Business metrics, sometimes known as KPIs (key performance indicators) provide insight into how successful your company is. Every business will need to track business metrics to improve and drive success. With an endless possibility of metrics that can be tracked, it can be difficult to prioritize what your business should focus on. Keep reading for a list of 12 metrics your business should be tracking.
1. Customer Acquisition Cost
This metric refers to how much it costs your company to get a new customer. This includes all of your marketing expenses, including salaries and bonuses. Once you have calculated your marketing costs in a specific time period, divide this number by how many new customers you acquired during the same time period. For example, if you spent $50,000 in marketing in one month, and you acquired 25 new customers, then your customer acquisition cost would be $2,000 for that month. This is a great business metric to track since your team can try to get it lower every month. A simple equation follows:
Total Cost of All Marketing and Sales Expenses
Total Number of New Customers
2. Website Traffic
Website traffic is essential for businesses to track. You can use Google Analytics or Visitor Queue to track how many visitors your website is getting. Google Analytics will track all of the visitors to your website, while Visitor Queue will track how many businesses are visiting your site. They both allow you to sort by location, what pages they visit, and how long the user spends on each page. Your team should compare your website traffic to other website metrics and can help you predict your website’s performance.
3. Time Spent on Site
Time spent on-site goes hand-in-hand with website traffic. Your team can see how long users are on your site, and what pages they spend the most time on. You can use this to see if customers are finding what they are looking for, if they are reading the content on the pages, or if they are bouncing. This business metric can help you improve your user experience, and hopefully increase the time users spend on your site.
4. Monthly Recurring Revenue
If you are a SaaS business, this metric is important because it is what sustains your business. It’s essentially the income that your business is guaranteed every month, due to recurring subscriptions and other commitments. To calculate monthly recurring revenue, multiply your total number of paying customers by the average revenue per user. For example, if you have 20 customers and they pay $30 for their monthly subscription, your monthly recurring revenue is $600.
Number of Paying Customers
Average Revenue Per Customer
5. Return on Investment
Return on Investment, also known as ROI, determines which marketing and sales tactics are working to help your company meet its financial goals. This business metric measures the amount of return (profit, sign-ups) on a particular investment, like a social media marketing campaign, compared to how much time and money it took to run the campaign. Check out this return on investment calculator to help your team.
6. Customer Lifetime Value
Customer lifetime value (CLV) refers to how much one customer is worth to a business over their lifetime. If your business develops a relationship with your customers and you provide them with a high-quality product, your customers will be loyal and return to repurchase. Customers who have a high lifetime value are important since the more loyal customers are, the more likely they are to refer your product(s) to other people. To calculate this, determine how long the average customer is with you, and how much they spend with you. For example, if the average customer uses your product for 2 years, and they spend $30 per month, your customer lifetime value is $720.
7. Customer Churn Rate
This metric refers to the percentage of customers that stop using your product or service. Every business wants this number to be close to 0% or negative, but that’s not always possible. But, you can use your customer churn rate to help improve your service for the next customer. If you have the former customer’s email, you can reach out and ask them how you could have improved their experience. When you are calculating your customer churn rate, it is important to keep the same time period for your starting customers and lost customers. Customer churn rate is calculated by dividing the number of customers you have lost with the number of customers you began the period with, all multiplied by 100. For example, if you start a quarter with 800 customers, and by the end of the quarter you have lost 45 customers, then your churn rate is 5.65%. Below is the formula:
(Lost Customers ÷ Customers at the Start of the Time Period)
8. Customer Satisfaction
Customer satisfaction can be measured or tracked in many different ways. It can include surveys, ratings, and reviews. A great way to look at your customer satisfaction is to check out G2 Crowd, TrustRadius, or other review sites. You can see genuine reviews by your verified customers, as well as your competitor’s reviews. On the other hand, you can include a link to a customer satisfaction survey at the bottom of emails to your customers. These surveys will give your team anonymous insight on what customers like and what they might not like.
A great way to track your customer satisfaction is with a net promoter score (NPS). This metric measures the loyalty of your customers on a scale of -100 to +100. When you are taking a survey, there are often questions like “How likely are you to recommend this product?”, and then you rank it from 1 to 10, 10 being the highest. The individuals who rank it 9 or 10 are your promoters or the people who will repurchase the product or service, and share their positive experience. 7 or 8 are the passives, they are satisfied, but not enough to be considered promoters. 0 to 6 are unhappy customers, who will most likely not purchase again, and may even leave negative reviews, or tell others to not purchase from you.
9. Year Over Year Growth
While month-over-month growth is an important metric to track, it can be discouraging if you have a bad month. There are outside factors that can affect monthly growth, like the time of year or a recession, so using year-over-year growth is a great way to look at the bigger picture. Track your monthly revenue and marketing efforts in a spreadsheet, and at the end of the year, you can take a look at what worked and what didn’t work compared to the previous year.
10. Customer Engagement
Customer engagement is a valuable metric to track on your social media platforms, email campaigns, website, and more. Although conversions are great, it’s also great to see that your customers are interested in the content you’re putting out. Social media engagement is easy to track and can help you understand what your followers are interested in. For example, if you share your blog posts on your Facebook, but you see they don’t get a lot of likes or clicks, then maybe your team can think of adding or replacing the blog content with a different form of content.
11. Employee Happiness
Employee happiness is the key to any successful business. In fact, happy employees are 12% more productive and provide better customer service. Every year your company can email your employees an anonymous survey that asks questions about their happiness, work-life balance, and how they feel about management. Take this feedback seriously, and address the common issues in the business, as well as your plan to fix the issues. You can also set up informal events, like a team BBQ, dinner, or other activities that are not at work. This is a great opportunity to build a relationship with your team, and have fun!
12. Conversion Rate
Conversion rate is one of the most important metrics for your business to track. Your conversion rate can be calculated using your website traffic or leads your sales team is following up with, or any other way your team uses to acquire leads. Then, compare that number to how many people converted. For example, if you have 10,000 website visitors, and 200 conversions on your website, then 2% of your website traffic is converting.
Want to Increase Your Conversion Rate?
On average, only 2% of website visitors convert. They visit your website, so they are interested in your business, but what can you do once they leave? Visitor Queue can help! Visitor Queue can identify the name, contact details, and user data of the businesses that visit your website. Use this information to reach out to your leads and close more deals. Sign up for your free trial today!
Not every metric is important for every business. But, this list includes some of the most important business metrics that we use regularly. If you’re having a hard time keeping track of all of the metrics your business uses, check out this free metric spreadsheet from Hubspot.
As always, if you have a question about how Visitor Queue can increase your conversion rate, do not hesitate to reach out with any questions!