KPIs to Track to Grow Your Business Faster
Key Performance Indicators (KPIs) are an important tool to grow your business. They are measurable business indicators that can be used to track performance, identify areas for improvement, and ultimately help you reach your business goals. By tracking KPIs in your company, you'll be able to see how well you're doing compared to other companies in similar industries or with similar revenues. The key is finding the right KPIs for your specific needs and goals so that you can monitor performance effectively throughout the year. Below we share some KPIs you can start tracking in your business today.
Customer Lifetime Value
Customer Lifetime Value (CLV) is a metric that helps you understand the value of your customers over time. It is the net present value of all future cash flows generated by a customer relationship, which can be calculated as the sum of the present values of all future cash flows.
For example, if a customer generates $1,000 in revenue over the next year, but you expect them to generate $2,000 in revenue over the following two years, then their CLV would be $3,000. The metric is useful because it helps brands determine how much money they can spend acquiring new customers and how much effort should be put into retaining existing ones.
Conversion Rate Optimization
Conversion Rate Optimization is the process of testing different iterations of a website or landing page to determine which combination drives the highest conversion rate. The goal is to optimize this metric by increasing the percentage of people who take a desired action on your site, such as filling out a form, clicking an advertisement or making a purchase.
There are many ways to do this, including changing copy, images and layout; adding new features; creating more targeted ad campaigns; using automated testing software to test variations in real time; and more. The higher your conversion rate, the more money you can make from each visitor.
Revenue is the amount of money a company generates from its operations. It’s calculated by taking total revenue, subtracting operating expenses and taxes, and then dividing this figure by net sales. Revenue is often expressed in dollars or as a percentage of sales.
Gross Profit Margin
The gross profit margin is the percentage of a company’s revenue that remains after subtracting the cost of goods sold from its total sales. It’s calculated by dividing gross profit by sales to get a number between 0 and 100. The higher your gross margin, the more money you have left over after selling products or services—which means you can invest in other areas of your business or give yourself and your employees a raise!
Inventory Turnover Ratio
An inventory turnover ratio is the number of times inventory is sold in a given period. The higher the ratio, the faster inventory turns over; conversely, the lower the ratio, the slower inventory turns over. The formula is: annual sales divided by average inventory.
Average Transaction Size
Average transaction size is the average amount spent by a customer on each purchase. It can be calculated for each customer, or for all customers combined.
Average transaction size is an important metric for e-commerce businesses because it helps you determine how much profit you’re making off of your most valuable customers. If your average transaction size is higher than the industry standard, it means that your customers are spending more than other people who buy from similar businesses in your field and therefore should be considered high-value prospects who may need additional support and attention from your sales team to close a sale.
Employee Turnover Rate
This is one of the KPIs to track if you want to grow your business faster.
The employee turnover rate is the number of employees that leave their job within a given period of time, usually annually. It's also known as staff turnover or annual employee departure rate.
The employee turnover rate is calculated by dividing the number of employees who left the company during a year by the total number of employees at the beginning of that year. For example, if you have 100 employees at the start of this year and 5 leave in June, your turnover rate will be 5 / 100 = 0.5%.
Total Sales and Average Daily Sales Volume
Total sales and average daily sales volume are two important indicators of how well your sales team is performing. If you see these numbers trending down for a few months, it's time to make some changes—and fast! You may need to hire more reps or retrain yours on key strategies that are driving customers to make purchases.
We hope you found this short list of some of the most important KPIs for growing your business helpful. We know there are many more, and we’d love to hear about them in the comments below! Don’t forget that tracking these metrics can help you make better decisions about how to grow your business faster. The key is knowing which data points matter most for you at any given time so they can be prioritized appropriately.
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