Thriving entrepreneurs in all industries know that making data-driven decisions is essential for success. Capturing data samples from several areas within the business provides valuable information to help leadership steer the organization. 

For new enterprises, knowing what data to collect can be overwhelming. Here are five essential business metrics to keep your business sustainable and profitable.

Customer Retention and Churn

One of the most valuable metrics you can track is customer retention and churn rates. Using a KPI manager to capture and analyze this data will provide deeper insights into customer loyalty and satisfaction. This data will also help determine any gaps in the customer experience so your organization can make strategic improvements.

Several studies validate the added expense of acquiring new customers compared to retaining existing customers. While the statistics vary from study to study, the overarching theme remains the same; acquisition is significantly more expensive than retention. Failing to capture and understand this metric could be detrimental to the company.

Sales Growth

Sales growth is a multifaceted metric with many contributing factors. The idea is to measure year-over-year growth in the company with a focus on revenue. This metric allows you to compete against yourself rather than using arbitrary comparisons to the competition.

In addition to measuring total revenue growth, you can also hone in on contributing factors. Consider reviewing the average order value and customer lifetime value (CLV). These metrics will inform leadership of which opportunities or limitations exist in growing revenue over time. 

Employee Satisfaction and Retention

Many businesses focus solely on profit and customer-related metrics. It’s also essential to look at employees as an asset to the company and quantify their engagement and satisfaction.

Like customer acquisition, employee turnover is costly. While the exact number varies based on the position, compensation, etc., experts estimate that turnover costs 33% of the employee’s annual salary. A proactive approach to streamlining hiring practices and prioritizing employee satisfaction can help.

Exploring turnover metrics can provide insight into staffing issues. Adding context to these metrics is also valuable. Were turnover rates higher when a significant technology change was being implemented? Do employees under specific leadership or departments have a higher turnover rate? 

Capturing anonymous feedback surveys also creates a safe space for employees to share their experiences and offer improvement suggestions. 

Conversion Rates

Evaluating how many leads become paying customers is another crucial metric to capture in business. Sometimes referred to as the win rate, companies look at this metric from both a high-level and zoomed-in view. 

A high-level overlook evaluates the overall conversion rate within a company. A zoomed-in view may clarify the number by sales rep, quarter, channel, department, product, etc. 

The conversion rate identifies if there’s customer friction in the sales funnel. This friction could be related to sales techniques, technical issues, or seasonality within the business. Understanding the cause helps leadership make informed decisions regarding improvement strategies. 

Fixed and Variable Costs

Expenses are on the other side of the revenue equation and showcase how profitable a business really is. Fixed costs relate to the overhead expenses: rent, equipment, and other expenses that stay the same from month to month. Measuring fixed costs is the first step in understanding your company’s break-even point.

Variable costs include fluctuating expenses like bank fees, salaries, and shipping costs. These expenses are volatile and susceptible to environmental influences. Monitoring these expenses can help prevent surprises in forecasting and planning.

These metrics are a strategic starting point for data-driven decision-making. Create time to capture and reflect on these telling data points for business success. 


Leave A Reply