B1.13-Company Metrics

Company metrics are essential tools that help organizations measure and evaluate their performance, progress, and overall health.  These metrics provide actionable insights into key areas such as revenue growth, customer satisfaction, operational efficiency, and employee engagement.  By tracking and analyzing the right metrics, businesses can make informed decisions, identify strengths and weaknesses, and align their strategies with long-term goals.  Ultimately, company metrics serve as a compass, guiding leadership through complex business landscapes and driving continuous improvement.

Companies can improve their profitability in three ways:  generate more revenue for a given cost, generate the same revenue for a lower cost or both.  All methods require measuring and tracking operational performance meticulously — and that cannot be done without business metrics.

The right business metrics will not only help you achieve your business goals, but will also identify areas that are meeting (or exceeding) expectations while pinpointing those that are falling short.

What Are Business Metrics?

Business metrics are quantifiable measures used to track business processes to judge the performance level of your business.  There are hundreds of these metrics because there are so many different kinds of businesses, with many different processes.

Generally, individual divisions or departments within a company, such as manufacturing, marketing and sales, are responsible for monitoring the metrics that track the performance of their parts of the business.  Senior executives track more general metrics.  CFOs, for instance, track earnings before interest, taxes, depreciation and amortization (EBITDA), a universal measure of profitability, and the metrics that feed into it, such as net sales, operating expenses and operating profit. 

The COO of a manufacturing company, meanwhile, might want to track the perfect order rate, a key performance indicator (KPI) to measure the performance of warehouse operations. CEOs are likely to closely monitor just a handful of summary metrics drawn from the dashboards of each of their direct reports.

Tracking the right business metrics is vital to improving company performance, as they provide valuable insights into how well different areas of the business are functioning.  These metrics serve as benchmarks that help identify strengths, weaknesses, and trends over time.  With a wide range of potential metrics to consider, it is important for businesses to focus on those that are most relevant to their specific goals, industry, and operational needs. Selecting the most meaningful metrics ensures that resources are directed toward areas that have the greatest impact on success.  Key departments such as sales, marketing, finance, and human resources (HR) should be closely monitored, as they play a crucial role in driving growth and efficiency.  By tracking performance in these areas, companies can make informed decisions, set realistic targets, and implement strategies that support continuous improvement and long-term sustainability.

Benefits of Tracking Business Metrics

Tracking the metrics that are most important to your business — and managing operations based on the results — maximizes the business’s chances of success.  It’s that simple.  The key word here is “important”.  For instance, executive search professionals might track how many candidates they bring to a client.  But what matters to the client is the speed with which the position is filled and the quality of the candidates; those are the important metrics to measure and track.  Here are six key benefits of tracking business metrics that matter:

• Performance improvement – Tracking the right business metrics tells you how well or poorly the business is doing and provides direction for how to improve operations.
• Comparative analysis – Tracking business metrics reveals whether the business is over- or underperforming on key industry benchmarks.
• Alignment – Business metrics can be used to ensure the entire company is working toward shared organizational goals.
• Compliance – Mandates to track certain business metrics from governmental and other regulatory agencies require companies to monitor them to stay in compliance.
• Communication – Reporting business metrics is a vital communications tool for customers, shareholders, employees or society at large.
• Identifying problems – Analyzing business metrics can help identify emerging problems in time to correct them before they become major pain points.

What Business Metrics Should You Use?

This is a vital question because there are so many business metrics to choose from.  In the absence of clarity around business goals, some organizations can go “metrics-crazy” and try to monitor too many things.  While every business is different and, therefore, the metrics that matter are different for each of them, these four questions can be powerful tools to identify what matters most to any business:

• Is the metric directly relevant to the performance of the business?
• Does it help predict future performance in a useful way?
• Can it be reasonably measured?
• Can the business team associated with the metric impact it — and are they authorized to do so?

Topics to Consider

Align Metrics with Business Goals – Every metric you track should have a direct correlation with your business’s broader goals.  Whether it’s increasing revenue, expanding into new markets, or enhancing customer satisfaction, your metrics should offer insights into your progress toward these objectives.  If you find a metric doesn’t serve a strategic purpose, it’s time to reconsider its relevance.

It’s not just about numbers but what those numbers represent.  Having clarity on why you’re tracking a metric helps in prioritizing resources and efforts.

Prioritize Actionable Metrics – While it might be interesting to know that your website received visitors from 50 different countries last month, it’s not necessarily actionable.  Focus on metrics that can directly influence decision-making processes and subsequent actions.  For instance, a high cart abandonment rate on an e-commerce platform would require immediate attention.

Data without action is a missed opportunity.  When reviewing metrics, always think about the next steps.  How does this information shape strategy or refine tactics?  This way, you can ensure your business is more agile and responsive to changing conditions.

Embrace Tools – Modern businesses have a myriad of tools at their disposal to track metrics.  From Google Analytics to CRM systems, leverage technology to automate and simplify metric tracking, ensuring accuracy and timeliness.

Be Consistent – It’s essential to measure metrics consistently.  If you’re tracking monthly sales figures, for instance, make sure you’re capturing data for the same duration each month using the same methodology.  This ensures that comparisons over time are valid.

Consistent data tracking cultivates trust in the figures presented.  Irregularities or deviations in tracking can lead to misleading interpretations.  Thus, standardizing your measurement approach is more than a best practice.  It’s a necessity.

Ensure Data Integrity – Your decisions are only as good as the data you base them on.  Regularly clean and maintain your databases, ensure data sources are reliable, and cross-check figures where possible.  This guarantees your metrics offer an accurate picture of business performance.

Data is the foundation of informed decisions.  If compromised, it can cause misguided strategies.  Keeping data accurate strengthens the foundation of your business.

Regularly Review and Adjust – Business landscapes are ever-evolving.  The metrics you track today might not be relevant tomorrow.  Regularly review your metrics to ensure they remain pertinent to your business objectives.  If certain metrics no longer serve a purpose, don’t hesitate to pivot.

Remember, the only constant in business is change.  Just as markets and strategies evolve, the metrics you prioritize should reflect those shifts.  A periodic review ensures your metrics remain as dynamic as the business itself.

Key Business Metrics to Track

Step one is to identify the most important KPIs for your business.  Step two is to go ahead and track these KPIs.  There are several basic KPIs that are important, if not required, for every business.  These metrics have been listed by typical business departments.  The departments are as follows:

• Sales
• SaaS
• Marketing
• Social Media
• SEO
• Email Marketing
• Financial
• Human Resources
• Information Technology
• Engineering
• Manufacturing
• Inventory
• Procurement
• Shipping & Receiving

Sales Metrics

Sales metrics measure and evaluate the sales-related performance and activities of an individual, team or company over a given period of time (for example, weekly, quarterly or annually).  Analyzing sales metrics helps identify what is and isn’t working and provides insights into actions to take to improve sales performance. Here are a few key metrics to track in sales.

Sales teams, like marketing, rely on data to make decisions and develop their sales strategy. Sales teams need to monitor their pipeline, track their sales-qualified leads (SQLs), and watch MRR grow and expand.

Sales is a competitive business environment, so being in control of your data is key.  Tracking the right metrics and KPIs will put you on the path to success.

Net sales revenue – Revenue is the lifeblood of any company; it factors into every aspect of business development, especially sales. Depending on the size and maturity of your business, you may want to track several types of sales revenue metrics.  Examples include annual recurring revenue (e.g., from multiyear contracts), average revenue generated per user or customer, revenue by product or product line, revenue by territory or market and revenue generated per sales rep. Formulas for each of these and more are available in our sales metrics guide. But above all, be sure to track net sales revenue. The formula for calculating net sales is:

Net sales = Gross sales – Discounts – Returns – Costs associated with discounts and returns

Let’s say your company reports the following for the month: Gross Sales: $100,000, Sales Returns: $3,000, Discounts Given: $2,000, Allowances: $1,000.  Then Net Sales = $100,000 − $3,000 − $2,000 − $1,000 = $94,000 your Net Sales for the month would be $94,000, which is the true revenue recognized after adjustments.

Quota attainment – Likewise, there are many metrics oriented around sales goals, but quota attainment may be the most universal.  Are you looking to increase the number of reps reaching 100% of their quotas? Start by learning how many already have. Results can show you where to concentrate your efforts. Are you considering whether to ramp up sales in specific regions or markets? You can monitor these targets by measuring their performance against quota. The formula is:

Quota attainment = Amount of sales achieved by a particular rep or region / Goal for that rep or region

If the goal is $10 million and the rep achieved $9 million in sales, they’re at 90% of quota.

Growth rate – Year-over-year growth, which is similarly easy to calculate, is an important overall indicator of the health of your business.  When compared to industry benchmarks, it tells you how well or how poorly your sales team is performing compared to the competition. The formula is:

Sales growth rate = (Current year revenue – Previous year revenue) / Previous year revenue x 100

If your sales were $12 million this year and $11 million last year, your growth rate is ($12 – $11) / $11 x 100, or 9.09%.

Churn rate – Churn rate is the percentage of customers who cancel or don’t renew their contracts or subscriptions for a company’s services or products.  This metric crosses department lines: For sales, it reflects a sales team’s ability to retain customers. For finance, leaders watch churn rates to see the potential impact on a company’s sales and profits.  For Software-as-Service (SaaS) businesses, it can mean rising or plummeting subscribers and, hence, revenue. All of these concerns can hit the marketing department, too, which needs to evaluate the channels and campaigns that performed well or fell flat.  Rising churn rates could indicate a problem with a company’s offerings or customer service approach, or it could mean the company is losing business to competitors. The formula is:

Churn rate = Number of customers lost during period / Starting number of customers at beginning of period x 100

For example, if a company begins Q3 with 5,000 customers and ends Q3 with 4,000 customers, then the difference in the number of customers (1,000) indicates a 20% churn rate.

Lead response – Besides quota attainment, you might want to look into how it takes reps to contact a new lead.  Lead response time can be immensely important in certain industries because the quicker a salesperson responds to a person’s inquiry, the more engaged that person is likely to be and the greater chance of a sale. Calculate lead response time as:

Lead response time = Sum of time between lead contact to sales rep response for all contacts / Total number of leads

For example, if a sales rep is given 9 leads and responds to 5 leads within 1 day, 3 leads within 2 days and 1 lead in three days, the lead response time is (5 x 1 + 3 x 2 + 1 x 3) / 9 = 1.55 days.

Lead to Win Rate – This rate measures the percentage of leads that result in a successful sale.  Understanding it helps sales teams refine their approach and prioritize efforts.  A high lead-to-win rate showcases efficient sales processes since more leads become paying customers.

Win Rate% = (Number of deals you win / Number of deals you pursue) x 100%

For example, your business pursued 50 deals last month and won 10. Calculating the win rate is: (10/50) x 100% = 20%.  Your sales win rate for the business in that month is 20%.

Won Opportunities – This refers to the number of sales leads or prospects that convert into paying customers.  Tracking won opportunities gives insight into sales team performance and strategy effectiveness.

Won Opportunities Rate (%) – (Number of Won Opportunities / Total  Opportunities) x 100

For example, a sales team handled 80 opportunities in Q1, and 25 of them were closed as won.  The Won Opportunities is: (25/80) x 100 = 31.25%.

MRR Growth Rate – This measures the rate by which Monthly Recurring Revenue (MRR) increases or decreases over a given period.  Tracking the MRR Growth Rate will allow you to gauge their success in acquiring new customers and retaining existing ones.

MRR = Total Number of Active Subscribers x Average Monthly Subscription Price

If you have 120 active customers and each is paying an average of $50/month.  The MRR is: MRR = 120 x $50 = $6,000 is the monthly recurring revenue.

Revenue – Tracking revenue as a sales metric directly reflects the team’s effectiveness in closing deals and capturing market share.  An increase in sales revenue often signifies successful sales strategies and a strong product-market fit.  However, stagnant or declining revenue can prompt you to review your sales tactics and market positioning.

Revenue = Number of Units Sold x Price per Unit

For example if you sell 500 T-shirts and sell each at $20.  Then the Revenue would be: Revenue = 500 x $20 = $10,000.00 in Revenue.

Customer satisfaction – Like employee satisfaction, customer satisfaction is critical to a successful business.  One way to measure customer satisfaction is through a CSAT, or customer satisfaction, scale.  These are typically simple questions that follow up on a single customer experience: “On a scale of 1 to 10, how satisfied were you with X experience?” with 1 being extremely unhappy and 10 being extremely happy.  Businesses then add up all the scores and divide that figure by number of respondents to arrive at a customer satisfaction value.  The higher the number, the more satisfied customers are with the experience.  Findings can be used to address potential issues or reinforce effective practices.

Customer Satisfaction = (Number of Satisfied Customers / Number of Survey Responses)

For example if you sent out a customer satisfaction survey and got 200 responses and out of those 160 customers rated their experience as a 4 or 5 out of 5.  Then the satisfaction score would be: Customer Satisfaction = (160 / 200) x 100 = 80%

SaaS Metrics

Many important SaaS metrics overlap with key marketing and sales metrics.  For example, churn rate, customer acquisition cost, customer lifetime value and customer retention are all extremely important for SaaS companies, given that the subscription-based business model relies heavily on keeping customers, not just acquiring them.  Additional metrics that can provide actionable insights for SaaS companies include:

Monthly recurring revenue (MRR) – A key metric for SaaS companies, MRR is essentially a summary of all the revenue you expect to receive in a month.  To calculate MRR, simply add up total revenue from paying customers in a given month.  However, more complex SaaS businesses generally need to factor in additional MRR calculations. For example, it’s a good practice to calculate the MRR of new acquisitions in a month, as well as “expansion MRR” from existing customers who upgrade their accounts or add new product features and/or users, and “churn MRR” — the monthly revenue lost from downgrades or cancellations. Tracking MRR metrics can help you better understand revenue changes, how well sales teams are doing and whether customers are satisfied or dissatisfied with your service.

MRR = Total revenue from paying customers in a given month

If you have 50 customers paying $500/month and 50 customers paying $1,500 a month, your MRR for that month would be (50 x $500) + (50 x $1,500) or $100,000.

New MRR = Total number of new customers in a month x Revenue brought in by new customers in month

If you’ve added 50 more customers in a given month, 25 of whom pay $500/month and 25 of whom pay $1,000/month, the new MRR for that month would be: (25 x $500) + (25 x $1,000), or $37,500. Gaining new customers is key to revenue growth.

Expansion MRR = Total number of customers who upgraded in a month x (New revenue – Old revenue)

If 10 customers upgraded from $500/month plans to $1,000/month plans, your expansion MRR would be $5,000, or 10 x ($1,000 – $500). In other words, you’ve expanded your revenue without having to add new customers.

Churn MRR = Total number of customers who canceled or downgraded x Lost revenue

If three customers canceled their $500 subscription and two customers downgraded from a $1,000/month plan to a $500/month plan, your churn MRR equals (3 x $500) + (2 x $500), or $2,500. Significant churn indicates customers may be dissatisfied with your service.

Average revenue per account (ARPA) – Also known as annual revenue per unit (ARPU), ARPA measures the average revenue generated by each account, usually on a monthly basis.  It’s important to have access to your billing or accounting system in order to accurately calculate ARPA.  Tracking ARPA can help give you a sense of how your revenue evolves over time.  Some SaaS businesses might track the ARPA of long-term customers and compare it with the ARPA of new customers to see whether new acquisitions have different purchasing preferences, providing insight into how customers use and perceive your product. The formula is:

ARPA = MRR / Total number of customers in that month

If your monthly recurring revenue is $100,000 and you have 200 customers, the average revenue per account is ($100,000 / 200), or $500.

Customer engagement score – Customer engagement scores can help you understand how much and how often your customers engage with your SaaS solution, such as how often they log in, how often they use specific tools and features, what they use the software for and more.  For example, if a customer regularly uploads files and uses various features throughout the day, they’re far more engaged than a user who simply logs in once a day to check reminders or alerts. By tracking customer engagement, you can better predict customer churn and be proactive about creating solutions to retain valuable customers.

There’s no one formula to calculate a customer engagement score, so a business must create its own model and system to do so. Create a list of inputs or actions that predict customer engagement, perhaps based on habits of long-term customers.  Then score each input or action based on how critical it is to customer retention and add up each customer’s engagement score. Continually evaluate your rating system to ensure you’re appropriately picking the right features that predict retention and churn.

Net Promoter Score (NPS) – NPS estimates the likelihood users will recommend your service to others. It’s particularly important for subscription businesses because their financial health depends on retaining as many customers as possible — and, preferably, getting them to upgrade and/or refer the product to colleagues and friends. NPS is usually measured through a one-question survey to customers: “How likely are you to recommend us to a friend or colleague?” with a 0-to-10 scale (where zero means they won’t recommend your product and 10 means they definitely would).  Respondents are then bucketed into the following categories:

• Detractors, or respondents who answer with a 0 to 6.
• Passives, or respondents who answer with a 7 or 8.
• Promoters, or respondents who answer with a 9 or 10.

To calculate:

NPS = Percentage of promoters – Percentage of detractors

For example, out of 100 survey respondents, 20 are detractors, 50 are promoters and 30 are passives. Your NPS would be 30 (50% – 20%).

Customer Lifetime Value (LTV) – LTV calculates the total projected revenue a company expects from a customer throughout their relationship.  A higher LTV indicates strong customer loyalty and informs businesses about potential profitability and how much they can invest in customer acquisition.

LTV = Average Purchase Value × Purchase Frequency × Customer Lifespan

Let’s say the average purchase value is $100, Customers make 3 purchases per year, and the average customer lifespan is 5 years.  This would be LTV = $100 × 3 × 5 = $1,500 meaning each customer brings in that amount of revenue over their lifetime with your business.

Churn – Churn represents the percentage of customers that stop using a SaaS product within a specific timeframe.  A lower churn rate signifies customer satisfaction and product stickiness. Meanwhile, a high rate may signal areas in need of improvement to retain customers.

Churn Rate (%) = (Number of Customers Lost During a Period / Total Customers at the Start of the Period) × 100

Let’s say at the beginning of the month you had 1,000 active customers, and by the end of the month, 80 customers had canceled or stopped using your service.  Then the Churn Rate = (80 / 1,000) × 100 = 8% which means 8% of your customer base left during that time frame.

Customer Retention Rate – This metric shows the percentage of customers a company retains over a specific period.  A higher retention rate indicates an equally high product value and user satisfaction, while a decline might suggest issues that need addressing to keep clients engaged.

Customer Retention Rate (%) = [(E − N) / S] × 100

Where: E = Number of customers at the end of the period, N = Number of new customers acquired during the period, S = Number of customers at the start of the period

Let’s say you started the quarter with 500 customers (S), you added 100 new customers during the quarter (N), and you ended the quarter with 550 customers (E).  Then the Customer Retention Rate = [(550 − 100) / 500] × 100 = (450 / 500) × 100 = 90% meaning you retained 90% of your original customer base.

Daily Active Users or Monthly Active Users – These metrics gauge the number of individuals actively using a SaaS product daily or monthly.  A rising DAU or MAU suggests strong user engagement and product-market fit, making it a key indicator of a SaaS product’s success and vitality.

DAU = Number of Unique Users Who Interacted with the Product in a Day

Suppose your mobile app had 4,200 unique users log in and perform an action (like viewing content or sending a message) on a given Tuesday. Then the DAU would be 4200.

Marketing Metrics

There are so many ways for businesses to market and advertise their product or service — direct mail, email, websites, social media — that it’s essential to know what mix works best.  Adopting key marketing metrics helps your marketing team determine how effective its methods and channels are in supporting the success of your business.

Marketing metrics are used by companies to monitor and display the overall performance of social media channels and marketing campaigns like email or advertising. 

Marketing is a data-driven practice with any number of channels and platforms.  Depending on the channels your team uses and your goals and objectives with each, the metrics you monitor will vary.

Return on marketing investment (ROMI) – ROMI is a bit different, and harder to calculate, than most ROI metrics because it focuses on the profits of incremental sales that can be attributed to marketing activity — or more simply, profit generated by the marketing department.  It can be calculated separately for every marketing or advertising channel. ROMI can provide insights into the value of marketing activities in general or differentiate the relative performance of different marketing channels and campaigns.  The formula is:

Return on marketing investment = (Sales growth – Marketing cost) / Marketing Investment x 100

For example, imagine you invest $10,000 in an email marketing campaign, which generates $60,000 in sales at a 20% margin, thus contributing $12,000 to company profit. Your ROMI for this effort is (60,000 X .20 – 10,000) / 10,000) x 100 = 20%.

Cost per lead (CPL) – How much does it cost to identify, attract, qualify and retain a customer? Determining how much each lead costs will help you allocate your budget appropriately.  But just because a particular channel incurs a higher CPL, doesn’t mean you should drop it: Those customers might actually convert at a higher rate or spend more than customers gained through a lower-CPL channel.

Cost per lead = Total marketing spend / Number of new leads

For example, if a company spends $1,000 on a digital advertising campaign and acquires 50 leads from it, the cost per lead would be: CPL= 1000 / 50 = 20.  This means the company is paying $20 for each lead generated through that campaign.

Customer acquisition cost (CAC) – How much does it cost to turn a prospect into a customer? CAC should take into account all marketing and sales costs, from salaries and benefits of the staff to the media spend.  It’s best to calculate CAC for a period of time that covers the peaks and valleys in your business — a year is standard.

Customer acquisition cost = Total marketing and sales spend / Number of new customers

If you invest $1 million in marketing and sales and get 500 new customers, your CAC is $1,000,000 / 500 = $2,000 per customer.

Customer lifetime value (CLV) – There’s little point knowing what it costs to acquire a customer if you don’t know what that customer’s patronage is worth.  CLV is the profit earned from a customer over the entire time they remain a customer.  But you don’t want to track the value of an individual customer — you want the average of all customers, or of like customer groups. Note that this is different for some companies, such as those that would add value from customer references or recurring revenue.  The formula is:

Customer lifetime value = (Average transaction value x Average number of transactions in a year x Average customer retention in years) x Profit margin

Suppose a company with an overall 20% profit margin retains customers for five years on average. The company has an average transaction value of $100 and each customer makes 10 purchases per year. Its CLV = (100 x 10 x 5) x .20, or $1,000.

Customer retention – Knowing how costly it is to acquire new customers demonstrates how important it is to retain the customers you already have.  Customer retention is the percentage of existing customers that stay during a specific period of time. The formula is:

Customer retention = (Number of customers at end of a period – Customers added during period) / Number of customers at beginning of period

For example, if a company had 500 customers at the start of a year, added 50 customers during the year and ended with 500 total customers, it would have a customer retention rate of (500 – 50) / 500, or 90%.

Website traffic-to-lead ratio – A sales qualified lead (SQL) from your website is someone that is not only aware of the company but interested enough to enter information about themselves on the website in order to, for example, get past a filter or to get your newsletter.  The formula is:

Website traffic-to-lead ratio = Number of leads / Number of unique website visitors

A business whose website is visited by 500,000 individuals in a month, 5,000 of whom convert to leads, has a traffic-to-lead ratio of 1%.

Conversion rate – Conversion rate is a way to measure the percentage of users or customer prospects who complete a desired action, such as making a purchase, registering an account or starting a free trial.  Tracking this metric can help you get a feel for how well your marketing strategy is working. The formula is:

Conversion rate = (Conversions / Total unique visitors) x 100

For example, suppose a subscription business offers a free trial to 1,000 potential customers in total, and 200 of them take advantage of it. The conversion rate is (200 / 1,000) x 100, or 20%.

Website bounce rate – Like conversion rate, this metric can help you track how effective your marketing strategy is.  Bounce rate tracks how well a website landing page generates visitor interest by calculating the percentage of visitors who enter the site and leave before viewing other pages within the same site. The formula is:

Bounce rate = (Number of site visits that access only one page / Total number of site visits) x 100

If a site has 100,000 visitors, and 50,000 of them view only one page, it’s bounce rate is (50,000 / 100,000) x 100, or 50%. The higher the bounce rate, the less likely the site engages customer interest. A low bounce rate is ideal.

Average Time on Page – This metric refers to the average duration a visitor spends on a particular webpage.  A longer average time indicates that visitors find the content compelling, leading to better engagement.  Average Time on Page can be used to fine-tune content strategy.

Average Time on Page = Time Spent on Page by All Users / (Total Number Of Pageviews – Exits)

If Visitors Spent a total of 1500 minutes on your blog post and the page received 300 pageviews with 500 users exiting immediately, then the Average time on Page = 1500 / (300 – 50) = 6 mins.

Lead Conversion Rate – Lead Conversion Rate measures the percentage of leads that turn into customers.  A high conversion rate indicates a strong alignment between marketing efforts and customer needs, while a low rate may suggest room for improvement in messaging or targeting.

Lead Conversion Rate(%) = Number of Leads Converted into Customers / Total Number of Leads)  x 100.

If your business generated 500 Leads in a month, and 60 of those became paying customers, then the Lead Conversion Rate = (60 / 500) x 100 = 12%.

Customer Acquisition Cost – CAC represents the total cost to acquire a new customer, considering all marketing and sales expenses.  If it exceeds the value a customer brings (Customer Lifetime Value), then your profitability is at risk.  It’s essential to balance marketing investments with the revenue potential of acquired customers.

CAC = Total Sales and Marketing Costs / Number of New Customers Acquired

For example, if the total sales and marketing expenses were $25,000 and you gained 500 new customers, then CAC = 25000 / 500 = 50.  Which means you spent $50 to acquire each new customer.

Marketing Qualified Leads – These are individuals who’ve engaged with a company’s marketing efforts and are more likely to become customers compared to other leads.  Identifying these qualified leads helps you prioritize them, ensuring sales efforts are directed toward the most promising prospects. 

MQL Count = Number of Leads who meet the Marketing-Defined Criteria

For example if you had 1000 total leads and based on your criteria, 200 filled out a demo request, opened 3 + emails, and visited the pricing page then 200 is what you passed on to the Sales team for follow up.

Return on Marketing Investment – With this metric, you calculate the return on marketing activities by dividing the net profit from these activities by the associated costs.  A positive return on marketing investment indicates a successful strategy. Conversely, a low or negative return may suggest a need for re-evaluation or adjustment.

ROMI = (Revenue Attributed to Marketing – Marketing Cost) / Marketing Cost x 100

Suppose your company ran a digital ad campaign that generated $40,000 in Revenue and cost $10,000 to execute.  ROMI = (40000 – 10000) / 10000 x 100 = 300% meaning you earned 3$ for every $1 spent on marketing.

Social Media Metrics

Social media metrics track performance and engagement on platforms like Twitter, Instagram, TikTok, or Facebook.  Social media marketing is a fundamental component of any marketing strategy.  Awareness and engagement campaigns are used to drive traffic to your website, generate leads, and at its core: get people talking about your brand.   With so many platforms to monitor, however, it can be challenging to measure performance across all of them. Here are five key metrics you can track across all channels:

Account Reach – Account reach signifies the number of unique users who’ve seen any content from your social media profile over a specific period.  It provides insight into the spread of your brand’s message and helps determine your potential audience size.

Account Reach = Number of Unique Individuals Engaged within a Target Account

If 7 different employees from a company interacted with your content (e.g., 2 visited your site, 3 clicked an ad, and 2 attended a webinar) then you would have an Account Reach of 7.

Followers – This represents the total number of individuals who’ve chosen to receive updates from your social profile.  An increasing follower count is indicative of growing brand loyalty and interest, making it a benchmark for brand popularity and resonance.

Followers = Total Number of Users Who Have Subscribed to You Social Profile

Followers is a basic yet important social media metric and simply represents the total number of people that follow your profile.

Follower Growth Rate(%) = ((New Followers – Lost Followers) / Starting Follower Count) x 100

If you had 500 followers at the beginning of the month and you gained 400 new followers and lost 50 then the Follower Growth Rate = ((400 – 50) / 5000) x 100 = 7.0%.  The follower count is now 5350 with 7% growth rate over the month.

Comments – Comments on social media posts are direct feedback from your audience, signaling deeper engagement than mere likes or shares.  Tracking comments helps businesses understand audience sentiments, gather feedback, and engage in direct conversations with their community.

Comments = Total Number of User Responses Left on a Piece of Content

Simple count of comments left.

Comment Rate(%) = (Total Comments / Total Followers or Views) x 100

If your Instagram reel received 120 comments from an audience of 10,000 followers then the Comment Rate = (120 / 10000) x 100 = 1.2% comment engagement rate.

Post Engagement Rate – This metric measures the percentage of your followers or viewers who interact with your content, either through likes, shares, comments, or clicks.  A high engagement rate often indicates high audience relevancy and campaign effectiveness, which can help guide your content strategy moving forward.

Post Engagement Rate(%) = (Total Engagements / Total Followers or Impressions) x 100

Suppose your post received 300 likes, 40 comments and 20 shares.  If you have 8000 followers then Total Engagement = 300 + 40 +20 = 360.  Engagement Rate = (360 / 8000) x 100 = 4.5% of the audience engaged with the content.

Video Views – In an era where video content is a crowd-favorite, tracking video views helps businesses gauge content effectiveness, audience preferences, and potential areas for content enhancement.

Video Views = Total Number of Times a Video has been played

Simply total the count on video plays

View Rate(%) = (Video Views / Total Impressions) x 100

If a video reaches 10,000 people and gets 2,500 views then View Rate = (2500 / 10000) x 100 = 25% which means one in four people who saw the video played it.

SEO Metrics

Search Engine Optimization (SEO) plays a crucial role in boosting a website’s visibility and driving organic traffic. Ultimately, monitoring this metric fosters business growth.   Here are five key SEO metrics you should track for your website:

Pageviews – Pageviews represent the total number of times a specific webpage has been viewed by visitors.  This metric helps you gauge the popularity of individual pages, which is essential to understand the effectiveness of your content, helping you spot areas that may need optimization.

Page Views = Total Number of Times a Webpage is Loaded or Reloaded

Page View Growth Rate(%) = (( Current Period Views – Previous Period Views) / Previous Period Views) x 100

If you had 3,200 page views in March compared to 2,400 page views in February, then the Growth Rate = ((3200 – 2400) / 2400) x 100 = 33.3% increased growth.

SEO Click-Through Rate – This is the percentage of users who click on a link to your site after it appears in search engine results.  A high rate usually indicates that your meta titles and descriptions are compelling and relevant to search queries, making it a key indicator of your SEO effectiveness.

SEO CTR(%) = (Number of Clicks / Number of Impressions) x 100

If your blog post appears in a Google search 10,000 times and receives 1,200 clicks, then the SEO CTR = (1200 / 10000) x 100 = 12% of users who saw the link actually clicked through to the site.

Domain Authority – Domain Authority (DA) is a score developed by Moz that predicts how well a website will rank on search engine result pages (SERPs).  A higher DA suggests greater chances of ranking higher in search engines, making it an important metric for gauging the overall strength and reputation of your website.

Domain Authority = There is no calculation. 

This is simply a score acquired from sites like Moz Link Explorer, SEMrush Authority Score, or Ahrefs Domain Rating.  These scores are used for comparison purposes.

Organic Traffic – Organic traffic counts the number of visitors that come to your site through unpaid search results.  Tracking this metric helps businesses understand the effectiveness of their SEO efforts, as increasing organic traffic typically indicates successful SEO strategies and high-quality content.

Organic Traffic = Total Number of Website Visits from Search Engines

Organic Traffic Growth(%) = ((Current Period – Previous Period) / Previous Period) x 100

For example if 12,000 organic visits happened in April, compared to 9,000 visits in March, then Organic Traffic Growth = ((12000 – 9000) / 9000) x 100 = 33.3% traffic growth.

SEO Keyword Ranking – This metric shows where your website ranks on search engines for specific keywords.  Regularly monitoring keyword rankings lets businesses understand their competitive standing in the market and refine their SEO strategies for better search visibility.

Average Keyword Ranking = (Sum of All Keyword Positions) / Number of Keywords Tracked

Let’s say you’re tracking 5 target keywords and your site ranks #3, #5, #9, #12, and #7 respectively, then Average Keyword Ranking = (3 + 5 + 9 + 12 +7) / 5 = 7.2 which means you are generally appearing on the first page of a search.

Email Marketing Metrics

Email marketing continues to be a valuable tool for building customer relationships, driving sales, and nurturing leads.  Monitoring specific metrics provides concrete data on campaign performance, which can be used to refine marketing strategies.  Here are five essential email marketing metrics to keep track of:

Click-to-Open Rate (CTOR) – CTOR represents the percentage of recipients who clicked a link within an email out of the total who opened it.  It’s a direct indicator of the email’s content effectiveness, revealing if the message successfully engaged those who viewed it.

CTOR(%) = (Unique Clicks / Unique Opens) x 100

Let’s say you sent an email to your list and 2,000 people opened it and 300 people clicked a link inside, then CTOR = (300 / 2000) x 100 = 15% of the people who opened the email were engaged enough to click through.

Email Marketing Engagement Score – This metric consolidates various engagement indicators, such as opens, clicks, and shares, to provide a comprehensive view of an email’s performance.  A higher score often signals content relevance and effective targeting.

Engagement Score = (Open x 1) + (Click x 3) + (Reply x 5) + (Conversion x 10)

Let’s say a subscriber over one month opened 4  emails, clicked 2 Links, replied once, and made 1 purchase, then the Engagement Score = (4 x 1) + (2 x 3) + (1 x 5) + (1 x 10) = 25 is their Email Engagement Score.

Email Website Traffic Metrics – Email website traffic metrics track the number of visitors arriving at your website directly from your email campaigns.  It helps determine the efficacy of email marketing in driving web traffic and potential conversions.

There is no single formula for Email Traffic other than the Total Number of Website Sessions Originating from Email Campaigns.

Email Bounce Rate – Just like website bounce rates, email bounce rates measure the percentage of sent emails that could not be delivered to the recipient’s inbox.  A high rate could signal issues with the email list quality or possible server problems.

Email Bounce Rate (%) = (Total Bounced Emails / Total Emails Sent) x 100

For example, suppose you sent an email campaign to 5,000 recipients, and 150 emails bounced.  Then the Email Bounce Rate = (150 / 5000) x 100 = 3% of the Emails bounced.

Email Click Through Rate (CTR) – CTR calculates the percentage of recipients who clicked on at least one link in an email.  It offers insights into the email’s effectiveness in prompting user action.

Email CTR (%) = (Number of Unique Clicks / Number of Emails Delivered) × 100

Let’s say your email was delivered to 4,000 recipients, and 200 people clicked a link.  Email CTR = (200 / 4,000) × 100 = 5% meaning 5 out of every 100 recipients engaged with a link in your email.

Financial Metrics

For finance teams, the metrics that matter most are the ones that reflect the financial health of the business.  After all, a company’s survival hinges on its financial health. Thus, most financial metrics concern factors like revenue, cash flow, accounts receivables and assets and liabilities — there are many financial metrics to track.

Companies rely on revenue to stay in business, and managing and tracking that revenue is a core function of your finance team. Financial metrics carry weight outside your team, too.  Potential investors, stakeholders, and customers will be curious about your financial data.

Fiscal health is a key aspect of any business.  Here are the financial metrics to monitor and track the health of your business and your bank account:

Net income – Also known as the bottom line, net income is generally one of a business’s biggest financial concerns.  It’s also an important starting point for calculating other key metrics, like net profit margin and earnings per share.  Since it reflects total business expenses subtracted from total revenue, net income generally appears at the bottom line of a company’s income statement.  Net income can help assess whether revenue exceeds business expenses and, if so, by how much. The formula is:

Net income = Total revenue – Cost of goods sold – Operating expenses – Other expenses – Interest – Taxes – Depreciation and Amortization

Net income is different from gross income, which only subtracts the cost of goods or services sold from revenue.

Net profit margin – One of the most important indicators of a business’s profitability, net profit margin measures how much actual profit is netted for each dollar of revenue made.  This is important because revenue increases may not always translate into increased profitability. Before calculating the net profit margin, a business must calculate its net income.  The formula for net profit margin is:

Net profit margin = (Net income / Total revenue) x 100

Suppose your company generated $250,000 in revenue last quarter and had a net profit of $40,000 after all expenses.  Then Net Profit Margin = ($40,000 / $250,000) × 100 = 16%.  So, your Net Profit Margin is 16%, meaning for every dollar earned in revenue, your business retains 16 cents as profit.

Gross profit margin – Unlike net profit margin, gross profit margin shows a company’s profits before subtracting interest, taxes and operating expenses like rent, utilities and wages.  A healthy gross profit margin plays an important factor in whether a business is able to cover all of its expenses.  The formula is:

Gross profit margin = [(Revenue – Cost of goods or services sold) / Revenue] x 100

Let’s say your business had: Revenue: $200,000, Cost of Goods Sold (COGS): $120,000.  Gross Profit Margin = [($200,000 − $120,000) / $200,000] × 100 = 40%.  So, your Gross Profit Margin is 40%, meaning your company retains 40 cents from every dollar of sales after covering the direct costs of producing goods or services.

Current ratio – To stay financially fit, a business must be liquid and able to pay off its financial obligations. Current ratio measures a company’s ability to pay off financial obligations that are due within a year and is calculated as the ratio of current assets to current liabilities.  Current assets are those expected to convert to cash within a year (such as accounts receivable), while current liabilities are obligations due within a year (such as accounts payable).  The formula is:

Current ratio = Current assets / Current liabilities

Generally, a current ratio above 1.0 is considered healthy. A ratio of 2.0, for example, suggests the business has two times more current assets than current liabilities. However, a current ratio above 3.0 could indicate the business isn’t efficiently handling working capital. Note that the current ratio is only a quick, short-term snapshot of solvency and must be calculated regularly.

Working capital – All businesses need money to meet short-term needs, but having too much cash on hand at any given time means the company is wasting an opportunity to invest in future growth.  Keeping a close eye on working capital can help you figure out ways to free up cash, use funds more effectively or learn to reduce dependence on outside funding, while getting a clear sense of the business’s liquidity. The formula is:

Working capital = Current assets – Current liabilities

Suppose your company has: Current Assets: $150,000, Current Liabilities: $90,000.  Working Capital = $150,000 − $90,000 = $60,000.  So, your Working Capital is $60,000, meaning you have that amount available to support daily operations and cover short-term debts.

Accounts receivable turnover ratio – Businesses must be able to effectively bill and collect payments from their customers or clients.  The accounts receivable turnover ratio measures how effectively the accounts receivable department collects debt owed by clients.  The higher the ratio, the better the company is at collecting payments, which makes it more likely to have cash on hand to make its own payments or invest in growth.  A lower turnover ratio can indicate illiquid customers, slow-to-pay customers or an inefficient debt collection process — potentially stunting a business’s growth. The formula is:

Accounts receivable turnover ratio = Net credit sales in a given period / Average accounts receivable of period

Let’s say your company has: Net Credit Sales for the year: $500,000, Average Accounts Receivable: $100,000.  Accounts Receivable Turnover Ratio = $500,000 / $100,000 = 5.  This means your business collects its average receivables 5 times per year, or roughly once every 73 days (365 ÷ 5), indicating the speed of customer payments.

Percentage of accounts payable overdue – It’s not only important to keep track of accounts receivable; it’s also key to pay close attention to accounts payable.  The percent of accounts payable overdue can indicate cash flow problems — the more overdue payments, the more likely the business is having trouble paying suppliers, indicating a need for funding or a new business strategy.  The lower the percentage, the better a company is at paying its debts on time.

Accounts payable overdue rate = (Accounts payable overdue / Total accounts payable) x 100

Suppose your business has: Total Accounts Payable: $120,000, Overdue Accounts Payable: $30,000.  Accounts Payable Overdue Rate = ($30,000 / $120,000) × 100 = 25%.  This means 25% of your payables are overdue, which could signal the need to improve cash flow management or renegotiate payment terms with suppliers.

Return on assets (ROA) – ROA calculates the per-dollar profit a company makes on its assets and is used to assess profitability.  This is a particularly important metric for the banking industry because bank assets largely consist of money that is loaned, making cash flow harder to analyze than other types of businesses. The formula is:

Return on assets = Net income / Total assets

The higher the ROA, the more efficient a company is with its assets. However, it’s important to note that bank ROAs generally hover around 1% — which is still considered a healthy number for the industry. This is because banks often have more debt than equity.

Revenue vs. forecast – Executives and other top-level managers can benefit from monitoring metrics that reflect overall business health, such as comparing actual revenue to forecasted revenue.  This metric can help executives see whether company performance is matching expectations or coming up short.  If actual revenue is falling short of expectations, executives must act to find out what’s causing the disconnect.  To quantify the variance, companies can use this formula:

Variance Percentage = ((Actual – Forecast) / Actual) x 100

Let’s say your company planned to spend $80,000 on marketing, but the actual spend was $90,000. Variance Percentage = [($90,000 − $80,000) / $80,000] × 100 = (10,000 / 80,000) × 100 = 12.5%.  This results in a 12.5% negative variance, indicating that the marketing budget was overrun by 12.5%.

Gross Margin – Gross margin represents the percentage of total revenue that exceeds the cost of goods sold (COGS).  This metric is an indicator of production efficiency and profitability.

Gross Margin (%) = [(Revenue – Cost of Goods Sold) / Revenue] × 100

Let’s say your company generates $100,000 in revenue for the month, and your COGS is $60,000.  Gross Margin = [(100,000 – 60,000) / 100,000] × 100 = 40% meaning you retain 40 cents of every dollar earned to cover other expenses and profit.

Net Burn – Net burn rate measures the amount of money a company is losing per month, especially pertinent to startups.  For businesses, particularly those not yet profitable, understanding net burn is crucial.  It indicates how long a company can operate before it needs additional funding or becomes profitable. 

Net Burn = Total Cash Outflows – Total Cash Inflows

Monthly Net Burn = (Starting Cash – Ending Cash) / Number of Months

Suppose in April your startup Spent $120,000 (cash outflows) and Earned $30,000 in revenue (cash inflows).  Net Burn = 120,000 – 30,000 = $90,000 meaning you used that amount from your cash reserves to sustain operations.

Net Profit – Net profit is also often referred to as the bottom line.  It represents the amount of revenue remaining after all operating expenses, taxes, and additional costs have been deducted from gross revenue.

Net Profit = Total Revenue – Total Expenses

Net Profit Margin (%) = (Net Profit / Revenue) × 100

Let’s say your company earned $200,000 in total revenue during the quarter and had $160,000 in total expenses.  Net Profit = 200,000 – 160,000 = $40,000 and Net Profit Margin = (40,000 / 200,000) × 100 = 20%.  So, your Net Profit is $40,000, with a Net Profit Margin of 20%, indicating you keep 20 cents of every dollar earned after all costs are covered.

Revenue – Revenue, also known as sales, refers to the total income generated from goods sold or services provided during a specific time frame.  Many businesses consider this as the starting point of assessing business performance.

Revenue = Number of Units Sold × Price per Unit

Let’s say your company sells 1,000 software licenses at $150 each in a month.  Revenue = 1,000 × 150 = $150,000.  So, your monthly revenue is $150,000, representing your total income before any costs are deducted.

Human Resources Metrics

Human resources metrics can help indicate employee satisfaction and performance.  These metrics generally track data related to employee turnover, development and engagement, company culture and training costs — all of which can help you spot workforce trends and dynamics and proactively solve potential issues, like burnout or ineffective training programs. Key HR metrics to track include:

HR metrics measure the efficiency and effectiveness of HR practices, processes, and activities in a quantifiable manner.  These metrics are crucial to measuring employee productivity, talent management, and the overall health of an organization’s human capital. 

Employee turnover rate – Every company will lose employees from time to time, but the less turnover, the better. High turnover rates can reflect talent management issues, unhappy workers or a pattern of hiring employees unfit for their positions.  In general, an average turnover rate between 10% and 20% is little cause for concern, but numbers vary by business and by industry.  Turnover rates higher than industry average suggest competitors may be more attractive for employers.  Note that turnover can be voluntary or involuntary, and it’s important to measure both to track how often employees leave on their own accord and how often they are let go. Some businesses may also benefit from calculating the turnover rate for high performers.

Turnover rate = (Number of separations in a given period / Average number of employees in period) x 100

Let’s say during the past year, 20 employees left your company, and the average number of employees was 200.  Turnover Rate = (20 / 200) × 100 = 10%.  This means your company has a 10% turnover rate, which can be used as a benchmark to evaluate retention strategies or compare against industry averages.

Revenue per employee (R/e) – Sometimes regarded as a sales metric, revenue per employee is important in the HR context because it can help you get a read on the productivity of your entire workforce.  The more revenue per employee, the more productive a business is and the more likely it’s efficiently using resources — both of which can directly relate to greater profits.  However, revenue per employee will differ greatly across industries, so it’s important to only make comparisons with businesses similar to your own. An online bank, for example, might have far fewer staff than a brick-and-mortar bank chain requiring staff at each location. To calculate:

Revenue per employee = Total revenue / Current number of employees

Suppose your company generated $5,000,000 in total revenue last year and had 50 employees:  Revenue per Employee = $5,000,000 / 50 = $100,000.  This means each employee contributed an average of $100,000 in revenue, which can be used to benchmark performance or plan workforce investments.

Employee net promoter score (eNPS) – eNPS is an effective measure of employee satisfaction. Like the traditional NPS, eNPS offers a standardized approach to understanding how employees feel about the company, using a scale from 0 to 10.  However, eNPS measures the likelihood that an employee would recommend your company as a place to work, or the likelihood they’d recommend your products to family or friends. Again, scores of 0-6 are detractors who are unlikely to recommend, 7-8 are passives and 9-10 are promoters who are highly likely to recommend your company. The formula is:

eNPS = Percentage of promoters – Percentage of detractors

Suppose 100 employees respond to the eNPS survey: 60 give a score of 9 or 10 (Promoters), 25 give a score of 7 or 8 (Passives), 15 give a score between 0 and 6 (Detractors).  Then the % Promoters = 60%,  % Detractors = 15%, and the  eNPS = 60% − 15% = 45.   The eNPS score is 45, indicating strong overall employee satisfaction and a likelihood that many employees would recommend the company.

Training spend per employee – Companies should track training expenses to see whether they’re getting a return on their investment.  For example, companies with high turnover ratios may be investing more in training an employee than the revenue that employee generates before they leave the company.  Similarly, tracking training expenses alongside employee productivity and profitability can help a business determine whether training strategies are effective. The formula is:

Training spend per employee = Total training expenses / Total number of employees

Suppose a company spends $150,000 annually on various training programs, including workshops, online courses, and external seminars. If the company has 75 employees, the Training Spend Per Employee would be calculated as:  Training Spend per Employee = 150,000 / 75 = 2,000.  This means the company spends an average of $2,000 on training for each employee every year.

Career path ratio – This metric helps track the ratio of vertical promotions to lateral transfers. This is important for both employees and businesses.  If companies want to promote long-term job satisfaction, employees generally need room to grow and learn new skills, whether it’s via vertical promotion or applying for a lateral move.  For companies, turning inward to find talent can be more cost-effective than recruitment. Tracking career path ratio can help a company measure employee mobility. The formula is:

Career path ratio = Total promotions / (Total promotions + Total transfers)

Values above 0.7 indicate more vertical promotions, meaning the organization may be getting too “top heavy” and should look to start expanding roles laterally. Values under 0.2 indicate more lateral transfers, suggesting not enough employees are being primed for promotion.

Applications Received per Vacancy – This metric quantifies the number of applications received for each job opening.  It helps HR teams gauge the attractiveness of a company position and the effectiveness of their job marketing.

Applications per Vacancy = Total Number of Applications / Number of Job Openings

For example, suppose your company posted 5 job vacancies and received a total of 250 applications then Applications per Vacancy = 250 / 5 = 50 applications per vacancy.

Cost per Hire – Cost per Hire shows you the total expenses involved in hiring a new employee, including advertising, interviewing, screening, and onboarding.  You need to know this for budgeting and evaluating the efficiency of the recruitment process.

Cost per Hire = (Total Internal Recruiting Costs + Total External Recruiting Costs) / Number of Hires

Suppose your company spent $10,000 in internal recruiting efforts, $15,000 on external recruiting efforts, and hired 5 new employees.  Cost per Hire = (10000 + 15000) / 5 = $5000 is the cost per hire.

Job Offer Acceptance Rate – This represents the percentage of candidates who accepted a job offer.  A lower rate might indicate uncompetitive compensation or that the hiring process is lengthy and complicated.

Job Offer Acceptance Rate (%) = (Number of Offers Accepted / Total Number of Offers Made) x 100

Let’s say your company extended 20 job offers last quarter, and 16 candidates accepted the Job Offer Acceptance Rate = (16 / 20) x 100 = 80% indicating that 8 out of every 10 candidates offered a position accepted it – a healthy sign of a competitive hiring strategy.

Open Job Requisitions – With this, you track the number of current open job positions within the company.  Monitoring this can help assess the company’s growth rate and talent acquisition needs.

Open Job Requisitions = Total Number of Active Job Openings at a Given Time

For example your company is hiring for the following roles: 3 Software Engineers, 2 Marketing Specialists, and 1 Sales Manager.  Your Open Job Requisition is simply 3 + 2 + 1 = 6.

Recruiter to Open Requisitions Ratio – It evaluates the workload of recruiters by comparing the number of open job requisitions to the number of recruiting staff.  A high ratio could indicate the need for additional recruiting resources or improved processes.

Recruiter to Open Requisitions Ratio = Total Number of Open Job Requisitions / Total Number of Recruiters

Let’s say your organization has 30 open job requisitions and 5 recruiters on staff then the Recruiter to Open Requisitions Ratio = 30 / 5 = 6 is the number each recruiter is managing on average.

Information Technology Metrics

Information Technology (IT) metrics are essential for measuring the performance, reliability, and efficiency of an organization’s technology infrastructure and support services.  These metrics provide valuable insights into system availability, support responsiveness, cost management, and overall user satisfaction.  By tracking key indicators such as system uptime, mean time to resolve (MTTR), first call resolution rate (FCR), support ticket volume, and IT cost per employee, businesses can identify areas for improvement, allocate resources more effectively, and ensure that IT services align with organizational goals.  Effective use of IT metrics not only enhances operational efficiency but also supports a stable and responsive technology environment that enables business success.

System Uptime – System uptime measures the percentage of time that IT systems or applications are operational and available for use.  High uptime indicates reliable IT infrastructure and minimizes disruptions to business operations.  This metric is especially critical for systems that support customer-facing services or internal productivity.

System Uptime (%) = (Total Uptime / Total Scheduled Time) × 100

If a system was scheduled to run for 720 hours in a month and experienced 5 hours of downtime, System Uptime = ((720 – 5) / 720) × 100 = 99.31%.

Mean Time to Resolve (MTTR) – Mean Time to Resolve (MTTR) measures the average time it takes to resolve an IT issue from the moment it is reported.  It reflects the efficiency and responsiveness of IT support teams.  Lower MTTR indicates quicker problem resolution, which helps minimize disruptions.

MTTR = Total Downtime / Number of Incidents

If IT resolved 20 issues over 200 hours of total downtime, MTTR = 200 / 20 = 10 hours per issue.

First Call Resolution Rate (FCR) – First Call Resolution Rate tracks the percentage of IT support requests resolved during the initial contact.  High FCR means effective support and a better user experience, while low FCR may indicate the need for additional training or more detailed troubleshooting protocols.

FCR = (Incidents Resolved on First Contact / Total Incidents) × 100

If 150 out of 200 IT tickets were resolved on the first call, FCR = (150 / 200) × 100 = 75%.

IT Support Ticket Volume – Ticket volume tracks the total number of support requests over a given period. It provides insight into IT workload and can help identify trends or recurring issues.  Analyzing ticket volume helps with resource planning and service optimization.

Ticket Volume = Total Number of Support Requests in a Given Period

If 500 tickets were submitted in a month, Ticket Volume = 500.

(While this isn’t a ratio-based metric, it’s valuable when compared over time or against other metrics.)

IT Cost per Employee – IT cost per employee measures the average cost of providing IT services to each employee.  It helps assess the efficiency of IT spending and supports budgeting and resource allocation decisions.

IT Cost per Employee = Total IT Operating Cost / Number of Employees

If annual IT costs are $300,000 for a company with 150 employees, IT Cost per Employee = 300,000 / 150 = $2,000 per employee.

Average support ticket resolution time – A key metric for customer service departments, average support ticket resolution time tracks how long it generally takes to resolve support tickets.  Although response time is also important, resolution time is a better metric because a short resolution time typically will indicate quick responses as well. Support teams should strive to have fast resolution times in order to keep customers satisfied.

Average Resolution Time = Total Time to Resolve All Tickets / Total Number of Resolved Tickets

Let’s say your support team resolved 100 tickets in a week. The combined time taken to resolve them was 500 hours.  Then the Average Resolution Time = 500 hours / 100 tickets = 5 hours per ticket meaning it typically takes your team 5 hours to resolve a customer issue from start to finish.

Engineering Metrics

Engineering metrics are essential for assessing the efficiency, accuracy, and overall performance of engineering teams and processes.  These metrics help organizations track progress, identify areas for improvement, and ensure that projects are delivered on time, within scope, and to the desired quality standards.  Key metrics such as cycle time, engineering change request (ECR) rate, first-time right (FTR), time to market (TTM), and defect density provide valuable insights into productivity, design quality, and operational effectiveness.  By consistently measuring and analyzing these indicators, companies can enhance their engineering output, reduce costly rework, accelerate innovation, and maintain a competitive edge in product development.

Cycle Time – Cycle time in engineering refers to the amount of time it takes to complete a task or project from start to finish.  This metric is crucial for evaluating productivity and identifying bottlenecks in the engineering process.  Shorter cycle times typically indicate more efficient workflows and faster product development.

Cycle Time = End Date – Start Date

If a design project started on April 1 and finished on April 15, Cycle Time = 15 – 1 = 14 days.

Engineering Change Request (ECR) Rate – The ECR rate tracks how often changes are requested to engineering designs or plans.  While change requests are common, a high rate may point to issues with initial design accuracy, planning, or evolving requirements.  Monitoring this helps improve design quality and communication.

ECR Rate = (Number of Change Requests / Total Engineering Projects) × 100

If 10 change requests were made during 50 projects, ECR Rate = (10 / 50) × 100 = 20%.

First-Time Right (FTR) – First-Time Right measures the percentage of engineering outputs that meet requirements without needing revisions.  A high FTR rate suggests that designs are being executed accurately, reducing rework and accelerating timelines.

FTR = (Number of Tasks Completed Without Rework / Total Tasks) × 100

If 85 out of 100 engineering tasks were completed without errors, FTR = (85 / 100) × 100 = 85%.

Time to Market (TTM) – Time to Market is the time it takes for a product to move from the initial concept through design and development to being ready for launch.  This is a strategic metric that helps evaluate how quickly engineering teams can deliver innovations.

TTM = Product Launch Date – Product Concept Date

If a product was conceived on January 1 and launched on July 1, TTM = 6 months

Defect Density – Defect density measures the number of defects found in a product or design relative to its size or complexity.  It’s often used in software and hardware engineering to assess quality and reliability.  Lower defect density typically reflects better engineering practices.

Defect Density = Number of Defects / Size of the Component (e.g., lines of code, parts, features)

If 10 defects were found in a software module with 5,000 lines of code, Defect Density = 10 / 5,000 = 0.002 defects per line of code.

Manufacturing Metrics

Manufacturing metrics are essential tools that help companies monitor, evaluate, and optimize their production processes.  These metrics provide valuable insights into efficiency, quality, cost, and overall performance on the factory floor.  By tracking key indicators such as Overall Equipment Effectiveness (OEE), First Pass Yield (FPY), cycle time, and scrap rate, manufacturers can identify bottlenecks, reduce waste, and make informed decisions that drive continuous improvement.  Accurate and timely measurement of these metrics allows businesses to maintain high standards, meet customer demands, and remain competitive in a fast-paced industry.  Ultimately, manufacturing metrics serve as a foundation for operational excellence and strategic growth.

Overall Equipment Effectiveness (OEE) – Overall Equipment Effectiveness is a vital metric for evaluating how efficiently manufacturing equipment is being used. It combines three key factors: availability, performance, and quality.  OEE helps manufacturers identify losses, benchmark progress, and improve productivity.  A high OEE score indicates that a plant is running efficiently with minimal downtime, fast production, and few defects.

OEE = Availability × Performance × Quality

If a machine is available 90% of the time, performs at 95% speed, and produces 98% quality output, OEE = 0.90 × 0.95 × 0.98 = 0.8361 or 83.61%.

First Pass Yield (FPY) – First Pass Yield measures the percentage of products manufactured correctly without any need for rework or repair.  It reflects the effectiveness of the manufacturing process and quality control.  A high FPY indicates minimal waste and high-quality output from the first attempt.

FPY = (Good Units Produced / Total Units Produced) × 100

If 950 out of 1,000 units are produced without defects, FPY = (950 / 1000) × 100 = 95%.

Cycle Time – Cycle Time is the total time taken to complete one cycle of a production process, from the beginning of one unit to the beginning of the next.  It’s crucial for identifying bottlenecks and improving throughput.  Reducing cycle time can lead to increased production capacity and efficiency.

Cycle Time = Net Production Time / Number of Units Produced

If a machine runs for 300 minutes and produces 100 units, Cycle Time = 300 / 100 = 3 minutes per unit.

Throughput – Throughput measures the number of units a production line produces within a specific period.  It indicates the speed of the manufacturing process and helps assess productivity.  High throughput is generally desirable as it reflects the ability to meet demand efficiently.

Throughput = Total Units Produced / Time Period

If a line produces 2,000 units in an 8-hour shift, Throughput = 2,000 / 8 = 250 units per hour.

Scrap Rate – Scrap Rate refers to the percentage of materials or products that are discarded due to defects or errors during production.  Monitoring this metric helps reduce waste, lower costs, and improve quality.

Scrap Rate = (Scrap Units / Total Units Produced) × 100

If 100 units are scrapped out of 5,000 produced, Scrap Rate = (100 / 5000) × 100 = 2%.

Inventory Metrics

Inventory metrics are critical for managing stock efficiently and ensuring that products are available when customers need them, without over-investing in excess inventory.  These metrics provide valuable insights into how well a business is controlling inventory levels, turnover rates, storage costs, and order accuracy.  By tracking key indicators such as inventory turnover ratio, days sales of inventory (DSI), stockout rate, carrying cost of inventory, and order accuracy rate, companies can strike a balance between meeting customer demand and minimizing holding costs.  Effective use of inventory metrics helps improve cash flow, reduce waste, and enhance overall supply chain performance, making them essential for maintaining operational efficiency and profitability.

Inventory Turnover Ratio – Inventory Turnover Ratio measures how many times inventory is sold and replaced over a specific period.  A high turnover rate indicates strong sales and efficient inventory management, while a low rate could suggest overstocking or sluggish sales.  It helps businesses assess how effectively inventory is being used.

Inventory Turnover = Cost of Goods Sold (COGS) / Average Inventory

If the COGS for the year is $500,000 and the average inventory is $100,000, Inventory Turnover = 500,000 / 100,000 = 5 times.

Days Sales of Inventory (DSI) – Days Sales of Inventory calculates the average number of days it takes to sell through inventory.  It helps determine how long capital is tied up in inventory and is useful for managing cash flow and storage costs.

DSI = (Average Inventory / COGS) × 365

Using the previous numbers: DSI = (100,000 / 500,000) × 365 = 73 days.

Stockout Rate – Stockout Rate measures how often inventory is unavailable when a customer places an order.  A high stockout rate can lead to lost sales and reduced customer satisfaction.  Monitoring this metric helps businesses optimize reorder points and maintain service levels.

Stockout Rate = (Number of Stockouts / Total Order Opportunities) × 100

If there were 15 stock outs out of 500 order attempts, Stockout Rate = (15 / 500) × 100 = 3%.

Carrying Cost of Inventory – Carrying cost refers to the total cost of holding inventory over a period, including storage, insurance, depreciation, and opportunity costs.  This metric helps businesses assess how much their inventory is costing them and whether they’re holding too much.

Carrying Cost (%) = (Total Annual Inventory Costs / Total Inventory Value) × 100

If annual inventory costs are $25,000 and total inventory value is $200,000, Carrying Cost = (25,000 / 200,000) × 100 = 12.5%.

Order Accuracy Rate – Order Accuracy Rate measures the percentage of orders fulfilled without error. It reflects how well the inventory system supports order processing and customer satisfaction.  High accuracy means fewer returns and better customer experiences.

Order Accuracy Rate = (Accurate Orders / Total Orders) × 100

If 970 out of 1,000 orders were accurate, Order Accuracy Rate = (970 / 1000) × 100 = 97%.

Procurement Metrics

Procurement metrics are essential for evaluating the efficiency, effectiveness, and strategic value of an organization’s purchasing activities.  These metrics help procurement teams measure performance in areas such as cost savings, supplier reliability, order processing efficiency, and return on investment.  By tracking key indicators like cost savings, purchase order cycle time, supplier lead time, compliance rate, and procurement ROI, companies can identify opportunities for improvement, strengthen supplier relationships, and align procurement goals with overall business strategy.  Effective use of procurement metrics not only drives cost efficiency but also enhances decision-making, risk management, and long-term value creation across the supply chain.

Cost Savings – Cost savings is a primary metric in procurement that measures the reduction in purchasing costs achieved through negotiations, supplier changes, or process improvements.  This metric demonstrates the procurement team’s ability to add value to the organization by acquiring goods or services at a lower cost without compromising quality.

Cost Savings = (Baseline Price – Actual Price) × Quantity Purchased

If the baseline price was $100 per unit and the negotiated price is $90 for 1,000 units, Cost Savings = ($100 – $90) × 1,000 = $10,000.

Purchase Order Cycle Time – Purchase Order (PO) Cycle Time measures the average time taken from placing a purchase request to the final approval and issuance of the purchase order.  It’s a key indicator of procurement efficiency, and shorter cycle times often mean better responsiveness and lower lead times.

PO Cycle Time = Total Time for All Purchase Orders / Number of Purchase Orders

If 20 purchase orders took a combined 200 hours to complete, PO Cycle Time = 200 / 20 = 10 hours per PO.

Supplier Lead Time – Supplier lead time tracks the average time it takes a supplier to deliver goods after receiving a purchase order.  This metric helps assess supplier reliability and aids in planning and inventory management.  Consistently long lead times may indicate a need for supplier evaluation or diversification.

Supplier Lead Time = Delivery Date – Purchase Order Date

If a supplier received an order on March 1 and delivered on March 15, Supplier Lead Time = 15 – 1 = 14 days.

Supplier Compliance Rate – Supplier compliance rate measures how often suppliers meet the agreed terms, such as delivery schedules, order quantities, and specifications.  High compliance ensures consistency, reliability, and quality in the procurement process.

Supplier Compliance Rate = (Compliant Deliveries / Total Deliveries) × 100

If 45 out of 50 deliveries met contract terms, Supplier Compliance Rate = (45 / 50) × 100 = 90%.

Procurement ROI – Procurement Return on Investment (ROI) evaluates the value gained from procurement activities relative to the cost of running the procurement function. It’s a high-level metric showing how efficiently procurement contributes to the company’s bottom line.

Procurement ROI = (Annual Savings – Procurement Costs) / Procurement Costs × 100

If procurement achieved $500,000 in savings with $100,000 in operational costs, Procurement ROI = ($500,000 – $100,000) / $100,000 × 100 = 400%.

Shipping and Receiving Metrics

Shipping and receiving metrics are vital for evaluating the efficiency, accuracy, and cost-effectiveness of a company’s logistics operations.  These metrics provide visibility into how well goods are being moved in and out of the organization, impacting both customer satisfaction and internal inventory management.  Key indicators such as on-time delivery rate, receiving cycle time, dock to stock time, shipment accuracy, and freight cost per unit help businesses identify bottlenecks, reduce delays, and minimize errors in the supply chain.  By regularly tracking and analyzing these metrics, companies can streamline their shipping and receiving processes, lower operational costs, and ensure that products are delivered accurately and promptly to meet customer expectations.

On-Time Delivery Rate – On-time delivery rate measures the percentage of orders that are delivered by the promised date.  It reflects the efficiency of the shipping process and directly impacts customer satisfaction. High on-time delivery rates indicate reliable logistics performance and a well-coordinated supply chain.

On-Time Delivery Rate = (On-Time Deliveries / Total Deliveries) × 100

If 920 out of 1,000 shipments were delivered on time, On-Time Delivery Rate = (920 / 1000) × 100 = 92%.

Receiving Cycle Time – Receiving cycle time tracks the average time it takes from the arrival of goods at a warehouse to their full processing into inventory.  This metric is crucial for identifying inefficiencies in the receiving process and ensuring that products are quickly available for use or sale.

Receiving Cycle Time = Total Receiving Time / Number of Shipments Received

If it took 400 minutes to receive and process 20 shipments, Receiving Cycle Time = 400 / 20 = 20 minutes per shipment.

Dock to Stock Time – Dock to stock time measures how long it takes for received goods to move from the receiving dock into available inventory.  It’s a key indicator of operational efficiency in warehouse and inventory management.

Dock to Stock Time = Time Goods Available in Inventory – Time Goods Received

If goods were received at 10:00 AM and entered into inventory by 2:00 PM, Dock to Stock Time = 4 hours.

Shipment Accuracy Rate – Shipment accuracy rate assesses the percentage of orders shipped without any errors, such as wrong items, quantities, or damaged goods.  High accuracy reduces returns and improves customer trust and satisfaction.

Shipment Accuracy Rate = (Accurate Shipments / Total Shipments) × 100

If 980 out of 1,000 orders were shipped correctly, Shipment Accuracy Rate = (980 / 1000) × 100 = 98%.

Freight Cost per Unit Shipped – Freight cost per unit shipped evaluates the cost efficiency of transportation by showing the average shipping cost per product.  Monitoring this helps identify opportunities to optimize routes, negotiate better rates, or consolidate shipments.

Freight Cost per Unit = Total Freight Cost / Number of Units Shipped

If the total freight cost was $5,000 for 2,500 units, Freight Cost per Unit = 5000 / 2500 = $2.00 per unit.

Tracking Business Metrics With ERP

As businesses grow, they need to track more and more business metrics to ensure they achieve high performance over the long term.  At a certain point, an ERP solution such as NetSuite ERP will play a leading role in helping the organization stay on top of the metrics that are most important.  Because ERP systems contain data that spans a company’s core business operations, they make it easier to generate real-time metrics, often through visual dashboard formats tailored to each executive.  This empowers teams to track important metrics, absorb their meaning rapidly and intervene, as needed, in real time. For example, by sending an alert when inventory falls below a particular level, a manager can issue a purchase order before a stockout nears, thus proactively improving inventory turnover rate.

Also, by organizing and improving business processes, ERP solutions make it easier for a company to deliver products or services more effectively and efficiently.  Improvements of this kind can generate satisfied and loyal customers, which grows the bottom line, the ultimate goal of any business.

Business metrics help companies track such things as revenue growth, average fixed and variable costs, break-even points, cost of selling goods, contribution margin ratio and profits.  They provide a means of measuring business or departmental activities or tasks over a given period of time and reflect the ways different departments within a company interact with and affect each other. Choosing the right metrics, and choosing the right number of metrics, is important to the long-term success of any growing business.

Business Metrics FAQ

What are key metrics in business?  Key metrics in business are the numbers you track to make sure your business is doing as well as it can.  They help businesses achieve goals and determine where improvement is needed.

How are metrics used in business?  Business metrics help companies track things such as revenue growth, average fixed and variable costs, break-even points, cost of selling goods, contribution margin ratio and profits.  They provide a means of measuring business or departmental functions over a given period of time and reflect the ways different departments within a company interact with and affect each other.

What are the 5 key performance indicators?  Opinions differ and vary from one business to the next, but many agree that five of the most important KPIs include sales revenue, customer acquisition costs, customer churn, customer engagement and customer satisfaction.

What is an example of a business-related measurement?  Examples of business-related measurements include metrics like sales quota attainment or net profit margin.  Sales quota attainment measures whether salespeople are meeting their sales quotas, which can directly affect a business’s bottom line.  Net profit margin measures how much actual profit each dollar of revenue yields, which is particularly important because revenue increases may not always translate into increased profitability.

Summary

Business metrics are critical tools that help organizations measure performance, monitor progress toward strategic goals, and make informed, data-driven decisions.  These metrics provide insight into every functional area of a business—including sales, marketing, finance, human resources, manufacturing, procurement, inventory, shipping and receiving, information technology, and engineering—allowing leaders to identify trends, spot inefficiencies, and capitalize on opportunities for improvement.  By regularly tracking and analyzing the right metrics, companies can better understand their operational health, align departmental objectives with overall business strategy, and make adjustments in real time to stay competitive in a rapidly evolving marketplace.  Effective use of business metrics enables organizations to optimize processes, allocate resources wisely, improve customer satisfaction, reduce costs, and ultimately enhance profitability and long-term sustainability.  In today’s data-driven world, business metrics serve not only as performance indicators but also as essential tools for continuous improvement and strategic growth.