Essential Performance Metrics for Business Success Across Industries

Mar 21, 2023

Key performance indicators (KPIs) help companies quantify successes and failures. These metrics use data from company operations or finances. The goal is to calculate figures that measure processes and outcomes.

Your business can use these KPIs to compare performance across different timeframes. They can also measure the success of strategic or process changes. For instance, if you run a logistics company, you can collect and visualize data for delivery times. Then, you can use the information to see if new route optimization software lowers average delivery times across your entire fleet.

Some KPIs are universally important for all companies. The US Chamber of Commerce points out the importance of KPIs not only for financials, but also related to customer experience, human resources, and marketing.

Industries have unique KPIs related to specific processes. But, some metrics are universally important whether you operate a hospital, a coffee shop, or an e-commerce site. Here is a closer look at these fundamental KPIs.

Universal business metrics

Universal business KPIs can help companies track their profits and the effectiveness of fundamental processes. Ultimately, they affect revenue and the ability to compete with other companies.

As a business owner, you can gain clear insights from these statistics. With this information, you can help you see where your business stands. Also, you can avoid subjective assessments that don’t actually measure results.

With that in mind, let’s look at four metrics you can use to get such unvarnished insights.

Employee turnover rate

Employee turnover rate counts the number of workers who leave your company over a specific period. You calculate turnover rate by dividing the average number of employees over the timeframe by the number of workers who left. Most companies calculate the turnover rate annually. However, some businesses may use quarterly calculations.

Employee turnover rate offers several insights. If employees are leaving, it could be due to poor work conditions or insufficient support. Perhaps you are hiring the wrong workers in the first place. While different factors could cause a high employee turnover rate, it could be a signal to investigate potential problems with your workforce.

You might respond to a high turnover rate by taking steps to increase employee happiness. For instance, you can consider offering additional training, adding new resources to make employees’ jobs easier, and building systems to collect and respond to worker feedback.

Continue to monitor the employee turnover rate to see if these changes lower the figure.

Revenue growth

The revenue growth metric requires a simple calculation. It is the increase in revenue over a defined timeframe. Your business might calculate it monthly, quarterly, or annually — depending on your industry. For a monthly assessment between January and February, subtract January’s revenue from February’s then divide the answer by January’s revenue.

Revenue growth offers insights if you make significant changes, scale your operations up, or add new business models. The metric helps see if these new approaches are indeed helping you grow. Revenue growth is also important for helping you calculate the return on investment (ROI). If quantifies ROI for business expansions, new equipment or systems, or increases in your workforce. The KPI shows you if the changes increase revenue. It can also help you see how long it will take to achieve a positive ROI.

Customer acquisition cost

Customer acquisition costs (CAC) count the average amount spent to obtain each new customer. You come up with this metric by adding all marketing, ad, and sales costs over a given period. Then, divide that sum by the number of new customers over the same timeframe.

CAC figures can vary by industry. Business-to-business (B2B) service providers may only get one or two new clients per year. However, an e-commerce site could hope to draw thousands of new customers every month.

Your company can compare quarterly CAC metrics with figures from previous quarters. It can help take steps to reduce costs with new marketing strategies or ad placements.

Supply chain waste

Supply chain waste includes all unnecessary costs and losses that occur before the product or material reaches your customers. You can add factors like excess packaging, inventory, unnecessary transportation costs, and spoilage. Supply chain waste can also have an environmental component. Your company can count the carbon footprint and pollution emissions associated with the supply chain.

Whether calculating excess costs or environmental impact, you can reduce supply chain waste with a more efficient logistics strategy. These steps could include sourcing products from nearby vendors to reduce transportation costs and emissions. You might also find sustainable suppliers who limit the use of unnecessary packaging.

Industry-specific metrics

Businesses have different processes depending on their industry. Because of these differences, they need to rely on sector-specific metrics in addition to universal business KPIs.

For instance, vehicle maintenance costs and efficiency metrics like delivery time are essential if you operate a logistics company. These can show current operating costs and performance. Also, they allow you to assess efforts to lower costs and optimize processes.

Here are three examples of essential industry-specific KPIs.

Vehicle maintenance costs

Any company that operates a fleet will need to consider vehicle maintenance. Vehicle maintenance costs include all expenses related to scheduled tune-ups and unplanned repairs. You can add the total upkeep costs for all vehicles in a fleet. Another option is to divide the total cost over a given period by the number of vehicles in the fleet. This gives you the average cost per vehicle.

You can also build on these insights by comparing costs based on the age or type of vehicle. These stats offer additional guidance, such as deciding whether it’s more cost-effective to repair or replace older vehicles in your fleet.

Your fleet managers can take steps to reduce vehicle maintenance costs with preventative maintenance strategies. These scheduled repairs and parts replacements aim to reduce breakdowns. These unplanned repairs are usually more expensive and disrupt operations, hurting revenue.

Inventory turnover

Inventory turnover counts the number of times inventory gets sold or sent over a given timeframe. Higher turnover figures mean a company is selling or moving inventory efficiently.

For a transportation company, it means inventory isn’t sitting on loading docks or warehouses. Instead, it is moving through the supply chain. Since logistics operations earn revenue based on loads delivered, higher inventory turnover means greater revenue.

Inventory turnover is also a leading indicator to measure the success of process changes. Your trucking company can add route optimization software to see if the change leads to higher inventory turnover.

Delivery time

Delivery time is another important metric for logistics operations. It measures the effectiveness of driver performance, route planning, and load optimization. Faster delivery times can increase customer satisfaction in industries like e-commerce delivery.

However, fast delivery times do not necessarily mean an efficient operation. Pursuing speed can reduce accuracy and increase pressure on employees. Your logistics company can decrease delivery times with the assistance of fleet management software. These tools can increase efficiency and provide drivers with support as they complete their routes. Electronic logging devices (ELDs) can provide additional data to support efficiency efforts and help drivers improve their performance.

Best practices for monitoring and improving metrics

The first step in using KPIs is to establish a system for collecting data. Complete and accurate data is essential for insights from business metrics. The ability to call up KPIs through an automated software system can lead to benefits like informed decision-making for managers. You can enjoy real-time insights into the effectiveness of new strategies and processes.

With fundamental KPIs, you can see where your business stands. These figures help you measure improvements related to previous performance and the activities of your competitors. You can make informed decisions using these KPIs and continuously assess strategies and processes to see if they yield the desired statistics.

Time to move forward with managed technology

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