Is your business winning?
How do you know?
The big difference between opinion and fact is that facts come with data. Curious whether you’re profitable? Having a feeling that you are is nice, but it isn’t useful. Knowing you are because your spreadsheet, financial analyst, or in-house software says so is downright potent.
Key business performance metrics are mile markers that let you know where you are in relation to your goals so you can speed up, slow down, or just take out some champagne and celebrate.
Here are 11 business metrics you should keep your eye on and why:
- Gross profit margin
The money you take in from a customer is not the actual money you get to take home. To gauge profitability, you take your revenue and subtract your cost of goods sold. Divide the resulting number by your revenue and now you have your gross profit margin, a number that needs to encompass operating expenses, too.
- Net profit
Take your revenue, subtract all your expenses, and you get your net profit. This is your take home pay, your getaway money, your salary (fingers crossed you’re getting one!).
- Net profit margin
Net profit margin is just net profit represented in percentage form, which can help you spot growth patterns dollar amounts alone won’t show.
- Debt asset ratio
Most businesses have at least some debt — but how does that compare to the company’s assets? Debt to asset ratio lays that out, and the lower the percentage, the happier your accountant will be.
- Return on advertising spend (ROAS)
You ran an ad campaign. You got new customers. Success!! Or maybe not… ROA tells you how much you spent versus how much that cash that campaign brought in.
- Customer acquisition cost (CAC)
To measure overall marketing efficacy, you need to figure out how much it’s costing you to acquire each new customer.
- Time to payback
This metric measures how long it takes to earn back the money you spent acquiring a new customer. In other words, is the newbie worth it?
- Marketing originated customer percentage
So, you’re getting new customers — but how many are signing up or clicking “buy now” because of your marketing? Find out whether your marketing is generating the attention and revenue you think it is.
- Employee efficiency
Here we break the golden rule of metrics because employee efficiency can’t be objectively quantified. There are guidelines, though, and it mostly involves personal observations and asking your management team.
- Quality of work
Since employees can be efficient (completing all their cold calls for the day before noon) but not effective (none of those calls turned a prospect into a customer), we measure quality of work as well as quantity.
- Adherence to values
Another subjective metric, this time evaluating whether employees are buying into company values and acting accordingly.
The only way you can truly know whether you’re making progress toward your business goals is to keep score. Learn how Aliste Marketing can help you track and exceed your business performance metrics.
