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Data Analytics
Key Metrics Every Business Should Be Tracking with BI
BI (business intelligence) metrics help companies and leaders unearth invaluable data and insights related to several key metrics/parameters. It can thus be said that business analytics and metrics have a symbiotic relationship when it comes to enabling data-driven business decisions, along with helping companies and leaders understand operations, customers, and organisational health better.
Naturally, when there are more informed decisions along with regular tracking of KPIs for business growth, the end-result is a boost in organisational performance. Here’s looking at some of the key metrics that you should be tracking with the help of BI.
Business Intelligence Key Metrics for Companies
Nowadays, AI, data analytics, and other technological tools like unified and integrated CRMs have automated the measurement and tracking of several of these metrics. Businesses now view everything across unified and centralised dashboards while getting help with BI implementation strategies for evaluating multiple aspects of business performance and productivity.
Here are a few of the KPIs for business growth that should be regularly tracked and analysed in order to enable data-driven decision making and eventual results. It should be noted that KPIs may vary across businesses, depending on their type and other parameters.
- Revenue: It indicates the aggregate of all financial/monetary inflows into the organisation and is the easiest metric that can be measured. Along with total revenue tracking, businesses should also break down revenue by geographies/locations, customers, and product categories/segments. The key objective for revenue metric calculation is to work out growth rates on an annual/monthly basis. Any company selling a product can track its sales and see whether revenues are growing steadily or not. At the same time, this can be spun off into other associated aspects like marketing, branding, and customer experiences. However, those businesses which have cyclical models for sales should account for seasonality while tracking rates of sales growth
- Gross Profit Margin: This is another powerful metric that indicates how efficient your business operations truly are. GPM is the percentage of revenue that you get after deducting the costs of direct production. Any healthy increase in GPM over a period of time indicates a good balance between payments to suppliers and sales. This is crucial for the smooth running of the business. For example, suppose an e-commerce entity sees its GPM falling over a few years. In this case, it should then analyse its production procedures again along with its relationships with suppliers. This will necessitate lowering company overheads and even tweaking pricing strategies for products. EBITDA (earnings before interest, taxes, depreciation, and amortisation) can also be tracked by businesses, which may also help while valuing the business/company
- Cash Flow: Another one of the vital KPIs for business growth, this is calculated as the differential amount between cash outflow and inflow. Hence, this net balance in cash is an indicator of any business’ financial stability, health, and overall liquidity levels. Whenever a business is what we call net cash positive, then this means it has sufficient funds for meeting operational costs. At the same time, it also has the means to expand, pursue new opportunities for growth, and also repay debt. Forecasting cash flow can help companies/businesses track actual performance and one of the commonest sub-metrics in this category is operating cash flows. Individual unit-level cash flow should also be tracked efficiently in order to scale up any business
- CLV (Customer Lifetime Value): This is a vital metric for businesses, particularly since it encourages a more customer-focused approach for improved performance. CLV enables an estimation of the cumulative value contributed to any enterprise by a customer throughout his/her whole association/journey with the same. This takes in aspects like average purchase value, purchase frequency, and of course, customer loyalty. A business can thus work out whether it has suitable revenues from clients to justify the costs of retaining and acquiring customers. Yet, customers should always be segmented properly in order to understand the CLV value. High-value clients may be identified and resource allocation decisions can be changed, based on the profit in every segment. High CLV also means that the business is doing well, since more clients are likely to keep their association intact, while referring others too
- Enterprise Productivity: It is crucial to monitor overall productivity and employee engagement as far as businesses are concerned. Revenue per employee and profit per employee are noteworthy metrics in this regard, clearly indicating the cost that is involved in higher revenue generation. Yet, there are also other qualitative aspects that should be tracked, which include willingness to up-skill or upgrade, and work ethic, in tandem with absenteeism, employee turnover rates, satisfaction levels, and employee retention
Business Analytics and Metrics are Invaluable for Companies
In a growingly competitive business landscape, companies should invest in proper BI implementation strategies with cutting-edge AI and analytics-driven processes/systems. BI will enable them to regularly track these invaluable metrics in order to get a grip of organisational performance, employee productivity, customer satisfaction, financial output, and of course, overall efficiency.
At the same time, companies can also track KPIs that are customised as per their particular goals. It can thus be said that BI-enabled tracking of metrics is invaluable for almost any company today.
FAQs
1. What are the most important key performance indicators (KPIs) for businesses to track using BI?
There are several crucial key performance indicators (KPIs) that businesses can track with the help of BI (business intelligence) tools, including CLV (customer lifetime value), cash flow, enterprise productivity, revenue, and gross profit margin.
2. How can tracking customer acquisition cost (CAC) with BI tools benefit my business?
CAC (customer acquisition cost) is a vital metric that can be tracked with BI tools. This is evaluated in relation to the CLV (customer lifetime value) and hence tracking it is important. This metric is what helps companies build the right balance between customer acquisition costs and potential revenue generation from that customer over his/her lifetime.
3. What role does BI play in monitoring and improving customer lifetime value (CLV)?
Business intelligence (BI) has a crucial role to play in helping companies track customer lifetime value (CLV), which indicates the value derived in terms of revenues from the average customer over his/her lifetime/association with the brand. Looking at the historical data and patterns for this metric, companies can work on better customer retention strategies to improve CLV in case it has come down.
4. How can BI tools help in tracking and reducing churn rate?
Strategic BI tools can be immensely helpful with regard to tracking the churn rate and also lowering it based on patterns and inputs for the same. The objective will be to lower churn and scale up CLV (customer lifetime value in turn). Companies will depend on these tools for data-based decision making and multi-channel inputs on customer feedback that will help them find and fix pain points to reduce churn.
5. What financial metrics should businesses be tracking with BI to ensure profitability?
Some of the important financial metrics that businesses should track with BI include revenue, gross profit margin, and customer lifetime value, to name a few. Many other metrics can be customised based on the specific business requirements.
