The Ultimate Guide To Business Metrics 2023 (With Examples)

Want to understand what business metrics are and learn how to use them in your company?

Business metrics help you measure your company’s performance in achieving various business goals and objectives. 

They’re the things you turn to when you need help in determining how you’re doing – a lot like what Alfred is to Batman!

But what exactly are these metrics? 

More importantly, how do you use them? 

In this article, we’ll cover what business metrics are and highlight the 11 essential metrics you need to track. We’ll also cover four tips that’ll help you choose the right metrics for your company. 

But that’s not all.

We’ll also cover how you can use a business metrics dashboard to take care of all your activities – like your very own Batcomputer!

Let’s get started!

What are Business Metrics?

Business metrics (also called performance metrics) are measures that companies use to evaluate the performance in achieving certain goals. 

As these metrics give you a clear overview of your activities, tracking and analyzing your business performance becomes really easy.

Do you use the same metrics to track all your business processes?

Of course not! 

Different performance metrics monitor different business activities. 

For example, marketing teams would focus on metrics like customer acquisition and website traffic. However, human resource teams would focus on metrics like employee turnover rate instead.

How are these metrics different from KPI?

KPI (Key Performance Indicators) are measures used to determine your performance in meeting core business goals. 

But that sounds like a business metric…

Don’t worry. 

Technically, all key performance indicators are business metrics. 

However, not all business metrics are performance indicators.

Confused?

Here’s all you need to know about the differences between them:

• If a metric tracks key business goals, it’s a KPI
• If a metric tracks non-core business goals, it’s a regular metric

Read our in-depth article on KPIs vs metrics if you want to know more.

So, what metrics are KPIs?

That depends on you and your business.

Remember, different businesses prioritize different things and a KPI for one business could just be regular performance metrics for someone else.

For example, Batman might prioritize “lives saved” when evaluating his performance, but Robin might prioritize “villains defeated” instead! 

But what metrics should you use in your company?

Let’s find out…

11 Essential Business Metrics to Measure Your Company’s Performance

Like Gotham villains, there are hundreds of business metrics — each with a different purpose. 

However, you don’t need all those metrics to start tracking your business performance!

Instead, you can start with these 11 key business metrics that are super important for almost any company. 

Let’s see what these key metrics are and how to measure them:

A. Sales and Marketing metrics

Metric #1: Customer acquisition cost (CAC)

The cost of customer acquisition includes the resources you spend on acquiring a single customer across all stages in your marketing and sales funnel. 

How do you measure this?

Customer acquisition cost is calculated by dividing the total costs of customer acquisition by the number of new customers obtained in a given time period.

Wayne Industries could calculate Customer acquisition cost by totalling the costs incurred on marketing their surveillance tech and dividing it by the new customers they gained over a specific time period.

(Rumour has it that over half their sales went to this mysterious cave in Gotham – not sure why…)

How do you reduce this cost?

As you grow your business, the cost for each new customer should decrease over time.

So here’s how you could reduce CAC:

• Define a clear target audience
  By identifying your target audience, you can:
  • Stop spending on unnecessary activities that don’t resonate with them
  • Create a detailed buyer persona for effective marketing campaigns that have better conversion rates
• Invest in Marketing Tools and Automation

Investing in marketing tech and automation software will help you eliminate activities that require manual effort. For example, a marketing automation tool can use email interaction and web browsing data to automatically segment your email list and qualify prospects to marketing qualified leads (MQLs).

Metric #2: Monthly website traffic

Monthly website traffic represents the number of visits your website receives in a month. 

It helps you determine the popularity and reach of your website.

How do you measure this?

Use tools like Google Analytics that help measure your monthly website traffic and break it down for easy analysis. 

For example, if Commissioner Gordon wanted to boost the Gotham Police’s online presence, he could set up a website. He could then use Google Analytics to see how many visitors it’s getting, how long they’re spending on the site, and what resources they’re interacting with.

How do you increase it?

Improve your SEO

SEO is a super important factor to boost your website traffic — a higher search engine ranking increases your visibility among your target audience.

Promote your content

Don’t wait for people to find your content on Google. SEO takes up time! Promote your content by posting on social media, writing answers on Quora, paid advertising, sharing your content with influencers and so on.

Minimize load time

Loading time can make or break your website traffic. You want your website to load as fast as possible before customers lose their patience and leave! Use a Content Delivery Network (CDN) to boost your site speed.

Metric #3: Incremental sales

Incremental sales are metrics that measure the additional sales your marketing campaigns generated made over a company’s average recurring revenue from sales.

How do you measure it?

Incremental sales = total actual sales – average sales for the given period

Wayne Industries could calculate incremental sales by identifying the difference between actual sales over a time period, against the average sales they usually made. It’s a good indicator that whatever they’re doing to increase sales is working!

(Plus it doesn’t hurt that new villains keep popping up – making their products indispensable to vigilante superheroes)

How do you improve incremental sales?

• Diversify your marketing channels

Experiment with various kinds of marketing campaigns and channels to bring in more sales as you’ll have more touchpoints.

Metric #4: Sales growth

Sales growth is a percentage of the increase in your sales revenue over the current time period when compared to the previous one.

Sales growth is about the percentage change in sales between two specific periods, while incremental sales are the difference in sales from one period to an average/estimate from multiple past periods.  

How do you measure this?

Sales growth = [(current sales – previous period sales) / previous period sales] * 100

Let’s say that Wayne Industries initiated a new campaign to boost sales over this quarter. To determine if that campaign successfully hit their sales OKRs, they can calculate their sales growth to gauge the impact of growth initiatives on revenue.

But when your board meetings are filled with owners like these, I wouldn’t be too sure of success:

How do you improve this?

• Listen to your target audience

Customer satisfaction is essential to growing your sales over specific periods. Find out what your audience wants and how your sales team can deliver that to boost your sales.

Metric #5: Sales cycle length

Sales cycle length is the amount of time between making initial contact with a lead and closing a deal with them. 

How do you measure this?

Measure the amount of time from the first contact with a prospect until making the first sale for each customer. Then, take an average of all your customer’s different sales cycle lengths to arrive at an overall result.

If Poison Ivy was finding it hard to sell enough of her plant-based products, she could start by calculating the average sales cycle length. This will give her an idea how long each sale takes and how she can speed things up. 

How do you improve this length?

Shorter sales cycles are usually better as they represent quicker, more efficient customer acquisition. So here’s how to shorten your sales cycles:

• Reduce efforts on low-quality leads
  Low-quality leads are prospects that are unlikely to convert. Instead of wasting time and resources on them, ask your sales team to conduct stricter screening processes and only focus on leads that are likely to convert.
• Improve sales processes by automating tasks
  Help your sales team become more efficient by automating repetitive administrative work. Invest in a good CRM. This way, they can focus more on their leads instead of everything else.

Metric #6: Lead-to-client conversion rate

The lead-to-client conversion rate tells you how many qualified leads (prospects that have expressed interest) have become your clients. This gives you an idea of how effective your conversion process is.

How do you measure this?

To calculate the lead-to-client conversion rate, divide the number of customers acquired by the number of qualified leads and then multiply by 100. 

Essentially:

(Customers acquired/total leads) x 100

Let’s say Bane started selling the steroid powder that made him so gigantic. He’s got tons of leads since he’s found a lot of people who may be interested in it. However, he still isn’t making enough money.

What can he do?

Calculate his lead-to-client conversion rate to determine how many of those leads actually go on to purchase the powder from him. This will let him know if there’s a serious problem in his conversion process and how he can fix it.

Unfortunately, Bane fails to realize that punching isn’t always the best solution to all of his problems!

How do you improve this?

• Invest in sales training: Investing in the right sales training and coaching can dramatically improve your team’s selling skills.
• Screen your leads carefully: Only qualify leads that you believe will convert. This way, your lead-to-client conversion rate will go up.

B. Financial metrics

Metric #7: Cash flow

Cash flow is simply a measure of the money that flows in and out of your business.                                                                                                                                                                                                               

How do you measure it?

Your total cash flow = total receivables (inflow) – total payables (outflow.)

Since Joker’s such a big spender, he definitely needs to know the amount of money he’s making to ensure that he doesn’t run out:       

How do you improve it?

• Negotiate better invoicing terms: Try to negotiate terms where you get paid as soon as possible. Avoid getting into contracts that pay you after 30 days.
• Reduce spending where you can: Identify business areas where you’re spending too much and can become more cost-effective. Common ways to do this could be outsourcing and automating expense management.
• Manage your inventory: If you sell multiple products, track sales patterns to identify products that sell easily and those that don’t. Stock inventory accordingly and stop keeping items that take too long to sell.

Metric #8: Average production costs 

Average production costs are financial metrics representing the cost of producing units. 

By correctly identifying production costs per unit, you either set more profitable prices or minimize excessive costs and turn a healthy profit margin. 

How do you measure them?

Divide total costs by total number of units made

Let’s go back to our favorite roided-up salesman Bane here:

If he wanted to calculate how much making the steroid powder cost him, he’s need to divide the amount spent on producing it by the volume of powder he produced.

This will give him a better understanding of how to price it to ensure that he doesn’t lose money with each sale!

How do you reduce these?

• Optimize productivity: If you are in services, use time tracking apps to monitor and reduce the time taken per task. This allows you to take on more projects and earn more.
• Cut supply expenses: Ask your suppliers if they offer bulk discounts and stock up when possible. Compare sources and find the best deals available.

Metric #9: Working capital

Working capital is the difference between your current assets and current liabilities. It’s basically the money you’re left to run your short-term business expenses with – salaries, utility bills, inventory costs. To understand working capital better, check out this article.

While cash flow considers the cash your business can generate over a period of time, working capital is simply a representation of your current financial status.  

How do you measure it?

Working capital is a “difference,” but it’s helpful to measure it as a ratio instead.

Divide your current assets by current liabilities to find your working capital ratio.

If Batman completely disrupted Joker’s business activities, he would need to quickly calculate his working capital to see how much money he still has to work with.

It’ll help him and Harley avoid situations like this:

How do you improve it?

The ideal working capital ratio is between 1.2-2.

• For ratios <1: Negative working capital in the short term is fine. But in the long run, it means your assets can’t pay off your debts – which is a direction towards bankruptcy. Take a long term loan or liquidate some fixed assets to raise cash. Of course, in the long run, you should focus on increasing sales revenue or profit margin by cutting cost.
• For ratios >2: You have a ton of money lying around unused. Use this by investing in your business to grow and improve processes.

C. Human resources metrics

Metric #10: Employee turnover rate

Employee turnover rate helps you track the number of employees leaving your company.

While the churn rate usually represents the normal rate of employees eventually moving away, turnover rates are slightly different. Unlike churn, turnover is caused by situations you can change, such as poor management or decision making. 

How do you measure this?

Divide the number of employees who left by the average number of employees in your company, and multiply this by 100. 

Compare this with your average churn rate to see how bad things are.

After Batman busted up his smuggling ring, The Penguin would need to calculate his turnover rate to see how many team members left his enterprise.

How do you improve it?

• Encourage team-building: Improve communication within your company and grow stronger bonds through team-building activities and staying open. Also invest in employee engagement activities like training and coaching to make them feel more valued.
• Provide healthy employee benefits: Many employees look to their jobs for benefits such as insurance, dental, pension plans, etc. Providing this to your employees could reduce your turnover rate.

Metric #11: Revenue per employee

Revenue per employee is a measurement of the average revenue earned by each employee.

It helps you judge the efficiency of your employees. The higher the ratio of revenue per employee, the greater their productivity is, which usually results in higher overall profit!

How do you measure this?

Divide total revenue by the number of employees.

If Joker wanted to see how effective his team was in selling his “Laughing Gas” – he could calculate the total revenue they generated and divide it by the number of henchmen he has.

How do you improve this?

• Hire the right candidates: Having talented employees from the start will help maintain higher revenues per employee.
• Conduct efficient training: Good training can be the difference between a good and great employee. Train your employees over what they need to do and they’ll be able to do it more efficiently.
• Focus on efficient management: The right management can get the best out of your talent and increase their productivity to the optimum.

So are those ALL the metrics you need to track?

While we feel that these are the 11 metrics every business needs to track, your business should determine what you need. There are also metrics like customer retention rate, net promoter score, bounce rate and tons more. 

It’s up to your business to decide which ones matter most to you.

4 Tips For Choosing The Right Metrics For Your Business

To accurately judge business performance, you need to use the right business performance metrics.

After all, you won’t judge Batman’s success by his ability to sing, right? 

You judge him based on the number of criminals he’s taken down.

Similarly, the metrics you choose to track your key performance should correlate with your business activities. 

Here are a few tips on choosing the right business performance metrics:

1. Pick metrics that are important to you

This one’s a no-brainer. 

Choose and track the metrics that are useful to your business.

For example, if your company’s customer acquisition channels only include sales and offline marketing, closely tracking web traffic or social media engagement is probably a waste of time! 

By picking the right business performance metrics, you avoid tracking irrelevant performance indicators and wasting your resources on them.

2. Choose actionable metrics

Actionable metrics are linked to specific and improvable tasks that are related to your business goals.

Metrics that aren’t actionable are vanity metrics. 

These include things like social media likes, tracking website traffic but not conversions, etc.

While they may be fun to look at, you can’t do much with them!

In Batman’s case, “number of articles written about me” doesn’t tell him what to do next. On the other hand, “hours spent fighting criminals” gives him an idea of what he can improve on to bring those times down. 

Devote more energy to actionable metrics and KPIs to actively boost business growth.

3. Refrain from using too many metrics.

While using multiple metrics is important, using too many can be harmful!

Why?

If you track too many, you’re going to be super confused and overwhelmed.

I mean, just because Batman can keep track of hundreds of different villains doesn’t mean you should too!

Stick to a few metrics and KPIs that allow you to cover the primary aspects of your business. 

Start with 3-4 metrics and increase them gradually as your business grows.

4. Use a business metrics dashboard to monitor your performance easily

A business dashboard is like your very own Batcomputer!

It gives you a visual representation of important statistics such as your metrics and KPIs. You can quickly analyze your key performance and keep track of your progress there.

Why do you need a business dashboard for your metrics?

Using a business dashboard saves you loads of time by giving you clear visuals of your key performance data.

This helps you identify issues early on and step in when needed!

But how do you set up your own project management Batcomputer?

Just use ClickUp!

What’s ClickUp?

ClickUp is one of the world’s highest-rated project management tools. Used by over 200,000 teams in startups and companies including Netflix, Webflow, Google and Airbnb, it has everything you need to manage your projects and boost productivity immediately.

While ClickUp may not help you fight crime, it’s just as powerful and organized as the Batcomputer!

Let’s take a look at how ClickUp helps you track your business metrics: 

A. Goals

Key business metrics are useless if they’re not helping you track your performance over specific goals, right?

Luckily, you can easily set clear, specific goals for all your metrics in ClickUp! 

Here’s how:

ClickUp’s Goals are high-level containers made up of small and measurable Targets. Once all the Targets are finished, the Goal is completed!

And the best part?

With ClickUp, you can customize the metrics used to measure these Goals and Targets.

These can include:

• Numbers: numerical values, including scores and percentages 
• Currency: best for metrics like sales revenue and customer acquisition cost
• Tasks: track progress by task completion

B. Dashboards

ClickUp’s Dashboards are the best place to track and manage your performance metrics. Their customizable interface allows you to view your KPIs exactly how you want to track them! 

Each Dashboard can contain a variety of Custom widgets to monitor all of your metrics and KPIs. These widgets are like Bat gadgets for your KPI Dashboard – they help you track business goals and take care of problems before they turn bigger!

These are the widgets you can access in ClickUp:         

• Line Chart
• Bar Chart
• Pie Chart
• Battery Chart
• Calculation (for sums, averages and other numerical data)

https://docs.clickup.com/en/articles/3625951-custom-widgets

And that’s not all.

You can even customize Dashboard access rights to share your performance indicators with your team and stakeholders! 

This makes it super easy for remote teams to collaborate on projects and stay on the same page.

However, these aren’t all of ClickUp’s features.

You also get tons of other helpful features such as:

• Project Management Automations: Set up Triggers and Actions to automate repetitive tasks
• Multiple Views: Switch between several project views as per your preferences
• Gantt Charts: View a comprehensive overview of the team’s progress
• Agile Project Management Dashboards: keep up with Agile metrics, Agile and Scrum projects using burndowns, burnups, velocity charts, and cumulative flow diagrams
• Priorities: Categorize tasks as per their importance and urgency 
• Pulse: Receive automatic activity reports based on the time spent on each task

Conclusion

Business metrics help you keep track of things, identify weaknesses and improve your productivity. And if your company was Gotham, business metrics are your Batman – keeping a careful watch over everything. 

Key Business metrics help you beat inefficiency and boost your performance to truly help your company grow and meet your business goals.

And since you can’t track your business metrics without the right dashboard, why not try out ClickUp today? 

It has all the features you need to be a silent guardian and watchful protector – looking over all the business metrics you track!