Tracking relevant business activities is a must while you are running a business. To understand the progress of your company, it is essential to map the performance of a company vis a vis the goals that have been established.
It is essential to understand the key business metrics that must be tracked. Some of them are:
Revenue
If tracked well, the sales revenue of a company tells a thousand things. Revenue is the sum total of the earnings less the costs incurred. The revenue of a company is the key parameter to measure the performance of business. Revenue must always be checked on a year-on-year basis and not as a stand-alone yearly figure. This also helps in comparison of results with the past years as well as with the competition. This financial performance when measured also helps us in goal setting for the future.
Fixed and variable costs
Fixed costs are there to stay irrespective of the units of production. Variable costs on the other hand, like, labour, raw material, commissions and wages largely depend on the quantity of products you sell. It is important to understand the impact of fixed costs on the potential of the product to make profit. The business must calculate the average fixed and variable cost in order to understand and manage the company’s growth and pricing.
Gross and net profit
Gross profit of a company helps us to understand the efficiency of a business. It tells us how much profit a company earns from the production and sale of its goods. Net profit on the other hand is the profit that remains after all the expenses have been deducted. It is the measure of the company’s overall profitability and reflects on the performance of the company.
Customer retention
The rate of retention of customers means a big deal for any company. It shows the loyalty the customers have towards the company. It also increases word of mouth sales. The retention rate shows the number of clients who keep using the company’s products and make repeat purchases. Customer loyalty is a great tool for any company to build trust and goodwill in the market.
Conversion rate
Leads and references received by a company is just the starting point. The same need to be rigorously worked on in order to confirm them into sales. Conversion rate is often a topic of discussion at sales meetings. The rate of lead to sale conversion always depends on the quality of the sales team, their conviction in the product along with their selling skills. It also is a tool to analyse the product and check whether it fits into the market. A higher conversion rate is always a dream for any company.
Employee satisfaction
None of the activities of the company would be fulfilled if the employees of the company do not have job satisfaction. Happy employees are productive employees. Employees always look forward to a safe and congenial place to work that is mindful of their needs of growth, learning and progress. It is important to check whether our company is a place where people are happy to work.