The Rundown on KPIs For Your Business

Alexa Bricker

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If you’re asking yourself, what’s a KPI? Don’t worry—we’ll start at the beginning. KPIs, or key performance indicators, are quantifiable values that your business should be tracking to ensure you are meeting your goals. They can be as simple as tracking net profit or as complex as customer loyalty and retention, but you’ll first need to identify what KPIs are essential to track, and how to keep tabs on your progress.

For most small businesses, the top five KPIs you should be tracking are:

  1. Net profit margin
  2. Sales revenue
  3. Customer engagement
  4. Lead-to-customer conversion rate
  5. Company goals met


But we’ll start with the most obvious KPI, profit.

Net Profit Margin

This stat can show you how much money your company brings in after you deduct your expenses—a number that will increase or decrease depending on the revenue you bring in versus how much you are shelling out in operating costs.

It’s important to measure your net profits mainly so that you can be sure you’re not overspending. It can be difficult, especially for a small business, to know how to differentiate between expenses that are absolutely necessary and ones that you can do without.

Sales Revenue

Obviously, if you are in a sales-based business, the amount of revenue you generate from sales should be a top priority. This can easily be calculated by taking the total income from your sales, and subtracting the cost associated with delivering your product or service.

Measuring your sales revenue can help you determine a long-term process for increasing your sales, or at the very least, determining the amount of revenue you’ll need to generate in sales to keep your business afloat.

Customer Engagement

You can’t have a product without customer engagement. The satisfaction of your customers should always be top of mind, but their satisfaction is not always the easiest KPI to track.

One of the best components to track, though, is customer retention. It costs far less money for you to maintain a customer than it does for you to acquire a new one, so maintaining your customer relationships is key. An easy way to track your retention rates is to subtract the number of new customers you gained over a time period by the number of customers you maintained, divided by the total number of customers you had at the start of that time period.

Lead-to-Customer Conversion

You already know it’s not enough to find solid leads—you need to turn those leads into customers. It can be a difficult (and lengthy) process, but most of your energy is worth it when it comes to going from prospect to sale.

Determining your conversion rate is fairly straightforward. Simply divide your number of new customers per month by your number of monthly leads, and you’ll have a quantifiable conversion rate that can help you strategize how to nurture your leads and turn them into a sale.

Company Goals

Last but not least, it’s always important to keep track of internal goals for your business. Whether you evaluate your progress on a weekly, monthly, or yearly basis, you don’t want to forget about the little milestones that contribute to your overall success. Perhaps you set a goal to hire ten new employees in the first quarter, or something more personal, like posting to social media more frequently.

Regardless of the goal and its size, it’s not just about the numbers when it comes to KPIs. Some of the best ways to measure your success can come in the form of little victories that you might not consider as paramount to your growth, but overtime, add up to make a huge difference.

Written by Alexa Bricker

Creative writer who believes in the power of a well-told story and helpful content.