Business performance metrics to follow in 2022

  • August 19, 2022
  • by Kat Ciesielska
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Business metrics are the tools that will help you not to fail. Regardless of the online business idea, sadly, 20% of the new businesses can’t survive even a year on the market. The rest of them struggle hard in the following years, and just a few will really succeed. 

You don’t want to only survive, do you? 

You want to succeed. 

And that’s why, if business metrics aren’t crystal clear to you, read this article. 

What are business metrics?

Let’s start with the business metrics definition. Business metrics track the performance of the business in a variety of its fields. They help you to understand where you are, and how far are you from achieving your business goals.

What’s essential, paying attention to key metrics can save you from falling dramatically. 

Every business metric addresses its stakeholder, for example, customers, managers, or investors. Some measure aspects important to the sales department, while others focus strictly on finances or management. Even the human resources department has something unique to follow. 

Why should you follow business performance metrics?

By using business metrics in your organization, you can allocate resources wiser, and make thoughtful decisions when it comes to all other aspects of your business. They are your guide to building a successful business. Without them, you are technically blind. No matter the number of customers you already have. 

Of course, you don’t need to follow all of them. Every organization should focus on something different, based on its niche and state of growth. What’s important for a big enterprise doesn’t necessarily suit a small business. 

In this article, I will show you the most important metrics that track business processes. Once you feel comfortable with them, start thinking about more specific ones for your business. 

Business metrics to follow in 2022

Here’s a list of the business metrics to follow:

Sales Metrics

Lead Response Time

This is a business metric essential for a sales team. Especially if you’re running e-commerce, support services or you have massive competition. That’s time that your potential customer needs to wait for a contact.

Let’s say that someone e-mails you. If they need to wait long for a response, there’s a huge probability that they will just choose another company.

That’s why it’s definitely one of the metrics to track carefully.

Lead Response Time = sum of time that leads wait for the response/total number of leads. 

Customer acquisition cost 

Customer acquisition cost (CAC) is also one of the key performance indicators to follow. It shows how much money it costs your organization to possess a new customer. That’s certainly one of the most important marketing metrics.

Thanks to it, you can understand the real return on investment (ROI) and invest wisely in marketing. Of course, lower CAC is better for you. 

According to US Small Business Administration, spending around 8% of your company’s revenue on marketing is a wise choice. 

To calculate customer acquisition costs, you need to add up the amount of money you’ve spent on marketing and sales (or other investment associated with acquiring new customers) and then divide it by the number of new customers you’ve got. 

You can also modify this metric to count the acquisition cost of previously inactive customers. Use it wisely with both, sales teams and marketing teams. 

Sales revenue

Sales revenue means all the income that a company gets from its core business. Let’s imagine that your organization focuses on selling cosmetics online. You have great e-commerce where people obviously make purchases, but that doesn’t need to be the only source of revenue. 

Your company can also earn money with investments, allowances, or the sale of assets. 

That’s one of the most important sales metrics if you want to measure profitability, determine valuation or decide where to invest your money. You can measure monthly revenue and sales revenue or do it after every 3 months; it’s all up to you. 

Sales Revenue = units sold

Sales growth rate

Sales growth rate tells you how much revenue it gets through sales over a fixed period of time. This is one of the performance metrics that all the investors will look at before deciding to become your angels. 

Usually, the sales growth rate is higher in start-ups and small companies, as they tend to grow really fast at the beginning. Later on, it often slows down, but there’s nothing bad about it as long as your organization sticks to its plan. 

Sales growth rate = [{Sales for the current period – Sales for the previous period) / Sales for the previous period] x 100

Sales qualified lead

This one is a metric frequently mentioned when creating the sales strategy. SQL is a prospect ready to have contact with your sales team. This is the person your sales team should call, mail, or contact in another way, and the chances to move on are pretty good.

It won’t be too much to say if we decide that’s one of the most popular metrics mentioned in the average sales process. 

Sales win rate

To check the company’s sales level, you can check your sales win rate. It will show you the percentage of won opportunities. If it’s low, you should definitely consider changing the sales process or investing in some curses for your sales team. 

Sales win rate = (Number of sales opportunities won/Number of sales opportunities contacted) *100

Net promoter score (NPS)

Certain business metrics are more important than others. That’s one of them. A net promoter score tells you how high is the probability that your customers will promote your product/service. Obviously, it depends on how they see your brand. If they like it, they will be happy to promote it between friends and family. 

To count it, most companies use the net promoter score (NPS) survey. 

Marketing metrics

Website Traffic

That’s one of the most significant business metrics if you’re online. Website traffic simply tells you how many visitors land on your website. Without visitors, there’s no possibility of selling anything online, so watch this metric carefully. 

You can focus on organic website traffic, this one coming from referrals or social media and others. Marketers try everything to constantly grow it to meet their business goals. 

The most popular tools to control it (along with other marketing metrics) are Google Analytics, Moz, and SEMrush. 

Cost per interaction

Cost per interaction (CPI) is the cost of acquiring a new customer. It’s computed by dividing the total cost of sales by the number of interactions.

This metric helps you understand how much it costs to acquire a new customer, and can be used to compare performance across your marketing channels and campaigns.

For example, if your website generates 100 interactions for $500 in total advertising spend, then your CPI would be 5 ($500 / 100). If you increase your advertising budget from $500 to $1,000 but don’t see an increase in conversions or interactions, then you’ll know that increasing the volume of impressions won’t improve results.

It could even hurt them if those impressions are driving users away from your site due to excessive noise or poor quality content.

👉 Read also about Best Budgeting Software For Business

Backlinks

Backlinks, also known as inbound links or incoming links, are hyperlinks that point to your website. They can be internal or external, but they all serve the same purpose: to increase the number of clicks your website receives.

Inbound links are very important because they allow search engines to see how popular your site is in relation to other sites on the web. This popularity is measured in two ways:

– The number of times other sites link to yours (the more popular a site is overall, the more likely it is that other sites will link to it)

– The total number of pages on your site (if you have a lot of pages that aren’t linked from anywhere else on the web, search engines will assume that those pages aren’t very important and won’t rank them high)

That’s why it’s so important for you to build up an organic backlink profile and measure it.

Financial metrics

Net profit margin and gross profit margin

Gross profit margin (GPM) is the difference between revenue and the cost of goods sold.

Net profit margin (NP) is the difference between revenue and all costs, including SG&A.

GPM is a better indicator of business performance than NP margin because it shows you how much profit your company makes on each dollar of sales (i.e., its ability to keep costs low while charging higher prices).

👉 Check our Profit Margin Calculator

Cash flow

Cash flow is the movement of money into and out of a business. It’s the lifeblood of your business and the best indicator of how well it’s doing.

The simplest way to calculate cash flow is by subtracting expenses from revenue:

Net profit + non-cash business expenses – cash cost of sales = free cash flow

 

Project management metrics

Productivity

Productivity is a key factor in business success. It can be measured in a variety of ways, but there are some common denominators that should be considered when you’re assessing your productivity.

Productivity is the measure of how much value a company generates per unit of time spent working. For example, if it costs $5 to produce widgets and those widgets sell for $10 each (a 50% margin), then it’s more profitable for the company to produce 100 widgets than 50 since they would have made an additional $500 on top of their initial capital outlay ($500 x 100 = $50K vs $400 x 50 = $20K).

Another important piece of this equation is figuring out how much time was spent making those doodads. If you’ve got two workers who each make five widgets per hour, then one worker will create five times as many finished products as another one during any given day or week. That makes them more productive overall, even though both may have similar numbers regarding wages paid and revenue generated through sales.

It’s also worth considering whether or not there are other factors involved that could affect profitability beyond just labor costs; materials used might matter here too! Just remember: productivity isn’t just about how fast someone works—it’s also about what they’re doing with their time once they’re done with work.”

Critical path

The critical path is the longest path through a project. It determines how long it will take to complete the project. The critical path has four characteristics:

  • It has the most activities
  • It has more dependencies than other paths (the second requirement means there are no alternate ways to get somewhere)
  • If any activity on the critical path is delayed, then the overall completion of the project will be delayed as well * If any activity on an alternate non-critical path is delayed or canceled, it won’t affect the overall completion of the project

For example, when planning to build a gazebo in the backyard, you can decide which tasks will go on the critical path. The longest time-consuming activity, like digging up existing sod with shovels and not using machines to do it faster, would be considered one of those tasks.

Other key metrics

Customer satisfaction

Customer satisfaction is a measure of how satisfied your customers are with your product or service. It is a measure of how well you meet the expectations of your customers. It can be calculated using customer reviews and surveys, or by surveying a sample of customers.

Customer satisfaction is an important metric for business because it’s key to customer retention and loyalty. For example, when customers feel that they have been treated well by a company, they’re more likely to buy from that company again in the future.

Customers who are satisfied with their experience are also more likely to recommend the company they used, as well as other businesses in the same industry (e.g., if someone else needs an accountant).

Customer retention rate

While customer acquisition is important, it’s also important to focus on keeping customers around. In fact, a study by Bain & Company found that companies can expect to spend five times more on retaining existing customers than they attract new ones.

To measure this metric:

  • Calculate the number of repeat purchases made by your customers over a specific period of time (e.g., six months)
  • Divide this number by the total amount spent in each transaction (including both revenue and any related costs). The result is your Customer Retention Rate (CRR), expressed as a percentage

 

Customer lifetime value

Customer lifetime value (CLV) also called Life Time Value (LTV) tells you how worth is one customer (account) during your whole relationship. This is one of the most vital business metrics because the cost of customer acquisition is much higher than keeping your loyal customers.

When you know customer lifetime value, you can focus on increasing it, which is significant to driving growth. It’s also essential to understand if your marketing efforts are profitable enough. There’s no point in investing $1000 in acquisition when CLV equals or even less. 

Tracking business metrics with TimeCamp

Time Tracking Reports
You already know what are the most important performance metrics to track. To boost your business processes and company’s performance, you should include measuring them in your business strategies. 

TimeCamp ​​can help you when it comes to measuring your productivity. As I’ve mentioned above, productivity is the measure of how much value a company generates per unit of time spent working.

And here’s where TimeCamp is your best friend. Our software will help you track every single minute of your team’s time. The app works automatically, so it’s easy to use and everyone will quickly learn how to use it. 

Once you know all the distractions and troubles that your employees have, you can help them to handle them and boost their productivity. How easy is that?

👉 Read how to Eliminate distractions and be more productive!

Conclusion

Measuring financial metrics is not enough, as many people think. As you see, there is much more to track. Choose the most important metrics for your business and when it comes to one of the most important, which is productivity… let us help you 😉 

Kat Ciesielska

Freelancer copywriter and salesman. Currently, in love with timeboxing time management (using TimeCamp). Writing since childhood (the story about dwarfs was the first one ever). Bookworm, foodie, gamer & nature lover (yes, she walks without shoes sometimes).

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