If you’re not tracking these key performance indicators (KPIs), you’re flying blind. And in today’s cutthroat business world, that’s a one-way ticket to obsolescence.
I’ve worked with hundreds of companies, and I’ve seen the good, the bad, and the ugly. The businesses that thrive all have one thing in common: they’re obsessed with data. Not just any data, but the right data.
So, let’s cut through the fluff and get to the meat. Here are the 10 KPIs you need to be tracking religiously if you want to dominate your market.
1. Customer Acquisition Cost (CAC)
This is the holy grail of marketing metrics. If you don’t know your CAC, you don’t know if you’re making money or setting cash on fire.
Calculate it – Total marketing and sales expenses / Number of new customers acquired
Why it matters – It tells you how efficiently you’re growing. If your CAC is higher than your customer lifetime value, you’re in trouble.
2. Customer Lifetime Value (CLV)
Speaking of CLV, this is the yin to CAC’s yang. It tells you how much a customer is worth to your business over their entire relationship with you.
Calculate it – (Average purchase value x Average purchase frequency rate) x Average customer lifespan
Why it matters – It helps you determine how much you can afford to spend on acquiring and retaining customers. If your CLV isn’t at least 3x your CAC, you need to rethink your strategy.
3. Net Promoter Score (NPS)
This is your crystal ball for customer loyalty and growth potential.
Calculate it – Percentage of promoters – Percentage of detractors
Why it matters – It’s a leading indicator of future revenue. High NPS scores correlate strongly with business growth.
4. Employee Net Promoter Score (eNPS)
Your employees are your first line of offense and defense. If they’re not happy, your customers won’t be either.
Calculate it – Same as NPS, but for employees
Why it matters – Happy employees = happy customers = more money in your pocket. It’s that simple.
5. Revenue Growth Rate
This one’s obvious, but you’d be surprised how many executives don’t track it properly.
Calculate it: (Current period revenue – Prior period revenue) / Prior period revenue x 100
Why it matters: It’s the pulse of your business. If it’s not growing, you’re dying.
6. Gross Profit Margin
Revenue means nothing if you’re not keeping enough of it.
Calculate it – (Revenue – Cost of Goods Sold) / Revenue x 100
Why it matters – It tells you how efficiently you’re producing and selling your products or services. Low margins = low sustainability.
7. Customer Churn Rate
Acquiring new customers is great, but keeping them is even better.
Calculate it – (Number of customers lost in a period / Total number of customers at start of period) x 100
Why it matters – High churn rates are a red flag that something’s wrong with your product, service, or customer experience.
8. Operating Cash Flow
Cash is king, and this KPI is the king of cash metrics.
Calculate it: Net income + Non-cash expenses – Increase in working capital
Why it matters: It shows you how much cash your business is generating from its core operations. Without healthy cash flow, you’re dead in the water.
9. Return on Marketing Investment (ROMI)
Marketing isn’t a cost center; it’s an investment. Treat it like one.
Calculate it – (Revenue attributed to marketing – Marketing spend) / Marketing spend x 100
Why it matters – It tells you which marketing activities are actually driving revenue, so you can double down on what works and cut what doesn’t.
10. Digital Engagement Score
In today’s world, your digital presence is your business card, storefront, and customer service center rolled into one.
Calculate it – Weighted average of metrics like website traffic, social media engagement, email open rates, and online conversion rates
Why it matters – It’s a barometer for how well you’re connecting with your audience in the digital realm. Low engagement = invisibility = death.
We’re Not Done Yet
These KPIs aren’t just numbers on a dashboard. They’re the lifeblood of your business. They tell a story about where you’ve been, where you are, and where you’re going.
But knowing the numbers isn’t enough. You need to act on them. Here’s how:
- Set aggressive targets for each KPI.
- Review them weekly with your leadership team.
- Hold someone accountable for each metric.
- Tie compensation to performance on these KPIs.
- Constantly experiment and iterate to improve them.
Remember, what gets measured gets managed. And in the mid-market, you’re either growing or you’re dying. There’s no in-between.
Conclusion
So, take these KPIs, make them your own, and use them to build a data-driven culture in your organization. It’s not just about surviving; it’s about thriving.
And here’s a final thought to chew on: The companies that win in the long run aren’t just good at hitting their numbers. They’re masters at choosing which numbers to hit.
If you’re ready to step up your game, here are a few ways to Get Started:
– Schedule a FREE Cup of Clarity Session and let’s create your tailored roadmap and next steps
– Check out Heroik’s Programs and Services and Consider enrolling in the Growth Accelerator Program
– Start Planning your next growth project using our FREE Project Planning Tool.
So, go forth and conquer. Your competitors are already tracking these KPIs. The question is, are you going to let them get ahead, or are you going to leave them in the dust?
The choice is yours. But remember, in business, as in life, those who hesitate are lost. So don’t just read this article. Take action. Your future self will thank you.
