisition Cost is the most important,” says Suponau. “This metric shows how much I spend on marketing a particular product. It tells me if I’m not overfunding a marketing campaign that hasn’t that much chance of success.”
“This KPI will let you know how many customers you are acquiring with Facebook, LinkedIn, Twitter, or any other social media sites,” says Bradley Keys of PatchMD. “Also, this will let you know if there’s a need for you to improve the copy and content of your posts.”
Catherine Yay of Valley Guardians says, “You want new eyes on your company at any given time, and if your traffic isn’t growing, you can’t scale your business.”
“For marketing, the one most important KPI is click-through rate,” says Brittany Ware of Elevate App. “This is the one metric that lets you know if you are successfully capturing the user’s attention enough for them to take action; everything else can be adjusted if your CTR is good.”
Haris Bacic of Pricelisto.com says, “Click-Through Rate (CTR) is the one metric eCommerce businesses, digital marketers and SEOs should value above all others. Others address who goes to a site or what they do when they get there, but CTR determines the direct link between SEO efforts to optimize the site for users and people who responded to that effort by clicking through to the site from the search engine result pages.”
“Growth in the share of voice,” says Yuliya Kutuzava of KNB Communications. “KPIs need to reflect communications goals, which can vary.
If the goal is to increase the share of voice among competitors in a particular market, the KPI can be the growth in the share of voice. If the goal is to reach a small but very targeted audience of decision-makers, the KPI can be securing a story containing key messages in a major publication that reaches that desired audience.”
“As a boutique clothing website, one of our most important marketing KPIs is Instagram engagement,” says Abby Christensen of Niche+Co. “We’re still a new website, and most of our sales already come from Instagram, anyway. The more our followers engage with the content we post, the more we sell and understand what our user persona is looking for.”
“Newsletter Sign-ups because through it, I can generate and preserve a database of email addresses of my audience,” says Samiksha S Rawool of yummytummyrecipes.com.
“I use this email list to run email marketing campaigns that promote my recipes. I have seen this strategy working great. Email marketing has improved my customer retention by 7%.’
“Calculate ROI for ad spend if your business is maximizing your advertising expenditures, and to make sure you are not losing money on ad placements on social media,” says Randy VanderVaate of Funeral Funds.
“Our ROI on ad spend is the primary KPI in marketing that helps us understand how well we utilize and maximize our advertising dollars. To compute our ROI for ad spend, we simply divide our advertising costs by our revenue. We measure ROI for ad spend every month to gauge our return on investment in advertising. Our return on investment helps us measure our conversion and financial success in marketing.”
Ratko Vorkapic of ORYX Rent a Car adds, “Return on ad spend is calculated by dividing gross revenue from an ad campaign with the cost of an ad campaign. It gives us insights for future budgets, strategies, and overall marketing direction.”
“How much are we spending to generate qualified leads,” says Kent Lewis of Anvil Media, Inc. “Which channels are most effective? Our reports track this information.”
Kinga Edwards of Brainy Bees adds, “Of course, engagement and reach are important, but at the end of the day, it’s CPC or CPS that really matter.”
Here are 9 finance KPIs to keep an eye on.
“Is our company actually making any profit,” says Kevin Bazazzadeh of Brilliant Day Homes. “We calculate this by comparing our operating costs to revenue being generated by the company. This is important because it allows us to keep an eye on the financial health of our company.”
Editor’s Note: if you use Xero, you can check out this Xero Profitability Overview dashboard template to get a better snapshot of your revenue, expenses, and overall profitability.
“Profit margin,” says Adam Smartschan of Altitude Marketing. “We call this the alligator mouth. You need to open the gap between revenue and expenses. The better your margin, the wider it opens.”
Seeff adds, “While revenue might be growing, the financial resources can be draining because of inconsistent cost management. It is easy to start overspending once you see a spike in sales. So measuring profitability helps us build our customer acquisition strategy based on getting better-paying customers and controlling our expenses to make sure we don’t drain our resources.”
“Net Profit Margin – Give the business clear insight into how efficiently we generate profits compared to revenues,” says Luke Fitzgerald of Ding. “Calculated as a simple percentage ratio, this KPI indicates how much of each Euro earned by the company translates into profits, giving our bean-counters a stick with which to beat our various SBUs!”
Lewis adds, “The reason is that I can’t create a sustainable agency if the company isn’t profitable. I’ve never had an unprofitable year, but I have had very rough years. What gets measured, gets managed, so best to manage profitability above all else, unless you have a trust fund.”
Carol Tompkins of AccountsPortal says, “Operating Cash Flow- helps us determine whether the business has enough capital to keep its accounts positive.”
“Earnings per share (EPS) is a company’s net profit divided by the number of common shares it has outstanding,” says Dhaval Sarvaiya of Intelivita.
“EPS indicates how much money a company makes for each share of its stock. In the end, any business is evaluated based on its ability to create and maximize wealth for its shareholders. Even for a company that is not listed, EPS is an excellent yardstick to see how financially healthy the company is. While a positive EPS is a sign of good financial health, the higher is always better.”
“Debt retrieval rate,” says Mollie Newton of PetMeTwice. “If my finance team cannot retrieve money owed to the business, I cannot maintain profitability.”
“Income sources and Revenue growth – these are the two major KPIs that I pay attention to,” says James Boatwright of Code Galaxy.
“The nuisances are relative as well, but as long as I have a handle on these two major players, I feel like I can strategize accordingly. You need to know the underlying financial issues. If you ignore this, your company is doomed. Do not leave this up to accounting, even though you rely on them. Yes, you need to have a handle on your business, and this is just the least you can do.”
“Total profit added,” says Helen White of Houseof. “We’re not simply looking at return on investment (ROI) but, more importantly, how much value does an activity drive for the business by accounting for factors such as cost and time invested in determining how profitable it is.
It’s a more holistic measurement of success rather than simply looking at the ROI from a purely spend/return perspective, which doesn’t quantify the true realities of the total cost incurred to the business.”
“Budget variance,” says Melanie Musson of StudentCarInsurance.com. “Budgets are critical to running a business wisely. The budget variance KPI reveals if your planned budget matches reality.”
Finally, here are 7 customer success KPIs to pay attention to.
“Our Customer Support Managers view the churn rate as the most important KPI because they want to optimize ViiBE’s growth potential by ensuring customers continue to have positive experiences using our platform,” says Kelly Dell of ViiBE Communication.
“To avoid churn, our success managers have developed an individualized onboarding process for each of our customers, which includes asking for and valuing customer input and product requests.”
“Net Promoter Score (NPS) – the big one for us, as our CS team is driven by a motivation to please,” says Fitzgerald. “NPS gives a measure of how likely it is that our customers will recommend our brand, products, and services to their friends or family, which is the lifeblood of our peer-to-peer mobile top-up model.”
Bob Sabra of Hovi adds, “The typical answer here would be NPS. Nevertheless, I do believe that when it comes to product, non-subjective feedback is more important. Usage per page and/or functionality will objectively imply what is working and what isn’t without any possible misinterpretations.”
“Customer satisfaction scores more than any other metric,” says Jake, Founder of DebtHammer. “We have customers rate their experience from 1-5, and we look at this data overall, by agent, and by service.”
“Customer Retention Rate – new customers are what we strive for, yet keeping a customer long-term is equally important,” says Kevin Van Dijk of Tree Online.
Luke Thomas of Strong Automotive Merchandising adds, “Our retention rate is our most important KPI here. Dealerships (our clients) change ad agencies often, so keeping a client on our roster for an extended period of time is indicative of quality customer service.”
“Client renewals are very important to us,” says Irene Lopez of Online Optimism. “Getting new clients is often difficult and time-consuming, so getting clients to renew or even increase their services is an important KPI.”
“Cost Per Resolution,” says Dylan Max of Netomi – AI Chatbot Company. “Support teams constantly track and record the cost per customer service ticket resolution so that they can improve over time. Some companies have shut down entire support channels that are more expensive so that agents can efficiently help more customers.”
“We live in a nonstop world,” says Smartschan. “Nobody’s willing to wait hours – let alone days – to get their question answered.”
Want to get notified when important KPIs trend up or down? Get Databox alerts for your KPIs now.
Analytics | May 12
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