Key performance indicators (KPIs) are performance measurements that give you an overview of how your department or business is performing. There are thousands of KPIs your business could use to track progress, but using the wrong indicators could stray you off course. To keep your wallet, customers, and employees happy, use the following KPIs that are often overlooked.
20 Important KPIs You’ll Need to Track Performance
Customer Metrics
The following KPIs concentrate on your customers, like how to retain or find more of them.
- Custom Acquisition Cost (CAC): By dividing your acquisition cost by new customers, you get your CAC. This important metric can save you money on marketing campaigns.
- Customer Lifetime Value (CLV): CLV calculates the lifetime value of a customer. CLV helps you maximize customer acquisition by gaining the best buyers over time.
- Customer Retention Rate (CRR): CRR is essential for subscription-based platforms, but a retail business has to ensure its customers stay loyal by focusing on branding.
- Customer Churn: A churn rate measures how much business a SaaS company has lost over time. Focus on customer service and problem-solving to lower your churn rate.
- Conversion Rate: When a user becomes a customer, they are “converted.” You can find your conversion rate by dividing your conversions by the number of website visitors.
- Customer Engagement Score: A business that keeps its customers engaged with its products or services will continue to use them or upgrade to a more expensive item.
Financial Metrics
The following KPIs concentrate on your finances, like your profits, sales, and budget.
- Profit: It’s important to know how much of a gross and net profit your business is making, but you need to subtract wages, marketing, and labor to produce a true profit figure.
- Cost/Cost of Goods Sold: Know how much it costs to create a product or service to get a better idea of markups and profit margin, or you won’t outsell your competition.
- Sales by Region/Country: Some states, regions, or countries will buy more of one product. Separating your sales this way can help you improve in underperforming areas.
- Expenses vs. Budget: An end-of-the-month/year KPI that measures your actual expenses versus your budget to help you create more effective financial plans.
- Earnings Before Interest, Taxes, Depreciation, and Amortization: EBITDA measures revenue after removing expenses, depreciation, taxes, and amortization.
- Amount Needed to Serve 1 Customer: While this number may vary depending on service, knowing this number can help you cut expenses in specific departments.
Employee Metrics
The following KPIs concentrate on your employees, like turnover rate and satisfaction.
- Employee Turnover Rate (ETR): It’s more expensive to hire employees than it is to keep them happy. A high turnover rate indicates you need to improve workplace culture.
- Employee Satisfaction: Happy employees work harder. Don’t measure happiness through surveys. Instead, praise them, train them, and provide health insurance.
- Knowledge Through Training: An effective employee will be adequately trained. A good way to test this is through a written or practical exam to improve the process.
- Response to Open Positions: Benefits, a posted salary, and a straightforward application process will bring in job seekers. To maximize exposure, post online.
- Salary Competitiveness Ratio (SCR): To understand if your employees are paid based on a competitive wage, research your competition and avoid wage discrimination.
- Promotion vs. New Hires: When looking at organizational succession planning, the promotion vs. new hires KPI can be helpful. Promoting from within is also cheaper.
Other Metrics
- Efficiency Measures: Efficiency is vital in all industries because you’ll make more money if your employees and manufacturing machines produce more within a period.
- Product Defects: Some of your products may come out defective, which will cost you money. If the amount of defects is high, service your machines or train your employees.
