What is a Business KPI?
Business KPIs are quantitative metrics that any business type can use to analyze its different modes of business operations. If you want to know how much reach you have gained through social media posts, you can check specific KPIs and get details.
Likewise, all activities that are carried out in your business will have dedicated indicators. All business KPIs are related to performance marketing that will measure sales and revenue channels effectively.
Why are KPIs important for businesses?
KPIs are very essential for any business just like a medical checkup for your body. To understand our health condition we will go through some blood tests and the reports will give quantitative measurements that indicate your current health condition.
By knowing the result you will start focusing on your diet and lifestyle and will make sure that you will regain your health soon. Here the blood test results can be directly related to KPIs. Without going for a medical check you may not know how your body is working. Likewise, without monitoring or keeping track of your business KPIs, you cannot have complete control over your business.
10 Business KPIs you need to monitor
When we talk about Business KPIs, numerous KPIs differ from business to business. Here we will analyze the most common business KPIs and will study their importance in maintaining our business.
Sales are the primary goal that any business wants to achieve. If you get more orders, it means your revenue is increasing and it is a positive sign for your business growth. You may have several lead-generating channels for getting leads that result in order conversion.
You can keep an eye on those channels and can find out which source is producing more leads and supporting your business in getting conversions. There are several more indicators related to sales that need to be monitored.
How to set KPI tracking on order count?
- You can set KPI tracking on several monthly orders.
- Find the increase in the percentage of sales done to new customers in a month.
- The overall increase in monthly sales.
Profit and Loss
Profit and loss are considered to be twins for businesses. You will be getting ups and downs in your business. Once you may face more profit and sometimes you may face severe loss. It is mandatory to expect both in your business.
You need to keep track of your extra expenses and additional income sources and have a keen eye on them to maintain your business. Analyzing the profit and loss margin will help you identify how well you are spending and earning through your business.
How to set KPI tracking on profit and loss?
- You can track quarterly profits.
- The cost of running your business quarterly
- Per month profit and loss after excluding all expenses.
Annual sales growth
Each of us gives more importance to monthly sales growth and keeps comparing it with previous months’ numbers. At one point we will be satisfied with this report alone. But to identify the real growth you need to monitor the annual sales growth of your company.
Turnover varies from season to season. Some businesses are seasonal and some businesses may not have product sales during a particular season. You need to identify your peak month of sale and also times when the sale is very low. For this, you need to track the entire year’s sales growth.
How to set KPI tracking on annual sales growth?
- After getting the entire year’s sales report, track them according to seasons like winter, summer, etc.
- Keep tracking during festival times and periods when you have given more offers and discounts.
90% of businesses require inventory and it has to be maintained effectively. Confusion in inventory management will lead to heavy losses. At any point in time, you should not run out of stock when there is a demand for a product in the market.
You can easily find out which product is fast moving and which one is not performing well in the market. According to the demand you can maintain the stock and also can give offers for slow-performing products and make them move faster among customers.
How to set KPI tracking on inventory?
- Find the stock-to-sales ratio.
- Check liquidity ratio
- Find out how much stock needs to be added for products that move faster.
- Identify which offer is working well on slow-moving products.
Accounts payable rate
To run a business with physical products you need to depend on manufacturers and suppliers. You will be paying them often for products you buy and deliver. The account payable rate has to be monitored to check how much transaction has been made for a particular supplier or manufacturer.
Any business may spend more in this department and this will have a huge impact on calculating the profit margin of the company. By tracking these reports, you can identify if any unwanted expenses are made and if so, you can minimize those expenses.
How to set KPI tracking on the account payable rate?
- Calculate quarterly overhead cost that includes suppliers and all staff.
- Cost per transaction made per month.
Every business will be focusing more on acquiring new customers, promoting their brand, increasing sales orders, and generating more revenue. They may forget to focus on consumers’ grievances. This will become a threat in the future if not addressed properly. Without retaining customers there is no point in spending on products and new businesses.
Then and there you need to identify what problems your consumers are facing by listening to their grievances. This is the best form of showing your gratitude to them and this will satisfy the customer and will make him stay with your business for a long time.
How to set KPI tracking on consumer grievances?
- The number of complaints received per quarter.
- Which is the most common grievance that is shared by many consumers.
- How many issues have been resolved in a quarter?