Although the most successful businesses are fuelled by passion, heart and soul, it’s necessary at times to be driven by data. Business metrics are business performance measurement tools that give structure and direction to your business. Monitoring and interpreting them effectively holds the key to sustainable growth.
You’re probably already using a lot of these business metrics, possibly unknowingly, but the key to harnessing their benefits lies in putting a strategic plan in place. This plan should be focused and well-monitored in order to yield consistently positive results. That’s where business performance measurement comes in…
What are business metrics?
Business metrics is a broad term that refers to quantifiable measures companies can use to track, monitor and assess the success or failure of various business processes. This includes everything from productivity and profitability to resource management and marketing efficiency.
5 common types of business metrics to monitor
Because business metrics is an umbrella term it can be applied to many different aspects of running a company. If you wanted to, you could implement business performance measures in all areas of your business. However, it’s best to prioritise and stick with the elements that are going to provide the most value for your long-term business goals. Five common types of business metrics to monitor include:
This is a business metric most companies use to measure performance. But issues arise when it’s the only one they use. Sales revenue is a great overall indicator of how your company is doing and your financial health.
Assessing the cost of lost customers and the resources spent to acquire them.
Cost of customer acquisition
Assessing all marketing and sales activities and processes, dividing the total acquisition expense by the total of new customers over a defined time period.
Customer loyalty and retention
Understanding the costs and resources involved in customer retention and loyalty schemes and weighing that up against revenue earned through repeat custom.
Assessing the productivity of teams and even individuals, determining the cost of motivation and upping productivity through both organic (culture, employee support and training) and digital tools (software and systems).
The benefits of using metrics for business performance measurement
Even large businesses make the mistake of failing to adequately measure their progress, therefore missing the opportunity to identify what’s working and what isn’t. Cue wasted resources, squandered funds and unhappy customers and workforces.
The main benefit to using business metrics is that they provide a better understanding of what’s working within your business (and what isn’t.) The advantages don’t stop there, effective business performance measurement helps to:
Drive business strategy: Business metrics allow you to continually assess strategy and make changes if needed, enabling you to move forward confidently in the right direction.
Support better decision making: Make decisions more easily with the data from your business performance measurement behind you.
Enhance performance: Employees can be motivated and supported through business metrics, enhancing morale and performance.
Providing focus: Business metrics offer focus – goals are important, but without metrics, it’s difficult to put your finger on exactly where your efforts should be focused (and where they shouldn’t).
What are the key OKR metrics?
OKR metrics tie in nicely with business metrics – making the process even more efficient and detailed. Business metrics don’t work without context – so it’s important to be clear on your overarching objectives before breaking those down into smaller goals.
OKR metrics are business metrics broken down to accompany OKRs. Key OKR metrics include outlines of your main objectives, along with the key results that enable you to reach each one.
How can we help your business performance measurement?
At TBG we’ve seen the immensely positive impact OKRs can have on the companies we work with. That’s why we’re so passionate about helping businesses to implement the OKR method, whilst utilising the business metrics that will help them achieve sustainable business growth. Speak to us today for tailored, sensitive support and advice.