- Business metrics are specific data represented by numbers.
- Financial and performance metrics are the most common, and the most important to follow.
- Keeping all the metrics in one place helps to better organize and navigate business processes.
What Are Business Metrics, in General?
As a business owner, you need to know how to track the results of your activities. But what are business metrics, exactly?
Business metrics are numerical values that provide key insights into a company’s performance and progress. All business metrics provide insights that can help improve business operations. Of course, some are a bit more important than others. We call them “key metrics”; this is because they come together to form a comprehensive evaluation of the business process.
Examples of Business Metrics (Key Business Metrics)
What are business metric examples? The most popular types of business metrics include financial metrics, customer metrics, employee metrics, and product metrics.
- Financial metrics: to track revenue, profit margins, and expenses.
- Customer metrics: help with checking the customer satisfaction levels and retention rates.
- Employee metrics: to measure employees productivity, happiness or turnover rates.
- Product metrics: these are the data that shows how well a product is doing on the market.
Marketing metrics are a way to keep track of how well a marketing campaign or activity is doing. They can be used to track both quantitative and qualitative data for businesses of all sizes. For example, you could measure:
- website traffic;
- conversion rates;
- social media engagement.
Tracking marketing metrics helps to oversee which marketing campaigns are successful and which areas need improvement.Additionally, this metric helps businesses to optimize their marketing budget and resources.
When it comes to sales metrics, cash flow is the most important metric – a company cannot survive without it. Sales teams should also pay attention to:
- customer retention rates;
- customer lifetime value;
- the number of new customers acquired each month;
- gross margin.
If you want to run a successful business, you need to set and achieve goals. But how do you know if you’re on track to reach your objectives? That’s where performance metrics come in.
Performance metrics are basically statistics of your progress towards a business goal. They can be financial, such as sales figures or profit margins, or non-financial, such as customer satisfaction levels.
How to Track Business Metrics
There are a few metrics that every business owner should track; for example: revenue, customer satisfaction, employee satisfaction, and passive and active income.
The best way to track these metrics is to set up a dashboard. There are plenty of software programs that can help you create a dashboard that is easy to read and understand. Some of them are even free to use!
Editor’s TipRemember that the metrics tend to overlap, and influence each other. Never analyze them on their own, and outside your business context.
Business Metric or Key Performance Indicator
Whether you’ve worked for a big company or not, you might have heard the term “KPI.” And now that you know the answer to “What are business metrics?” you might think these two are the same – they are not.
- Business metrics are a general way to track business processes. Key performance indicators (KPIs) are a type of business metric that specifically measures progress towards organizational goals.
- Both business metrics and KPIs can be used to track progress over time and identify areas of improvement, but KPIs are more focused on goal achievement. For example, if a company’s goal is to increase sales by 10% over the course of a year, a KPI could be the number of sales made each month.
- While business metrics provide valuable insight into overall performance, KPIs measure progress towards specific goals.
Business Metrics FAQs
What Is an Example of a Business Metric?
Customer acquisition. This metric shows how many customers a business has gained.
What Is the Difference Between KPI and Metrics?
All KPIs are business metrics, but not all business metrics are KPIs.
What Are the 5 Main Metrics Used in Daily Management?
Sales revenue, customer satisfaction, customer acquisition cost, conversion rates and employee productivity.
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