So, you’ve decided on the strategic goals for your organisation and know exactly what you want to accomplish. But how can you tell if you’ve achieved your objectives? By leveraging your data, you can get a clear picture of critical business information, clarify targets and accurately measure success. Here are the Key Performance Indicators (KPIs) that business leaders should be tracking in order to transform their decision-making process and get ahead of competitors…
1. Outgoings
It’s pretty clear that cash flow is one of the most important metrics for businesses to track. Whilst it can be tempting to focus more on revenue, it’s no good having lots of money coming in if you are needlessly losing it in other areas of the business.
There are several areas in which businesses spend money: suppliers, wages, expenses and equipment, for example. If you have a single source of truth to track these expenses, you can gauge where it’s possible to save money and operate more efficiently.
2. Overall gross profit margin
Once you’ve got a handle on your outgoings, you can start to focus on increasing your margins by considering where to manage suppliers more effectively or adjusting the prices of your products and services.
Knowing your margins is key to finding out which products and services are more resource-intensive, and therefore should benefit from further investment versus those that can be discontinued.
3. Sales revenue vs. sales target
There aren’t many businesses who don’t want to increase their sales, but it’s surprising just how many have no clear targets that are informed by data rather than gut instincts. Taking the time to track your revenue against your forecasted figures will give you an idea of your sales team’s success, whilst providing guidance as to what they should be aiming for.
4. Profit retention per customer
Profit retention per customer is a crucial KPI that reveals not only the financial relationship between you and your clients but also the quality of the product or service you are providing.
Tracking this KPI can help you identify your top customers and therefore where you should be directing more of your efforts. This will help you increase customer loyalty and, in turn, profits.
5. Customer trend
Whilst customer acquisition is important, it requires more time and money than customer retention, so it’s often deemed more critical to focus on the latter.
Analysing customer retention data can help you track any trends and pinpoint why customers are staying with you or not, so you know where to improve and which opportunities you should take.
6. Growth tracker
Growth can occur in a variety of business areas: products, services, departments, employees, customers and branches. It’s essential to track and report on your growth and what the future will look like for your business, particularly as we come out of what has been a difficult time for many businesses.
The market has undergone many changes over the past 18 months, making it more important than ever to keep up with current trends and future forecasts. Tracking your growth in the market and gauging which of your products, services and platforms are doing well, you can get a good idea of which direction you should be taking your business.
7. Sales conversion rates
How many of your prospects are turning into customers? You can find out by tracking your sales conversion rates and measuring the performance of your website, app, social media and other channels.
Finding out more about your ever-changing customer lifecycles can help you switch up your approach as needed in order to keep customers engaged and encourage more sales.
Embracing a data-driven culture
Whilst 79% of business leaders have a defined set of KPIs, only 36% are using them pervasively across the organisation.
Implementing a data-driven culture within your company may seem challenging but the rewards are worth it – it is best-in-class companies that rely on defined, pervasive KPIs more than average or laggard companies, according to BARC.
eBook: Essential KPIs for Data-Driven Business Leaders
Want to find out more about the KPIs you should be tracking? In our ebook, we share why leveraging your data is so crucial to getting ahead of competitors and explain more about the KPIs in this article.
You’ll learn:
- The importance of a data-driven culture and leading by example
- How to identify the KPIs that matter to your business
- The top 7 KPIs that will drive success and growth
- Why you should develop a business intelligence strategy
- How Air IT’s managed BI service makes it easy to measure your KPIs
