Key Metrics in Measuring Business Performance

KEY METRICS IN MEASURING BUSINESS PERFORMANCE A. Metrics for Marketing Here are some important metrics that can be measured to gauge a company's marketing performance: a. Marketing strategy implementation Measuring the number of employees using a marketing strategy can help you measure the relationship between the strategy and its target number. For example, your company's marketing team is expected to increase social media activity on a daily basis. From here, you can measure the number of posts made and compare it to the target number of engagement on social media and see the effectiveness of the strategy. b. Website traffic As the name suggests, this metric measures the number of people who visit your website. Not only that, but you can also see how they access it and how long people "stay" on your website. Of course, this information is useful to help you make decisions about your online marketing strategy. For example, you can compare the number of visitors who find out about your website through social media and through search engines. So, you can use this information to develop your SEO strategy. c. Conversion rate This metric is used to measure how likely potential customers take action according to the company's marketing strategy. Thus, this information can help you measure and analyze the success of the marketing techniques used. For example, you can measure how many email marketing recipients click on a link to your product or subscribe to your company's services. B. Metrics for Products Business performance metrics can also help you measure and understand your company's production effectiveness and efficiency. Here are some important metrics that can be measured to gauge a company's business product performance: a. Cycle time This metric is used to measure how long it takes to complete a business process, start to finish. The information from this metric is valuable to know the right strategy to optimize productivity. You can also compare the time taken for each business process. For example, your company produces hardware components for computers. From here, you can track the time it takes, from getting raw materials to selling them to other computer companies. Thus, you can find out which production processes can be accelerated and made more effective. b. Throughput Throughput is a metric that measures the amount of production in a given period of time. This metric is useful for measuring the speed your company needs to make one product. The formula that is commonly used is: Throughput = number of units produced/production time per unit c. Return of investment Quoting from Forbes, return of investment is an important metric should not be left out. This is because this metric measures business performance based on the profit earned by the company for every investment made. For example, Company X receives Rp3 billion in revenue from sales and invests Rp1 billion in its business operations. Then, the ROI obtained by company X is 200%. The commonly used formula is: ROI = [( total sales - total investment) / total investment x 100 C. Metrics for customer success If we want to measure the company's business performance in the aspect of customer success, here are some metrics that you can use. a. Customer satisfaction This metric can help you find out how satisfied consumers are with the products or services they buy from you. You can get this data by conducting surveys, polls, or product or company reviews. For example, if you create an Android app, you can find out the level of customer satisfaction from reviews on PlayStore. b. Customer retention Retaining customers and increasing their loyalty can have an impact on your business, such as increasing sales and promoting your products to others. According to Scoro, this metric shows the number of clients who continue to use your product within a certain period of time and make repeat purchases. From this metric, you can also analyze and evaluate customer experience. So, you can adjust various strategies ranging from marketing to products when facing competitors. c. Customer acquisition The customer acquisition metric measures the company's business performance in terms of the high or low costs incurred by the company to acquire customers. Based on the information obtained from this metric, you can help the sales and marketing department to make changes in their strategy if needed. D. Metrics for Financials Metrics are also usually used to measure the financial "health" of a business. The metrics that are commonly used to measure business performance in the financial aspect include. a. Cash flow Cash flow is used to measure the amount of money that comes in and out of the company. By calculating expenses and income, it will help you make decisions about production budgets. For example, if the company's cash flow shows a lot of expenses, you can analyze each expense and take steps to save. b. Profit margin Companies can measure gross and net profit margins because the two metrics have differences in the types of expenses. By understanding profit margin, you can make business decisions that maximize profits, such as increasing revenue or minimizing costs. c. Debt- to- asset- ratio This metric compares a company's debt obligations to its assets. Debt-to-asset ratio can help you measure the amount of debt a company has. Thus, helping you make business decisions if you want to take out a loan or when looking for new investors.