What are business indicators?
Posted: Tue Dec 17, 2024 5:21 am
We all have the intuition that the progress of a business can be evaluated by the numbers it produces. But the right variables are not always chosen, and good figures in the wrong indicator can hide errors or a development that can end the business.
KPIs , from the English Key Performance Indicators , are the factors that remain after filtering the essential values that reveal whether the business projections are really positive or negative.
One way to remember the attributes that characterize these indicators is given by the acronym SMART:
and S specifics ( S specific )
M edible ( M easurable )
Achievable ( A chievable )
R elevants ( R elevant )
on Time ( Timely )
It will be essential that the data from which the indicators are calculated are consistent and correct, as well as accessible in time to react and act.
The most commonly used indicators in startups and early-stage businesses may be:
Web traffic and conversion rate : with a measurement engineering email list tool such as Google Analytics, we must control the number of users who enter the key pages of our website, and how many of these users complete the process that turns them into customers.
Customer Acquisition Cost : This is the cost of gaining a new customer, and is typically calculated by dividing the cost of a marketing campaign or outreach initiative by the number of customers gained.
Average value per sale : you have to be very careful with the way you calculate this indicator, and discard values that are far outside the usual range, so that they do not distort the metric.
Recurrence : This is the rate at which your customers repeat business. If the average sales value is reasonable, the recurrence value can be a good indicator of the overall health of the business.
Customer value per sale (LTV) : is the gross margin per sale multiplied by the recurrence. To know the real value of a customer, the customer acquisition cost must be subtracted from that value.
Return on Investment (ROI) is an index that measures the relationship between profits and the investment made. It is always sought to be greater than one.
Customer cancellation rate or Churn Rate : is an index whose objective is to measure the number of users or clients who start and stop paying over a specific period of time.
Establishing KPIs and analyzing their results periodically will help you gain a deeper understanding of your business, know if you are on the right track, and have all the information necessary to make the most appropriate decisions.
KPIs , from the English Key Performance Indicators , are the factors that remain after filtering the essential values that reveal whether the business projections are really positive or negative.
One way to remember the attributes that characterize these indicators is given by the acronym SMART:
and S specifics ( S specific )
M edible ( M easurable )
Achievable ( A chievable )
R elevants ( R elevant )
on Time ( Timely )
It will be essential that the data from which the indicators are calculated are consistent and correct, as well as accessible in time to react and act.
The most commonly used indicators in startups and early-stage businesses may be:
Web traffic and conversion rate : with a measurement engineering email list tool such as Google Analytics, we must control the number of users who enter the key pages of our website, and how many of these users complete the process that turns them into customers.
Customer Acquisition Cost : This is the cost of gaining a new customer, and is typically calculated by dividing the cost of a marketing campaign or outreach initiative by the number of customers gained.
Average value per sale : you have to be very careful with the way you calculate this indicator, and discard values that are far outside the usual range, so that they do not distort the metric.
Recurrence : This is the rate at which your customers repeat business. If the average sales value is reasonable, the recurrence value can be a good indicator of the overall health of the business.
Customer value per sale (LTV) : is the gross margin per sale multiplied by the recurrence. To know the real value of a customer, the customer acquisition cost must be subtracted from that value.
Return on Investment (ROI) is an index that measures the relationship between profits and the investment made. It is always sought to be greater than one.
Customer cancellation rate or Churn Rate : is an index whose objective is to measure the number of users or clients who start and stop paying over a specific period of time.
Establishing KPIs and analyzing their results periodically will help you gain a deeper understanding of your business, know if you are on the right track, and have all the information necessary to make the most appropriate decisions.