BizSugar Blog » 10 Business KPIs Your Company Should be Tracking – And Why

10 Business KPIs Your Company Should be Tracking – And Why

Business KPIs to Track

When you run a business gauging the performance of the company across different metrics is key to determining what is working and what is not. A Key Performance Indicator or KPI is one tool you can use to see if you’re achieving key business objectives.

While large companies use KPIs across the board to measure the entire operation of their organization, small businesses don’t fully take advantage of this valuable tool. But with the right KPI system in place, you can better see the progress towards achieving your goals.

At the same time, you will also see what is not working. And with this information, you can make changes quickly as performances lag in the KPI parameter. The key to making it work for you is to figure out which KPIs you should be tracking.

Tracking Business KPIs

The kind of KPIs you track will greatly depend on your company. But at the end of the day, you can track every performance of your organization if you choose to do so. The question is should you be tracking all of them?

The answer is a definitive no. Because choosing the wrong KPIs can end your business by measuring metrics that might not be relevant for your company at all.

The key is identifying the goals of your business and measuring the activities that will lead to directly achieving those goals. Measuring the activities that are essential to your business is how you can make the best use of KPIs.

Business KPIs to Track

With that in mind, here are 10 KPIs your company should be tracking, and why.

1. Your Employees

Even though most KPIs put this metric last, in reality, it should be first. After all, if you don’t know how your employees are performing, all other metrics will start falling by the wayside.

Start by measuring the traditional metrics such as attendance and productivity. However, in today’s workforce, you also have to look at the engagement level, happiness, work/life balance and other related issues.

Why? With historic low unemployment rates, knowing how your employees perform as well as their level of happiness is critically important. Moving forward, these issues will be even more relevant as millennials make up an increasingly larger part of the workforce.

2. Customer Satisfaction

Customers are the engine for revenue. If your customers are not happy, they will take their business to another company.

With today’s digital technology, even the smallest of businesses can track customer satisfaction rates. Use these tools to find out what makes your customers happy, and what you could be doing better.

Why? Online reviews and comments are now a big driver to bringing in new customers as well as keeping them away. Invest in tools to gather and measure this data to grow your business.

3. Profit and Loss

The KPIs for the profit and loss (P&L) of your business will give you a record of your company’s income and expenditures. And it is a great indicator of how your business is performing over time.

Why? When you analyze your P&L on a regular basis, it helps you identify the good months or quarters from the bad ones. With this information, you can develop strategies to address issues that are negatively affecting your business.

4. Tracking Income by Customer

When you track your income by customer, you are able to see which of these customers are more important to your bottom line. And as a business, identifying your most valuable customers is key for growth.

Why? When you identify these customers, you can focus on building relationships to make them happy and keep them for the long run.

5. Revenue by Service

Do you know how much revenue your business generates for the different services it provides? A KPI for measuring this metric will let you know which service you should keep or get rid of.

Why? Knowing which of the services you provide are profitable will help you manage your resources more effectively. If you are wasting time, man-hours and capital on something which is not generating any revenue, you can make changes.

6. Website Traffic/Social Engagement

Businesses of all sizes now have websites and use social media to engage with their audience. The good news is there are many tools to measure how your site and channels are performing. So, it is much easier to put them in as part of your KPIs.

Why? With this data, you can better understand how your customers/users are engaging with your digital presence. You can then plan out strategies to target them in a way that is more productive while cutting out things that are not working.

7. Goals

When you set up the goals of your company for the year, you have to have a reliable way for measuring how they are going. A KPI you look over every week will let you know just how those goals are moving along.

Why? Setting goals is a proven way to ensure you are progressing as an organization. However, setting a goal and waiting until the end of the year to see if it has been accomplished is a recipe for failure. A robust KPI with weekly reviews is key to ensuring your goals are being achieved.

8. Customer Acquisition Cost (CAC)

Do you know how much you are spending to acquire your new customers? This is especially important for a company with a digital presence and eCommerce.

Why? Measuring the CAC for eCommerce is incredibly important because you can evaluate your marketing campaigns and determine their cost-effectiveness. You can also do the same thing for your brick and mortar outlet.

9. Inventory Turnover

Measuring your inventory turnover in a disciplined manner lets you see the ability of your business to move goods. Not only that, but you can set up your KPI to measure metrics for returns, defective products, time on the shelf and much more.

Why? With a comprehensive view of your inventory, you will have better control over your merchandise. You can then give your customers products they want and remove items that are just taking up shelf and warehouse space.

10. Marketing

How much do you budget for marketing? More importantly, are you measuring how each of your marketing efforts is delivering? A marketing KPI can give you all of these answers and more.

Why? By measuring your marketing efforts, you can determine the ROI for customer acquisition, retention, cost per lead, and much more. You can then spend more on what is delivering for even better returns.

One Last Point: There are many different metrics you can measure, and this, of course, will depend on your business. Whatever metrics you choose to measure, you have to use the information and act on it accordingly. Make it part of your routine so every week you go through the data. Once you learn to appreciate the value of this information, your business will thrive.

Next Steps:

1. Make sure your KPIs are actionable – Develop a target for short and long-term goals and make your KPIs work within this parameter to achieve those goals.

2. Your KPIs have to evolve – Don’t make your KPIs static. This means your KPIs have to be as dynamic as your business. Update them as you add new products, markets and your business grows.

3. Keep your KPIs realistic – When you create your KPIs make sure the targets you want to achieve are realistic. Start with a baseline with your current data and past accomplishments to plan what you can achieve. You can use accounting tools such as Zoho Books to track past revenue, payables, inventory, receivables and much more.


27 thoughts on “10 Business KPIs Your Company Should be Tracking – And Why

  • Clients are the motor for income. In the event that your clients are disturbed, they will take their business to another organization.

    With the present computerized innovation, even the smallest of organizations can follow consumer loyalty rates. Utilize these devices to discover what fulfills your clients, and what you could be improving.

  • Following you from a long time and loved your content every time as the information which you share is very insightful and help me alot to gain the knowledge to other marketing terms as well. Do share these insightful data in future as well.

  • Hey, Thanks for this information. I have recently set up my own company. I will surely try these things, but I have a strong sense that all this will work out pretty well. Thanks again.

  • Many thanks for the very valuable advice. I have been running the company for several months, it will certainly be useful for planning the future and better profits.

  • Thanks for sharing important tips.. i’m following some of there regularly but CAC and inventory turnover new for me.. i thought much about these criteria and feel like awesome.

  • Hey thanks for the information you provided to us. I recently setup my brand company and i hope your tips and tricks would help me in my future in growing or expanding my company. My new company is related to health and nutrition I think this would help me in making more profit from other sources. Once again thanks for the information you provided.

  • Love this. I would add that tracking cash flow is another very important KPI. When playing monopoly you loose the game when you’re out of cash so keep a close watch on the inflows and outflows to stay solvent!

  • KPIs, or Key Performance Indicators, are metrics used by businesses to measure their performance and progress towards specific goals. There are many KPIs that businesses can track, depending on their objectives and industry. Here are some common business KPIs:

    Revenue: This is the total amount of income generated by the business over a specific period. Revenue can be broken down into various categories, such as product sales, service fees, and advertising revenue.

    Profit Margin: This KPI measures the profitability of the business by calculating the difference between the revenue and the total costs, expressed as a percentage.

    Customer Acquisition Cost (CAC): CAC measures the amount of money the business spends on acquiring new customers. This KPI is important for businesses to ensure they are spending their resources efficiently.

    Customer Lifetime Value (CLTV): This KPI measures the total value a customer brings to the business over the course of their relationship. CLTV helps businesses understand how much they can invest in acquiring and retaining customers.

    Conversion Rate: This KPI measures the percentage of website visitors or potential customers who take a desired action, such as making a purchase or filling out a form.

    Return on Investment (ROI): ROI measures the amount of return on investment for a particular campaign or project. This KPI helps businesses understand the effectiveness of their marketing efforts.

    Employee Turnover Rate: This KPI measures the percentage of employees who leave the business within a specific period. High turnover rates can be costly for businesses and indicate underlying issues such as poor management or low employee morale.

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