A key performance indicator (KPI) is a way of measuring how well your business or functional unit is performing. KPIs can evaluate the success of an organization or of a particular activity (such as projects, programs, products and other initiatives) in which it engages. By setting KPIs, the company enables the team to make smart business decisions about the direction of all current projects.
1. NET PROFIT MARGIN
This KPI helps you measure the percentage of revenue remaining after all operating expenses, interest, taxes and other charges have been deducted from your company’s total revenue.
2. CASH FLOW FORECAST/FLOW IN FLOW OUT
This KPI helps estimate the amount of money that’ll move in and out of your business. It also includes your projected income and expenses. Cash flow forecasts typically covers the next 12 months, but can also be used for shorter periods of time – like a week or a month.
3. REVENUE GROWTH RATE
This (KPI) shows the increase (or decrease) in sales from one period to the next. Expressed as a percentage, revenue growth illustrates the trends in the performance of a business. Keep a close eye on revenue growth rate so as to make corrective decisions where necessary and avoid or reduce losses to the business.
4. LEAD TO CONVERSION RATIO
The Lead to Conversion Rate metric gives your team insight into how well you are at converting leads into actual sales. If you want to improve your conversion rates, you need to implement the right sales funnel optimization strategy to get the results you want. Take a closer look at your current process and making improvements based on what you see behind the scenes.
5. RELATIVE MARKET SHARE
This metric is used to give a general idea of the size of a company in relation to its market and its competitors. This (KPI) can be broken down into very specific categories to let a company know where it has a competitive advantage. It also provides key insights about a company’s revenues, growth and net profits.
6. INVENTORY TURNOVER RATIO
This is a ratio that shows how many times a company has sold and replaced inventory during a given period. Inventory turnover helps measure how fast a business sells. A low ratio implies weak sales and possibly excess inventory, also known as overstocking. Keep an eye on this number to know when to apply strategies that will boost turnover. Your aim should be to maintain a high ratio.
7. ACCOUNTS PAYABLE RATIO
The accounts payable turnover ratio is a short-term liquidity measure used to quantify the rate at which a company pays off its suppliers. It shows how many times a company pays off its accounts payable during a period.
8. EMPLOYEE SATISFACTION RATE
Companies who want to keep their employees happy and reduce turnover use an employee satisfaction survey to measure the satisfaction of their employee. Factors that influence employee satisfaction addressed in these surveys might include compensation, workload, perceptions of management, flexibility, teamwork, resources, etc. Aim for high employee satisfaction rates so that you can reduce cost of hiring and improve productivity.
9. CUSTOMER SATISFACTION SCORE
This KPI helps determine how happy the customers are with the company’s products, services, and capabilities. Customer satisfaction information, including surveys and ratings, can help a company determine how to best improve or changes its products and services. This will in-turn ensure that customers become loyal ambassadors over time.
10. FUNNEL DROP-OFF RATE
This KPI measures the number of visits/visitors who left a conversion process (funnel) without completing it. By learning when prospects abandon the buying process, you can identify problems and fix them in order to boost sales.
How many of these KPIs do you currently track in your business?
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