If you want your business to be successful, you need to track its performance. Otherwise, you’re flying blind. You might be moving forward, but you won’t know if you’re moving forward in the right direction. You won’t know if you could be doing more, achieving more. To make sure your business is on the right track, and you’re doing everything right, you need to track Key Performance Indicators (KPIs).
Measuring KPIs allows you to see whether your business is on the right path to hit targets, meet goals and grow in the way you want it to. By monitoring KPIs regularly, you’ll find it a lot easier to make informed decisions and make changes that put you back on the right path, all before small issues spiral into bigger, more complex problems.
Tracking KPIs is a Must for Businesses of All Sizes
KPIs aren’t just numbers, they’re proof that your business is moving in the right direction, on track to hit targets and meet objectives. They ensure that the day-to-day running of the business aligns with your long-term goals. They make sure that everything you’re doing is working towards the same strategy.
Here’s Why You Need to Track KPIs
There’s a lot of data flowing in and out of your business, but KPIs highlight what matters most. Without them, you run the risk of chasing vanity metrics or gut feelings, rather than focusing on the information that really matters.
There’s no knowing what’s around the corner for your business, but KPIs can reveal problems before they turn up and eventually escalate. This gives you time to make changes before small issues spiral into more complicated challenges.
Instead of guessing, crossing your fingers and hoping for the best, you can use KPIs to make decisions that are driven by data. You don’t need to rely on evidence to adjust business strategies, allocate resources or change your priorities.
When you track KPIs regularly, you build a culture of accountability and improvement. It encourages teams to optimise performance and constantly work to improve, all with the best interests of the business in mind.
What Happens if You Don’t Track KPIs?
If you don’t track KPIs, you’re putting your business at risk. For example, unless you track your revenue, cash flow and margins, you don’t know if you’re getting dangerously close to financial trouble until it’s too late. Similarly, unless you keep on top of how much you’re spending on marketing and sales, you could end up spending too much on acquisition, without the returns to make it worthwhile.
If you’re not measuring customer retention, unhappy customers might start leaving without you noticing. Unless you make changes to stop this from happening, your customer base could end up disappearing faster than you can replace it. You’re also at risk of productivity issues going unnoticed, creating bottlenecks that slow growth.
Failing to track KPIs means that you’re working hard, with no guarantee that you’re on the right track. You might make progress, but you won’t see the obstacles until it’s too late.
7 KPIs You Should Track Weekly
Regardless of industry or business type, target audience or business size, there are seven KPIs you should be tracking each and every week.
Customer Retention Rate – It’s usually cheaper to keep an existing customer, which is why customer retention rate is an important KPI. Tracking customer retention ensures that you’re not only winning customers, but also keeping them engaged, loyal and coming back for more. If your customer retention rate drops, it could be a sign that your customers aren’t satisfied with your service.
Revenue – Without revenue, your business isn’t going to grow. But, when you track revenue weekly, you’ll be the first to know if your sales efforts are working. Tracking revenue also highlights if external factors are influencing your income. It even allows you to identify seasonal fluctuations or sudden dips, before they impact cash flow.
Profit Margin – Along with revenue, you also need to pay attention to profit. Tracking profit margins makes sure that you’re not growing at the expense of profitability. Growing is important, but you don’t want to grow in a way that holds you back financially. Even a small dip in profit margins can signal rising costs or inefficient processes, which you will need to change.
Customer Acquisition Cost – By looking at customer acquisition costs (CAC), you’ll have an idea of how much it costs your business to win a new customer, which is a big part of sustainable growth. If your CAC is rising, it might be a sign that your marketing campaigns aren’t working as well as you thought, or you’re dealing with poor sales efficiency. Weekly tracking helps you to adjust campaigns quickly to ensure your business is as profitable as possible.
Cash Flow – It’s not always a lack of sales you need to worry about, it’s poor cash flow. Weekly tracking of the cash that’s flowing and out of your business will give you a clear picture of your business’ finances. You don’t want to be caught off guard, unable to pay employees or suppliers because you’re waiting for a big invoice to clear.
Employee Productivity – Your business would come to a grinding halt without your team, but they need to be productive. Tracking the output of your team, and comparing that output to business goals, helps you to measure efficiency and morale. This doesn’t mean micromanaging them, it means understanding whether workloads are balanced and if people are hitting targets.
Sales Pipeline – Though you shouldn’t calculate revenue and profits before sales have been finalised, you can learn a lot from your sales pipeline. Your sales pipeline shows the revenue you’re expecting. It looks at the number of qualified leads, opportunities and where various deals are. Doing this each week ensures you’re not only focused on closing current deals, but also fueling future growth.
If you want your business to be successful, you need to track its performance. Otherwise, you’re flying blind. You might be moving forward, but you won’t know if you’re moving forward in the right direction. You won’t know if you could be doing more, achieving more. To make sure your business is on the right track, and you’re doing everything right, you need to track Key Performance Indicators (KPIs).
Measuring KPIs allows you to see whether your business is on the right path to hit targets, meet goals and grow in the way you want it to. By monitoring KPIs regularly, you’ll find it a lot easier to make informed decisions and make changes that put you back on the right path, all before small issues spiral into bigger, more complex problems.
