Business Metrics - Why They Are Important

Business metrics are how businesses track, monitor, and assess their business processes and systems in order to make sure they are operating efficiently productively and moving in the right direction towards their strategic goals.   

What business metrics matter to individual businesses is specific to the company, their market, and what their individual goals may be. What’s important to realize is that you should determine what metrics are valuable for your business, set up systems and processes to implement the strategies, and track them using business metrics in order to make sure you’re moving in the right direction. 

Here’s a list of some common business metrics companies track, but remember you don’t necessarily need to be tracking these; they may be completely irrelevant or not important metrics in your business: 

• Sales Revenue  

• Net Profit Margin 

• Cost of Customer Acquisition  

• Customer Retention Rate  

• Leads Per Month  

• Lead Conversion Rate  

• Monthly Website Traffic  

How Do You Choose the Right Business Metrics?  

This causes a lot of issues for businesses. It’s common to hear something about the importance of business metrics and keeping an eye on them. The more difficult part is which ones should your business be tracking and how are you going to implement and design systems to make them move in the right direction. Don’t randomly select a bunch of metrics that sound good (for example businesses just default into tracking the financial metrics, but they may not be the most important thing to your business, or at least there may be others that are equally important). You need to analyze your goals and strategy; think about where you want to go and what you need to improve on to get there. Then you can start mapping out the business metrics that are most relevant to your business.  

Why Do You Need to Track Business Metrics?   

Here’s the simple, straightforward reason you should be tracking business metrics in your company: it lets you improve your overall results, align your goals and objectives, your processes, and your people. You can keep track of your financial performance in real-time; manage and track the performance of departments, individuals, strategic initiatives, and goals from the top level all the way down. It’s a way to track your actions, which means it’s also a way to know how effective your actions are and adjust accordingly when you’re off track, or goals change. It’s key in issue-spotting and highlighting concerns that could otherwise go unnoticed; if you aren’t tracking anything, tracking the wrong things, or just don’t know what to track there may be numerous underlying issues you’re missing out on that are negatively impacting the company.  

How Do You Track Business Metrics?  

There’s really no right answer here, it depends on what your goals are and what the important metrics to your business are. Financials may be easily tracked through an online accounting software; leads may be tracked through a CRM system, and business development tactics may just be tracked through a spreadsheet. Whatever works for you is what’s best. Keep in mind that figuring out the metrics to track comes first, then you figure out how to track them, and don’t be afraid to experiment with new ways to track them and utilize software or technology advances to your advantage. For example, tracking financials through an online software platform is almost certainly more effective and efficient than doing it on an excel spreadsheet.  

Have questions about business metrics, which ones are important to your business, and how to track them? Contact us for a free consultation.