While all KPIs measure the progress or relative success of a business or campaign, many metrics are more focused on long-term outcomes. Operational performance metrics look at organizational processes in the shorter term — sometimes weeks, days, or even hours.
Why Use Operational Performance Metrics?
Guessing is fine when you’re trying to figure out what’s in your Christmas stocking or speculating whether you’ll need an umbrella today, but running a business requires more than conjecture and hope. Using business metrics or key performance metrics (KPI) to track important data helps inform your decisions so you can build and tweak your game plan to accommodate both wins and losses as they happen.
Operational performance metrics are designed to be looked at daily, if not more often. You’ll establish a baseline, then follow up regular to monitor changes, calculate differences and decided whether it’s time to make adjustments. The frequency of these checks and what happens next should be something that’s written in stone. In other words, still no guessing! Keep to a schedule and follow your operational blueprint to make these metrics work for you.
Operational Performance Metrics in Marketing
Running a marketing campaign, especially those that are entirely online, is exciting because you can see results almost immediately. These operational metrics help you see how a Facebook ad or banner is doing so you can choose design A or design B or scrap a low-performing campaign altogether.
- Cost-per-click (CPC): How much it costs you to get each customer click on a paid search ad or other piece of online collateral
- Cost-per-acquisition (CPA): How much it costs to attract a new customer —high CPA may indicate your marketing campaign is inefficient, perhaps due to targeting the wrong people
Financial Operational Performance Metrics
These metrics can be used by any business to assess financial health.
- Gross profit margin: Usually represented by a ratio, this metric shows how much revenue is left once you’ve subtracted your cost of goods sold — a high GPM indicates a profitable product or service while a low GPM suggests the opposite
- Net profit margin: Another ratio, this time measuring how much revenue remains after subtracting all business costs including not only cost of goods sold but also operating expenses, taxes, interest, etc.
Examples of Operational Performance Metrics in Sales
The sales industry thrives on data. Everything from product launches to improving the length of a sales cycle relies on understanding and acting upon the facts and figures gleaned during market research and campaign analysis.
- Lead conversion rate: This data point measures the number of leads (typically in percentage form) that turn into actual sales opportunities. A high LCR could indicate that a salesperson is making the most of their leads or that they’re getting leads that are appropriately targeted and primed for conversion.
- First response time: FRT is the amount of time it takes a sales rep to follow up with their inbound leads. Too much time can destroy a deal before it starts.
For more insight into the fascinating world of KPI, read up on key business performance metrics and brainstorm how you can use data to fuel your business growth.