KPI Examples for Small Businesses

What is a KPI?

Let's start with the phrase's meaning and how it applies to your business.

KPI stands for key performance indicators. While all key performance indicators are metrics, not all metrics are key performance indicators. KPIs express critical goals and measure how close you exceed or underachieve them. Above all, they are quantifiable. To begin with, you can choose five to seven KPIs for every department in your company.

Each KPI should include:

• A Measure–The most expressive measures make the best KPIs.
• A Target–By turning goals into numeric values, you get a solid idea of how close you come to reaching targets in a given timeframe.
• A Data Source–A reliable data source means the difference between accurate, timely KPI reporting and fuzzy data that leads to useless metrics.
• Reporting Frequency–Many companies choose weekly, monthly, or quarterly reporting, depending on the industry and what's being measured. However, monthly KPIs are the most common.

KPIs vs. metrics

A KPI measures a specific goal indicative of the health of a business. You may have dozens or hundreds of metrics to track progress on various projects. KPIs include the activities and goals most vital to your company and, ideally, the industry.

Types of KPIs + Examples

The key performance indicator examples below include strategic measures that can help determine the effectiveness of different departments.

Sales

Sales KPIs measure the performance of individuals and the entire sales team against competitors. Choose sales metrics that help you evaluate, motivate your salesforce, and give your leadership team a clear idea of how well you're moving products and services.

Essential sales KPIs may include:

• Gross sales: This is the total sales revenue. KPIs should include achieving a certain percentage of sales growth based on potential markets and past performance.
• Sales profits: Subtract sales from the cost of goods sold to calculate sales profits. This is the first line on your income statement, typically above the cost of goods sold.
• Turnover rate: This is a great example of a KPI because it measures the rate at which you turn over products. To calculate sales turnover, measure how many products you sell in a month divided by the number of products (inventory) at the beginning of the month. Multiply the number by 100 to get the percentage.
• Percent of qualified leads: So, what is a qualified lead? The marketing team generates prospects or creates opportunities for the sales team through advertising and other efforts. These are qualified leads. The percentage of qualified leads measures the number of prospective customers (sales) versus how many customers (sales) are achieved by the sales team. This compares the intent to buy with actual sales.
• Customer Acquisition Cost (CAC): By measuring the amount of money you spend on getting a new customer, you can measure the efficiency of the customer onboarding process. Include all costs, such as advertising and marketing, required to welcome a new customer.

Marketing

Your marketing KPIs depend on how you reach out to new and potential customers. However, they typically include email, website, and conversion metrics.

• Email open rate: Measure the total emails you send in a marketing campaign and compare it to the number of emails opened. This can help you determine the performance of your subject lines and allow you to measure email marketing success for a particular campaign. You should also include other email marketing benchmarks in your KPIs.
• Percent of new customers: Calculate the number of customers at the beginning of the reporting period. Then determine how many customers you have at the end of the period. The difference between these numbers represents new customers. To compute this key performance indicator, you can divide the total new customers by the ones you initially had.

• Engagement rate: It's important to include all the ways you engage with clients in this metric. Examples include the following:

  • Reactions
  • Saves
  • Direct messages
  • Likes
  • Shares
  • Comments
  • Retweets
  • Profile visits
  • Regrams
  • Click-throughs
  • Clicks
  • Replies
  • Link clicks
  • Calls
  • Texts
• Average time on page: How long users spend on your page largely determines whether they'll convert to paying customers. This web analytics metric determines how long visitors spend on a particular web page, such as your homepage. You can exclude bounces to get a more accurate measure.
• Click-through rate (CTR): CTR measures how many clicks a particular ad receives compared to how many times it's shown.
• Blog visits: While many companies consider this a vanity metric, it's important to know how much traffic your blog generates. However, it's best to consider it along with other metrics for a fuller picture of the effectiveness of your content.

Learn more about marketing talk 101 to understand key marketing terminology.

Operational

Along with sales and marketing KPIs, you need dedicated key performance measures to determine operational strengths and weaknesses. Here are a few examples:

• Order fulfillment rate: This is a great example of a KPI for operations. Take the total number of orders fulfilled in the reporting. Divide this by the total orders received. Multiply by 100 to get the percentage. How well is your fulfillment team doing at meeting the demand for your products?
• Customer lifetime value (CLV): Multiply the average purchase value by the average frequency and average customer lifespan. If your average purchase price is $100 and customers typically buy from you 5 times and remain loyal for 5 years, the CLV would be $100 times 5 purchases yearly for five years, or $2,500.
• Labor utilization: This is an example of a KPI to determine the efficiency of your operations team. Calculate total labor and divide it by the sum of all labor minus idle time. For example, if a worker remains idle for 10 minutes for every 30 minutes of work, the average labor utilization is 30 / 40 or 75%.

Social media

Everything happens online these days. Therefore, it makes sense to have social media KPIs such as the following:

• Social media mentions: How many times people mention your brand on Facebook, Twitter, and Instagram over the time period measured.
• Likes: This important engagement rate determines how many likes, comments, and other positive reactions you receive from followers. Divide the total number of positive reactions by your follower count and multiply by 100 to calculate a percentage.
• Average engagement: Social media engagement can tell you how effective your content is at reaching your target audience. To calculate average engagement, take the number of public interactions per post, divide by the number of followers on that platform, and multiply by 100.
• Clicks: Measuring the total number of impressions versus clicks gives you your clickthrough rate.

Financial

Your finance team will likely have many internal metrics to measure the growth of the business. Here are a few financial KPIs you may wish to track:

• Burn rate: Burn rate is one example of a KPI that measures the performance of your finance team. To calculate the burn rate, subtract operating expenses from revenue. This shows you how much cash you need to operate over a period of time.
• Gross profit (GP): GP measures how much your business retains after subtracting costs related to manufacturing and selling products. Divide this cost by total revenue to determine the GP.
• Net profit: Net profit includes all expenses in your gross profit. It also consists of revenue sources included and not included in sales. To calculate net profit, take the total revenue minus the total expenses and divide that number by the total revenue.
• Customer service rate: Calculate the total number of satisfied customers by total customer responses. Multiply this number by 100 to get the percentage. For example, if you obtain 50 comments from customers and 40 of them are positive, your customer satisfaction rate is 80%.
• Support response times: How long does it take your team to resolve trouble tickets or customer complaints? To calculate this KPI, divide the time spent on this task by the total number of tickets or problems worked on in the same period.
• Number of tickets resolved: Calculate the total number of tickets handled hourly, daily, or weekly and divide by the number resolved in that time frame.
• First response time: How long it takes your team to respond to a customer ticket or complaint on average.

Choosing the right KPIs for your business

It's important to ask yourself what you want to achieve. When you know your business goals, choosing key performance indicators, including the examples above, becomes much easier.

Another tip is to be clear on your audience since your sales and marketing team requires separate metrics from your operations team. Your KPIs should be SMART: Specific, Measurable, Attainable, Realistic, and Time-sensitive. Additionally, it's essential to find a reliable, consistent way to measure performance prior to introducing a new KPI.

How to track KPIs

At first, you may find it challenging to track key performance indicators. However, it's important to make an effort to fine-tune this process and get good information your decision-makers can rely on. First, create a repository of data that serves as a single source of truth for your organization. When everyone is looking at the same data, it's easier to improve performance across your company.

Then, you can invest in web analytics tools to help you track KPIs across different departments.

Track your marketing KPIs with Mailchimp

Now that you've seen many examples of KPIs, you can choose which ones would best measure performance in your own business. Mailchimp makes it easy to track revenue and expenses, along with marketing and sales data. You can also create customized dashboards to help you achieve and exceed key performance indicators important to your organization.

Contact Mailchimp today for assistance and tools you can use to set up your own KPIs.