Whenever a business firm resolves to deliver the best quality products and services, there are high chances that customer retention and satisfaction will be rather high. However, when you promise to achieve success in whatever you do and offer, you should be well-informed about your own business. This knowledge can only be got by leveraging business metrics.
How can companies boost their profitability? Well, they can begin to generate higher revenue at a said cost, generate a similar revenue at a lower cost or both. No matter which method you choose to increase profitability, it is imperative that you meticulously track your business performance. All this can’t be done without the proper utilization of business metrics.
Valid reasons why businesses need to track metrics
- Metrics are utilized for boosting improvement and allowing businesses to focus on their resources and people or which is more important
- There is a wide range of metrics used by companies. While some metrics are for safety, legal, or contractual reasons, some others are for tracking improvements in efficiency, savings and profits
- Metrics should support the strategies for all business aspects, including marketing, finance, customer requirements, competition, and expectations
- Metrics symbolize a company’s priorities and offers a window on ethos, performance, and ambition
Key metrics business owners should track in 2022
If you’re the owner of a business or commercial property, you must be wondering ‘what does property maintenance include?’ While there are several types of business metrics to track, here are a few key metrics to track in 2022.
- Net Sales revenue
There’s no doubt about the fact that revenue is the lifeblood of a business and it plays a role in improving the sales development of a business. Based on the age and size of your business, you might wish to track different metrics of sales revenue. Some such metrics are yearly recurring revenue, revenue by product, average revenue generated per customer and revenue generated per sales rep.
- Growth rate
Over a span of several years, you have to calculate the growth, that is easy to compute because it is the main indicator of your business health. As compared to other benchmarks of the industry, it tells you how poorly your sales team is performing amidst the competition. The formula is sales growth rate = present year revenue – previous year revenue/ previous year revenue X 100.
- CPL or Cost Per Lead
How much money do you need to recognize your customers, qualify them as your customers and retain them? Once you determine the cost of each lead, you can draft your budget accordingly. However, that doesn’t mean that you’ll drop a channel that incurs high cost per lead. You never know these customers can actually convert at a rate that is much higher than others obtained through a low CPL channel.
- Failure metrics
Failure can occur in various degrees, either partial or total. Equipment failure means that a component, system or device can no longer attain desirable results. Hence, the 3 most important failure metrics to track are MTTR, MTBF calculation and MTTF. You have to understand the average Mean Time To Repair an equipment, the Mean Time Between Failures and the Mean Time To Failure.
- Net Income
This is also called the bottom line. One of the most important financial concerns is the net income. This is also a vital point with which you start calculating the other key metrics like profit per share or net margin profit. As net income is the total business expenses minus the total revenue, net income is always at the bottom line of a company statement.
Business metrics can assist companies in tracking things like growth in revenue, variable costs, average fixed costs, cost of selling goods, break even points and margin profits. This is the best way of measuring the success of your company over a given period.