growing business performance indicators: what to measure

Growing business performance indicators: what to measure

By Daniel Plume for NewVoiceMedia

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As a small or growing business, you probably have a lot on your plate. Managing a growing business is packed with complex and difficult decisions that can then leave many with sleepless nights. Every decision can feel like a stab in the dark, a step into the unknown, a risk. It feels like any mistake could be fatal to the business. It is not an enviable position for anyone to be in, particularly if you are a very small business or you rely heavily on just a few key clients as you seek foothold in the market. Every company has to go through this challenge, and this whitepaper is designed to help you come through it unscathed and in a position to grow faster.

We have helped many businesses through this turbulent and hazardous period and into successful and sustained growth. Our customers are outpacing the competition in their respective market by as many as 8 times the average. Focusing on the key metrics and drivers that matter most to you and improving those steadily is the best way to navigate this period in your organisation’s growth.

This whitepaper explores the key business performance indicators across sales and service that you need to pay close attention to. It maps out what you should be measuring as you take your business through the next stage of its development.


Sales Performance IndicatorsNew and growing businesses depend on acquiring new customers as fast as possible and as efficiently as possible. The sooner the dependence on a handful of key customers is diminished, the better.

Depending on the industry and the nature of the business, this can be harder for some, but there are certain things to focus on that will help you reach your goals and stay on track. The measures detailed here are broad metrics that indicate a healthy sales and marketing environment.

Sales revenuesSimply defined as income from customer purchases minus things like returned items. Everyone is happy when the numbers keep going up, but the data needs to be checked constantly for deeper meanings and trends.

Your sales data needs to be viewed alongside things like advertising campaigns, any price changes, competitive actions and of course other costs associated with the sale. There are more sophisticated measures in this area which will help you gain a better insight into your success, such as Return on Sales (operating profit), or Return on Assets. These can tell you where your company ranks alongside the competition, and in the long run this is what truly matters.


Customer acquisition cost (CAC)This measures the total costs associated with acquiring a new customer, including all aspects of marketing and sales. It is calculated by dividing the total acquisition costs by the number of new customers over a given period.

It is important with this measure to include the costs associated with your sales teams when they close deals as well as your advertising and marketing budgets. This helps you understand whether your investments are paying for themselves and gives you a great indication of performance. Over time, this cost should decrease as you become better established in the market and your brand recognition increases.

A great way to monitor this is to find clever ways to measure the ROI of marketing campaigns. This will help you focus your spend on activities that return the rewards and will ultimately bring down the cost to acquire new customers.


Building your typical customer profileTime is precious in sales. With man power and labour costs being some of your highest expenses, knowing that they are going to waste is a difficult pill to swallow. Therefore keeping your sales teams focused on your key targets is a sure fire way to minimise waste.

Look at your successes and build a ‘typical customer’ profile that you can then use to prioritise key leads and sales targets.

Size of gross marginThis is the company’s total sales revenue minus its cost of goods sold, divided by the total sales revenue. This is then expressed as a percentage. The higher the percentage the more your business saves on each dollar or pound of sales to service its other costs and enjoy as profit.

It is important to track margins in a growing business since increased volumes should improve efficiency and lower the cost per unit. Improving productivity requires effort and innovation, and many companies charge ahead without realising margins are heading in the wrong direction.

The key is to drive efficiency through every aspect of the sales cycle where you can. Technologies like click-to-dial can help save valuable time on a daily basis that enable sales teams to place more calls in any given day.


Knowing your sales funnelAs a growing business, understanding the ratios and flow of your sales funnel is critical. Winning new business is essential but do you know how much it costs to win each new piece of business? Do you know, for example, how many leads it takes per meeting booked? Or how many meetings you need to generate new pipeline?

Here are some typical sales funnel stages to keep an eye on:

• Leads to meeting

• Meeting to pipe

• Pipe progression

• Pipe to close

Keeping a track of all this kind of information can be difficult, you need to ensure all sales activity is logged in your CRM against your customer and prospects’ records. Only once you have a complete view of all sales activity can you work out, going backwards, how many leads it takes to hit your sales targets.

This information provides a great basis to plan your marketing activities and budgets, as well as knowing where you need to be with your sales function to hit your growth goals. Gradual improvements at any step along your sales funnel can reap great rewards at the bottom.


Building momentumNot necessarily a directly measurable business metric, but capitalising on big wins and celebrating all new business is a good way to make people feel included and to generate a sense of victory. Often when it comes to a sales environment, the enemy is the feeling of flat-lining or being static, so anything you can do to encourage people out of a slump or to stave off that feeling of inertia you should be doing.

This could involve gamification or any number of incentives schemes in order to drive not only better performance, but to give the work environment some energy and healthy competition. Ultimately keeping staff motivated is a great way to build that momentum and feeling of growth and moving forward.


Service Performance IndicatorsService is becoming the battle ground for the modern business. The customer experience is heralded as the key differentiator with businesses clambering over themselves to be leading the market.

Delivering exceptional service is critical for small and growing businesses, you want to keep your customers happy and with you for as long as you can. But what constitutes great service and what should you be keeping an eye on to ensure you are delivering great service? Outlined below are the core things you want to be tracking and measuring.

Speed of ServiceIf you are a very small organisation this may not seem like such an important metric, but as you grow your ability to turn customers’ problems around quickly

is highly important. In competitive market places where choice is readily available to your customers, the service level you deliver will directly influence the number of customers you attract and retain.

Technology plays a key role in your speed of service. Look for systems and technologies that keep information in one place, available simply for all staff to view and understand. It helps build a profile of your customers and also prevents the need to flick between systems when talking with customers directly.


Cost to ServePossibly the most important metric in your service organisation. If your costs to serve and costs to acquire outweigh your profits, then the business will fail. You have to maintain both.

This is an important metric to keep on top of and to understand where the costs are coming from. With so many moving parts in service and so much of the organisation usually involved with resolving customer challenges it can be a tricky task keeping on top of it all. All that said, you need to analyse and review on a regular basis to ensure costs aren’t spiralling.

Look for technologies that empower your service agents to help at first contact. Look for ways to reduce the time it takes to resolve challenges and reduce the number of times your customers need to call to get a resolution.

Customer loyalty and retention / churn rateKeeping hold of your existing customers is paramount to success. An often quoted figure or statistic in business is that is costs as much as 6 times more to win new customers as it does to maintain existing ones. Having to win all new customers drastically raises your costs to acquire which has a significant impact on your margins.

The best way to prevent this from happening is through great service. Take a good look at your customer churn rates and understand what their reasons are for leaving you. Use any methods at your disposal, whether an exit-survey conducted by the account manager or a simple questionnaire sent out to the leaving customer, get a handle on what you can do better to reduce churn.


Pick a customer service measurementWhether it is an overall customer satisfaction survey or using NPS (Net Promotor Score), you should pick a measure and use that to benchmark your own progress in service. Make it readily available across the business and share in your successes.

Sharing in your common goals as a business is a good way to build a culture. Driven by your success and knowing the numbers are improving breeds a winning mentality across your service department and will help champion good service from the whole of the business.

Prioritising key customersEvery business has their key customers. Whether they are target accounts in particular industries, landmark names to have on the books or large spending customers, they all deserve special attention. It isn’t something that any company will openly admit to but you can bet your bottom dollar behind closed doors they work harder for them.

Technology can play a particularly pertinent role here in allowing you to apply certain conditions in your service department. For instance, linking your CRM database with your phone system can enable priority routing. Your customers won’t even know it is happening, but you can start to provide personalised and fast service.


Business Performance IndicatorsThis section details metrics that examine the business performance as a whole. These indicators will highlight your operational efficiencies as well as give you a good understanding of total performance.

As with any business, operating effectively and efficiently is essential to maintain a steady growth trajectory. Keeping a keen eye on these can be the difference between making a good decision, and a bad one.

Operating productivityNaturally measuring staff productivity is important. If you don’t know how your staff are doing or how hard they are working then you can’t truly know the inner workings of your company. If staff morale is low it can be really dangerous for your company, conversely happy productive staff can be your greatest asset.

Productivity ratios can be applied to practically any aspect of the business. Sales productivity, for example, is simply actual revenue divided by the number of sales people. Compare your productivity to industry statistics or against yourself as a benchmark for continuous improvement. This process works for manufacturing, marketing and even support.

As mentioned previously, look for ways to incentivise performance and keep your working environment an exciting and enjoyable place to be.


Monthly profit or lossProfit is not simply the gap between the costs of your product or service and the price being charged for it. There are many factors and expenditures that must be considered including fixed and variable costs of operation. These include items like rent or mortgage payments, utilities, insurance, taxes and your staff salaries.

Beyond reducing your cost of operation, the biggest impacting factor on profit is the price you can charge for your product or service. The amount you charge above the base cost of an item is your ‘markup’ and then the difference between cost and price is the ‘margin’. Companies with margins below 60% are traditionally seen by investors as companies that will have a tough time growing.

Overhead costsEconomics states overheads as fixed costs not dependent on the level of goods or services produced by the business – like salaries or rents being paid each month. These need to be monitored closely as with any growing business they can spiral and become a serious inhibitor to growth.

Tracking these costs monthly will give you a clear view on where your spending occurs across the business. You can then utilise this information when you update your business plans or when looking at your yearly budgets. Overhead costs are not influenced by how much your business earns or grows so they must be tracked separately and carefully.

If costs seem to be spiralling, investigate the options of moving premises or switching utility suppliers to help keep your costs more manageable.


Inventory sizeYour inventory represents one of the most important assets businesses possess, because the turnover of inventory represents one of your primary sources of generating revenue and earnings for the company and its shareholders or owners.

For a growing business, it is an important area to manage. No doubt you will find you either have too much inventory, or not enough. The challenges include forecasting your requirements, buying in cost-effective amounts and just-in-time delivery systems.

Hours worked per processBeyond ratios, you need to keep metrics on total number of labour hours extended for various functions across the business. Labour is likely to be your most important and most expensive asset, particularly in manufacturing and support operations.

There is one constant in small business and that’s change. This is exactly why the excuse of, “we have always done things this way,” should be banned from any growing business. These days most labour-intensive operations can be replaced with automation so it’s important as your business grows that you recognise the point where automation becomes justified. There comes a point where the return on investment of technology and automated operations is well worth the cost and time to change.

For instance, any practices and activities carried out by staff that can be simplified to drive efficiency should always be considered. Consider your sales and service departments making and receiving calls all day, if you could automatically log that activity it would save both departments so much time.


Review your processesWhat worked yesterday may not work tomorrow. As your company grows it is important to review your processes regularly. The more people involved then the more possibilities there are for things to fail or slow down. This isn’t a slur at your workforce, it is human nature.

It is important to refresh and review your processes and make any and all improvements. When speed is so important for growing businesses making sure your operations are as smooth and efficient as possible can make all the difference when it comes to executing for your customers and keeping them happy.


SummaryWith so much to keep your eye on as a growing business knowing what data to analyse and what to discard is half the battle. Hopefully this guide will help you to zero in on key metrics that give an overall view of the business and its performance. Every business owner should monitor these constantly and take time to chart, review and carefully examine them at least once a month. If any of these key metrics start to ring alarm bells, you can dive into the numbers that help comprise them and get to the root of the problem.

It can be so easy to focus on new sales figures and feel that as you keep winning customers that the business is succeeding, but there are a lot of contributing factors to business success. Wherever possible look to see how technology can play a part in driving efficiency gains and in taking out the manual costs associated

with tasks that could be automated. A great way to keep the business on track is to firstly invest heavily in a great CRM. Invest now and invest fast and give your business every chance of growth. If you don’t have the right one in place it can act against you as you look to expand. You need to build a good understanding of your customers and your CRM is the best tool for the job.

What you are then looking for is a communications platform that integrates with your CRM to enhance communications, delivering a great experience for your customers and making every interaction context rich. This type of integration streamlines your sales operation, reduces costs to acquire and lowers labour costs since the team will be more effective and efficient. It will also help your service department provide excellent, personalised service as standard. A winner on all fronts.


Recommended for you…

The small business guide to cloud communications

Managing telephony for Salesforce as a growing business

Service KPIs: 18 things to consider

http://www.newvoicemedia.com/resources/whitepapers/smb-small-business-guide-to-cloud-communications

http://www.newvoicemedia.com/products/smb/quickstart

http://www.newvoicemedia.com/resources/whitepapers/service-kpis


Daniel curates the creation and distribution of marketing content at NewVoiceMedia. Daniel has worked in the telecommunications and IT sector for 5 years, almost exclusively with cloud technology. In his spare time he is a keen sports enthusiast, playing cricket throughout the summer, football in the winter, and can be found playing darts mid-week.

About the Author

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