The plan focuses on measuring key indicators of business performance, such as revenue growth rate and customer acquisition cost, which directly reflect progress and resource allocation efficiency. Monitoring these metrics is crucial for identifying opportunities for growth, such as increasing marketing efforts or optimizing advertising targets.
For example, assessing customer retention rates and net revenue retention ensures that customer engagement strategies are effective, whereas analyzing profit margins helps in understanding financial health and cost management.
Top 5 metrics for Business Performance Improvement
1. Revenue Growth Rate
The percentage increase in revenue over a specific period, indicating business expansion.
What good looks like for this metric: Typically 5% to 15% annually for stable industries
How to improve this metric:- Increase marketing efforts in high-potential areas
- Launch new products or services
- Improve pricing strategies
- Expand into new markets
- Enhance sales team's efficiency
2. Customer Acquisition Cost (CAC)
The total cost of acquiring a new customer, including marketing and sales expenses divided by the number of new customers.
What good looks like for this metric: $20 to $500 depending on the industry
How to improve this metric:- Optimise marketing spend
- Improve targeting in advertising
- Enhance conversion rate on sales funnel
- Leverage referrals and word-of-mouth
- Utilise partnerships and collaborations
3. Customer Retention Rate
The percentage of customers who continue to do business with a company over a given period.
What good looks like for this metric: 75% to 90% depending on the industry
How to improve this metric:- Enhance customer service and support
- Implement loyalty programs
- Regularly engage with customers via newsletters or updates
- Gather and act on customer feedback
- Strengthen community or brand connection
4. Net Revenue Retention (NRR)
The percentage of recurring revenue retained from existing customers over a set period, including upsells, cross-sells, and downgrades.
What good looks like for this metric: Above 100% is ideal
How to improve this metric:- Upsell and cross-sell to existing customers
- Implement personalised customer experiences
- Provide seamless customer onboarding and training
- Regularly review and address customer needs
- Maintain a competitive offering in the market
5. Profit Margin
The percentage of revenue that exceeds the costs of producing goods or services, indicating profitability.
What good looks like for this metric: 10% to 20% for most industries
How to improve this metric:- Reduce production or operational costs
- Streamline supply chain management
- Negotiate better supplier terms
- Focus on higher-margin products or services
- Improve financial management and budgeting
How to track Business Performance Improvement metrics
It's one thing to have a plan, it's another to stick to it. We hope that the examples above will help you get started with your own strategy, but we also know that it's easy to get lost in the day-to-day effort.
That's why we built Tability: to help you track your progress, keep your team aligned, and make sure you're always moving in the right direction.
Give it a try and see how it can help you bring accountability to your metrics.
