Where do you need more visibility into your operation? KPIs can provide the insights you need.
You can’t manage what you can’t measure. And if Peter Drucker is right, if you aren’t measuring it, you can’t improve it. Key performance indicators (KPIs) are metrics that show progress toward a goal or comparative performance. KPIs help your company look forward by measuring “leading indicators,” or looking back at historical performance through “lagging indicators.”
Any sales partner who has looked into KPIs knows there are a lot of options to track. So, how can you tell which are the most important indicators? Presentations and panel discussions at the 2023 Retail Solutions Provider Association (RSPA) RetailNOW event provided some guidance.
What the RSPA KPI study showed.
The RSPA surveyed its members to see which KPIs are essential to helping them keep their businesses on track. These were the most popular.
- Net profitability. This KPI measures how effectively your business generates profit from your revenues. The top 20% of survey respondents have over 30% net profits. The top 43% of respondents have a net 20% profit.
- Recurring revenue per customer. This metric shows how much revenue you can count on each month. According to the RSPA study, the top 8.7% of respondents are getting $1,000 per month per customer. In the next highest ranking, 18.7% have over $500 per month.
Of course, these two KPIs are by no means the only indicators you can measure. There are many more options you can track to make sure your business is staying healthy.
- Monthly sales growth. If your sales aren’t growing, your business may be struggling. Track monthly sales to see the percentage change month over month. To calculate, subtract sales from the prior month from sales for the current month and divide by sales for the preceding month. Multiply by 100 to see how much sales grew or declined.
- Average profit margin. To find this indicator, net income is divided by net sales. This is a useful measure to make sure your business stays in the black.
- Sales per rep. A simple calculation is found by dividing the total sales by the number of sales reps. Great for a competitive sales team for individual sales reps to try to stay above average. This indicator can also be useful for managers to coach and train underperforming agents.
- Average cost per lead. A very important indicator for marketing teams is determining the cost efficiency of campaigns and keeping it in line with the decision on how much is an acceptable amount to spend per lead.
- Customer acquisition cost. This KPI shows how much a business typically spends to acquire a new customer. This varies on the business model but would include all costs of marketing and sales efforts, including salaries and benefits costs for employees and overhead.
What do you want to know?
While you can use KPIs to see how you align with your peers or competitors, their utility goes far beyond that comparison. The real value of KPIs is how they can help you focus on what matters most to your business. Tracking the right KPIs will help you know if the work you are doing is leading to revenue growth, growing your customer base, or decreasing waste — all of which can contribute to business health.
Set a goal and then determine what you need to measure to reach it. Use numbers to see where you are today and monitor it for changes. It will allow you to course-correct when needed rather than be taken by surprise after performance lags.
Reach out to learn more about North American Bancard’s partner programs that can help you improve your KPIs.
