Many companies fail to measure the growth rate because of a failure to identify KPI's That's right, revenue is not the only performance indicator that companies should track. You should have more indicators relevant to your near and far goals.
Determining the right KPIs that are relevant to your goal helps you measure growth performance, analyze the performance of your marketing efforts, and helps you focus on your most important goals while leaving aside secondary issues.
In this article: We will talk about the importance of measurement for business growth What are KPI's, how are they determined, and examples of KPI's for sales, marketing, and growth teams? By the end of this article, you'll be better able to measure your goals, improve your strategy, and grow your business.
Why is measurement important in business growth?
Measurement is an essential aspect of the success and growth of any business, whether commercial or non-commercial, for example: if you want to lose some weight and appear athletic, it is not enough to follow a diet only, but you must measure your weight, the amount of fat, muscle mass and other measures And continuously in order to know how much weight you have lost and whether this diet is suitable for you or should you try a different diet, and this is how business is if you want to succeed and achieve growth, you must measure continuously.
Measurement allows you to gain a broad understanding of how well the strategies and tactics you use are working, gives you a way to track your progress over time, and helps you improve team performance and make data-driven decisions.
What are the KPI's:
They are metrics used to measure, track and analyze marketing performance and indicators of success and failure Key Performance Indicators Each stage of the marketing funnel has its own metrics, for example:
- Brand Awareness Indicators: Click-through rate (CTR), number of visits on the site, time spent on the site by the visitor.
- Acquisition Metrics: Percentage of customer increase over a given period, conversion rate, customer acquisition cost (CAC).
- Activation customer activity measures: the number of active customers, the number of potential customers, the number of subscribers to the newsletter, the average time required to convert a potential customer into an active customer.
- Retention indicators: frequency of purchase, customer lifetime value, abandonment rate.
- Referral metrics: interaction on social media platforms, content sharing, number of product reviews
- Revenue metrics: Monthly Recurring Revenue, Annual Recurring Revenue, Average Transaction Value, Percentage Increase in Revenue.
Regular measurement and analysis of KPI's is essential to help identify areas for improvement and make data-driven decisions for growth, customer acquisition and retention.
How are KPI's determined?
KPI's are the compass that guides you to your goals and takes you back on the right path whenever you stray from it, but how does this compass work? In the beginning, before you look at the compass, ask yourself and your work team, what are the goals that we want to achieve in the short term, and what are the goals that we want to achieve in the long term? Remember, the compass is of no importance if you don't have a specific goal you want to reach.
Do you know the goal you want to reach? Now it's the turn of setting KPI's
- It should be compatible with your near and far goals.
- It should be time specific and measurable.
- It is important to focus on the most important metrics to track.
- Share it with your team and make sure everyone understands and knows the importance of KPIs for business growth
- Constantly monitor and evaluate the KPIs you have chosen. This will help you track your progress, identify areas for improvement, and make it easier for you to make a decision.
- Be prepared to adapt and change performance indicators as your business evolves and your goals change.
By following these tips, you will be able to choose the right KPIs that align with your business goals and help you track progress and make more accurate and data-driven decisions.
Examples of KPI's:
Understanding and using KPIs can help make better decisions, improve business performance, and increase corporate profitability. In these examples, we will focus on KPIs for each of the business teams.
Key Performance Indicators (KPI's) for the Sales Team:
- Sales volume: during a certain period of time and compared with the same period of the previous year
- Sales growth The percentage increase or decrease in sales over a given period of time
- Revenue: The amount of revenue in a given period of time
- Conversion Rate: The percentage of potential customers who convert into real customers
- Repeat purchase rate: How long does it take for a customer to make a repeat purchase of the same product
- Customer Lifetime Value (LTV): The total purchases made by the customer over the course of their relationship with the company.
Key Performance Indicators (KPI's) for the Marketing Team:
- Website Traffic: The number of visitors on the website during a certain period of time
- Lead Generation: The number of people who subscribe to the newsletter or add bank card details
- Conversion rate: the percentage of visitors who convert into potential customers, the percentage of visitors who convert into customers immediately, the percentage of visitors who complete a specific action or request.
- Cost of Lead Acquisition (CPL):
- Return on Investment (ROI): for a particular marketing campaign
- Click-through rate (CTR): The percentage of users who click on a specific link
- Interaction rate: the percentage of users who interact with content on social media platforms.
- Customer Loyalty: Based on the likelihood of being recommended to others.
These are just a few examples of KPI's that can be used in the areas of sales and marketing. It is important when defining KPIs to ask yourself and your team: Are these indicators compatible with business goals? Does measuring, tracking and analyzing it add value to work?
KPI's for Business Growth:
It is important to monitor business growth indicators and analyze data related to financial matters, market trends, competitors and customer loyalty. Running a business without a pre-drawn map with clear features can be very difficult, so if you want to achieve growth in your business, follow the following measures:
- Revenue growth: The increase or decrease in revenue over a certain period of time.
- Customer Acquisition: The number of potential customers, the percentage increase in the number of potential customers compared to the same period of the previous year.
- Market Share: The percentage of sales achieved by the company out of total market sales.
- Customer Lifetime Value (LTV): The total value that the customer brings to the company over the course of his dealings with it.
- Customer retention rate: The percentage of customers who continue to deal with the company.
- Referral rate: The percentage of customers who refer your products to others.
- Net Profits: The percentage of profits after deducting operating and marketing expenses.
- Earnings Growth: The growth rate in profits compared to the same period in the previous year or month.
- Market share growth: The company's market share increase over time.
Different KPI's For each work and in each team from the other, if you want your efforts to succeed in any work you do, or if you want to analyze the performance of your work teams, you must measure them, and what cannot be measured cannot be managed.