In the contemporary age, companies need to be agile and responsive to changes in the marketplace. This requires them to constantly monitor their performance metrics and make adjustments accordingly. In the end, it is the way to measure their situation, diagnose problems and predict future scenarios.
One of the main mistakes many companies make is not knowing what the key KPIs (Key Performance Indicators) are for their business, therefore it is important to know the typology of the company and always have some metrics in mind.
Below are listed some of the key performance indicators for business growth:
- CAC, Customer Acquisition Cost, i.e. the cost of acquiring a new customer. This indicator must be kept under control, as the price of acquiring a customer is fundamental to the viability of the business.
- ARPU, Average Revenue per User, i.e. the average revenue generated by a customer over a period of time. This KPI helps to analyse the economic growth of a company.
- Churn Rate or the number of customers lost in a period of time as a percentage. This ratio plays a major role in businesses where the products or services are under a subscription model.
- CLTV, Customer Lifetime Value, measures how much a customer generates during the time he buys.
- CAC PAYBACK, the time it takes to get back the investment made in acquiring a new customer.
An indicator that your business is in good health would be if the CLTV is higher than the CAC, i.e. if the customers throughout their life in the company bring in more profit than the cost of acquiring them.
In short, we live in a very competitive, fast-changing business world where innovation makes a difference. The way to measure the growth, health or success of your business is to be clear about the KPIs for your business, as they provide information about the factors that are important for the strategic objectives of the organisation.