The Top 5 KPIs Business Owners Should Know

December 18, 2023
Blog, For employers

As a growing business, monitoring and tracking various Key Performance Indicators (KPIs) is essential.

KPIs are quantifiable measures of performance over time for a specific objective. They help to provide practical goals and milestones to gauge progress, providing insights to help managers make better decisions.

What KPIs should I track?

While there are various KPIs that businesses can track, some are more pivotal than others. Below are the top 5 essential KPI indicators you should consider in your business.

Monthly Recurring Revenue (MRR)

MRR is a crucial KPI for growing businesses, measuring the predictable revenue a business expects from its customers every month–for example, in Software as a Service (SaaS) businesses or companies that offer ongoing maintenance contracts. Analyzing MRR allows businesses to measure and forecast their future revenue streams and better understand their future growth and investments.

Customer Acquisition Cost (CAC)

CAC is an important metric to know because it determines the efficiency of your sales and marketing team. It’s essential to understand the cost involved in acquiring each new customer by taking into account your advertising, marketing, sales, and other acquisition expenses. Knowing these numbers helps you identify the most valuable processes in obtaining your customers.

Customer Lifetime Value (CLTV)

CLTV measures the total worth of a customer to your business over their lifetime, including revenue generated, referrals, and repeat purchases. By understanding the lifetime value of your clients, you’ll be able to keep them happy and engaged.

Gross Profit Margin (GPM)

GPM measures the profitability of a business’s sales. It’s calculated by taking the total revenue from sales minus the cost of goods sold (COGS) and dividing it by total revenue. Businesses should focus on increasing their GPM by reducing their COGS.

Net Promoter Score (NPS)

NPS measures how likely a customer is to recommend your business to a friend or colleague. It’s calculated by asking customers to rate their likelihood of recommending your business on a scale of 0-10. Scores of 9-10 are promoters, 7-8 are passive, and 0-6 are detractors. By tracking your NPS, you can identify areas of improvement to increase customer satisfaction and loyalty.

As a growing business, tracking these essential KPIs can help you measure your progress and make informed decisions.

Need help understanding your business’s KPIs? Set up a meeting with me.

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