4 KPIs Every Business Should Track

Graphic of key performance indicators in businessAll businesses can benefit by tracking key performance metrics across the organization. But most only track their “bottom line”.

“To change CEOs’ behavior, we need to change the numbers we measure. Stock value metrics that focus on the long term are a start, but even more important are new numbers that direct leaders’ attention to the real drivers of sustainable success.” – Dan Ariely, June 2010 Issue Harvard Business Review

So, where do you start? We’ve picked what we think are four key metrics spanning four different functional areas of any company. No matter what your industry, size or experience, you should know these metrics.

Marketing/Sales KPI

With the proliferation of information from the internet, marketing intelligence has exploded over the last few decades. That’s why it’s important to distill your metrics into as few as you can. The one every company should know is the Customer Acquisition Cost (CAC). Knowing the total cost of finding a new customer helps you understand the customer’s value to your business. Tracking this metric will clarify what is involved in finding new customers, enabling you to customize their treatment.

Example Client Acquistion Cost Dash Board

Customer/Client Fulfillment KPI

Next, we chose a metric that will show you what a customer is worth to your organization. The Customer Lifetime Value (CLV) will help you measure the total value a customer brings. This can be measured in dollars, units, time, or any other meaningful metric. As with the CAC metric, there are different functions that affect your overall CLV metric that you will want to track.

Customer Lifetime Value Dashboard

Operations KPI

Next is a metric that measures your company’s ability to deliver your product or service to your customers. Your Utilization Rate will tell you how much capacity you have and how much you can grow. It can also tell if you are over capacity and at risk of losing customers and/or employees.

Utilization Rate KPI

Financial KPI

Finally, you need to know the overall health of your business. Tracking your EBITDA gives you an excellent assessment of this. As with all our KPIs there are many different factors that can affect your EBITDA both positively and negatively.

Example EBITDA KPI

It doesn’t matter if you are new to tracking business metrics or are a seasoned pro, having a solid set of KPIs to monitor and track will give your business an unfair advantage in the marketplace.

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