The business KPIs varies by the nature of business.For example, if you run an e-commerce business you need to analyse new customer order vs returning customers order, what is the shopping cart abandoned rate, which products are purchased together or how many people downloaded your application.If you are a retail business owner you need to know the average customer spending, sell through rate, stock turn over rate etc.
On the other hand there are KPIs that every business owners should know which helps them to know their business stand point, to find out new growth opportunities.
Cash flow: How much cash is moving in & out of your account is a key indicator of your bunisess health.A real time cash flow dashboard here is very much helpful to track your business expenses & shows the negative & positive cashflows.More over it helps you to quickly figure out what adjustments need to be done to balance your cashflow.
Net & gross profit margin:This is the key indicator of your business to know whether it is in profit or not.Gross profit margin does not take into account for other cost expenses related to sales.
- Gross profit Margin =[ (Revenue – Cost)/Revenue]x100
Gross margin draws the ration between the production cost & revenue. It tells whether production cost is getting too costly.On that basis you can decide to increase or decrease the selling price. Gross margin does not take into account of interests, operating expenses, depreciation or any other cash outflows.That is where net profit margin comes.
- Net profit margin= [((Revenue – Cost)- other expenses)/Revenue]x100
Net profit margin is actually tells about the profitability. To be a business in profit, net margin should be in positive range.If the net profit margin is less than 15% than you should think about your business seriously.
Here a finance dashboard will be usefull in visualising all your financial data in one place.You can keep track of all your expenses, cost ,revenue in real time any where any time.
Sales revenue: With a sales revenue dashboard you can quickly figure out how your sales team is performing.What is the lead conversion rate?You can view what is the monthly sales rate,who are your top customers & what is your return on sales investment .Identifying slow & busy month through sales KPI helps creating appropriate strategy for each month. It also helps in controlling cashflow to ensure to cover expenses during slow business of the year.
Here comes in a sales dashboard.This is the most effective way to keep track of sales pipelining. you can view your leads, prospects,oppertunities, high valued customers & sales staff performance.By continuously keeping track on sales you can actually better analyse the bottlenecks of sales & you can improve upon your sales strategy.
Customer loyalty and retention:Customer loyalty & retention is one of the most important KPI for every business owner to know. How your product is being liked by your customers? How often they would like to refer your product or about your company to their network.Customer survey, product purchase analysis can help you gather the data to analyse customer satisfaction level.You can change your strategy by knowing the customer retention KPI to attract your high valued customers to stay with you for longer which can greatly impact your CLV.
Customer lifetime value(CLV): CLV is the value a customer contributes to your business over their entire life time at your company.We all know that it’s more costly to acquire new customer than to retain existing ones – thus extending your CLV is central to a healthy business model and customer retention strategy.Historic CLV & predictive CLV are 2 KPIs to understand how profitable the customer is to your business & accordingly you can create your customer retention strategy.CLV not only helps you on customer retention strategy but it also helps you to focus on the marketing channels that give you the high valued customers.
Historical CLV: CLV (Historic) = (Transaction1+Transaction2+Transaction3…+TransactionN) X AGM(AGM = Average Gross Margin) .Calculating CLV based on net profit ultimately gives you the actual profit a customer is contributing to your store. This takes into account customer service costs, cost of returns, acquisition costs, cost of markeitng tools etc.Gross margin CLV will give you great insight into the true profitability of your customers to date. Ex. If a customer is paying Rs.1200 every month for availing a service from you & the customer is with you for 5 years then historic CLV of that customer is Rs.72,000.
Predictive CLV :Predictive CLV try to obtain a more accurate value of CLV through predicting the total value a customer will eventually give to your store over their entire lifetime. “Predictive CLV is always the NPV (net present value) of the sum of all future revenues from a customer, minus all costs associated with that customer.” It is never exact but predictive CLV is useful in future forecasting.It is essential to do these calculations to get a real understanding of how valuable your customers actually are, the more accurate you become the more powerful your marketing can be.As we know, not every individual is same—some are a lot more valuable than others; as you gather more data about an individual, you can determine with increasing accuracy what sort of individual they are likely to be: High, Medium, Low value etc.
Customer acquisition cost(CAC): CAC is closely related to CLV.CAC is the total marketing cost divided by no of customer acquired during a given period of time.Ideally CAC should not exceed 1/3 of CLV.
For customer loyality,retention a customer care dashboard adds more value which can greatly impact your customer satisfaction which in turn increases CLV.It always important to interact with your customer to know their pain points & work towards increasing customer satisfaction index.By giving option customers to raise ticket option for any issue they are facing, & constantly monitor them & resolving the issues will improve customer lifetime with you as well as it will help you to analyse your support staffs performance. Where it is needed you should train your staffs more to make them aware of customer service importance in business.
As a business owner you need to track all those KPIs in real time which helps your business to be always on top. Without using a right tool, keeping track of all KPIs will be time & cost consuming & dashboards are great for that.