Mastering KPI Tracking: Essential Tips for Business Success
By Your Front eOffice
Key performance indicators (KPIs) are essential performance measurement metrics for tracking progress towards business goals. They help in decision-making, setting strategic objectives, and evaluating business progress in real-time. To choose the right KPIs, you should ensure that your business goals are measurable, actionable, and have a reasonable time frame. A good KPI should enable you to track the critical success factors related to the goal. KPIs vary from business to business, but they should be actionable, accurately measurable, timely, and impact the bottom line.
Cash flow forecast and gross profit margin as a percentage of sales are two critical KPIs that can help track business growth. Cash flow projections help businesses assess whether sales and profit margins are appropriate, and savvy business owners perform regular cash flow forecasts to identify problems in the early stages and make necessary adjustments. Gross profit margin as a percentage of sales demonstrates total profits compared to revenue and helps quantify how much money a business is keeping against the amount paid out to suppliers.
Other KPIs that can help businesses grow include customer acquisition cost, customer lifetime value, return on investment, sales growth, net promoter score, employee turnover rate, and employee productivity. Businesses should choose KPIs that meet the four criteria of being actionable, accurately measurable, timely, and impactful to their bottom line.More