The 5 Key Metrics Every Business Needs to Track

Using data the right way can provide businesses with a roadmap to success, but first, you need to know what to track.

learn more about Sumit Aneja

By Sumit Aneja

thianchai sitthikongsak | Getty Images

Opinions expressed by Entrepreneur contributors are their own.

Most business professionals have a heated, ongoing love affair with quantifiable metrics. That's because metrics allow you to objectively assess which direction to move in with your team. You can track a plethora of different metrics, depending on what you're aiming to do or find out. But, since most of us realistically don't have the time or resources to measure everything that's out there, as a starter, consider these key areas.

Related: Meaningful Metrics: The KPIs Every Franchisee Should Monitor

1. Customer acquisition cost

Customer acquisition cost (CAC) is simply the total expenses you spend to turn somebody into a buyer, divided by the total number of buyers. For example, if you spent $100 and brought in five customers, the customer acquisition cost would be $20.

Many organizations look at CAC as it relates to customer lifetime value (CLV or LTV), which is all the revenue you can expect to generate from a customer over your entire relationship with them. You typically want the cost of getting new customers to be lower than the CLV, because otherwise, you're either just breaking even (no growth) or, worse, losing money. Knowing the CAC to CLV ratio will help you get a concept of how much profit you'll get within a given window of time, and it can prove that you need a shift in your marketing channels or other operations. Both are essential to short and long-term goal setting.

2. Customer churn

Think of customer churn as the hot potato metric — it measures how many people drop you and stop buying. You find this rate by dividing the number of customers you lost by the number of customers you had at the beginning of the given time period. So, if you had 100 customers to start with and lost 13, then the churn rate would be 13 out of 100 or 13 percent.

To be clear, every business is going to lose customers. That's just competition, and the reality of dynamic market demands. So, you're not looking to keep this metric at zero. What you want is just to ensure that you're not losing customers faster than you can replace them. If you see that, it means there's a real problem within the business you need to address. This could be a lack of good customer service, the fact that you switched to an inferior product material, a continued series of bad, publically visible ethics choices by your managers, or any number of things. But high customer churn always necessitates some internal review or extended reanalysis of your target customers.

3. Net promoter score

Your net promoter score (NPS) is really all about your customers' experience. Applied generally, it can tell you how loyal people are to you and how they view your brand. Applied more specifically, it can also tell you how much people like certain products, services, marketing materials, representatives and more.

To find your net promoter score, ask your buyers how likely they are to recommend your business, product or service to somebody else. They rate you from 0 (wouldn't recommend you at all) to 10 (extremely likely to recommend you). Then, you separate detractors (0 to 6) from passives (7 to 8) and promoters (9 to 10). Subtract the percentage of detractors from the percentage of promoters for your final score. For instance, if 5 percent of customers are detractors and 85 percent are promoters, then your NPS is 80.

Determining your NPS is important because there's truly nothing better than free word-of-mouth advertising. People really are more willing to buy if they've been given good recommendations from others, especially if those recommendations are from family and friends. And the more people are willing to stick their necks out to recommend you, the less effort and resources you need to put toward bringing new customers into your fold or reducing customer churn — and the bigger your profits can become.

4. Employee net promoter score

This is essentially the same concept as NPS and is calculated the same way (subtract the percent of detractors from the percent of promoters). You just apply it to your employees for a grasp of how satisfied they are with your business or a specific manager. This makes an enormous difference when it comes to developing your company culture and overall team engagement. ENPS offers good insights into what needs to change to retain talent and serve customers well.

Related: A Different Way To Think About Achieving Goals In The Workplace

5. Customer satisfaction score

Referred to as CSAT for short, this score tells you the percentage of your total customers who are satisfied with your services or products. If you have 100 customers and 90 are satisfied, then your CSAT is 90 percent. Like NPS, CSAT is simple to implement. It can help you overcome customer-company disconnects and respond quickly to problems so people keep buying and recommending you. Implementing it immediately after a transaction or any interaction (e.g., by customer survey or star rating) is an excellent way to get a real-time pulse of what customers think of you. You can also trend it over time to identify issues as they arise.

Metrics don't have to overwhelm you. Start with core basics such as these, and then expand based on your other unique business objectives. These form your roadmap and enable you to progress with confidence. Measure your final metrics set consistently and you'll set the stage for truly solid decision-making across the board.
Sumit Aneja

Chief Executive Officer of Voxco

Sumit Aneja is the CEO of Voxco, an omnichannel software survey platform and a global market leader in the multi-modal survey software sector.

Related Topics

Editor's Pick

Everyone Wants to Get Close to Their Favorite Artist. Here's the Technology Making It a Reality — But Better.
The Highest-Paid, Highest-Profile People in Every Field Know This Communication Strategy
After Early Rejection From Publishers, This Author Self-Published Her Book and Sold More Than 500,000 Copies. Here's How She Did It.
Having Trouble Speaking Up in Meetings? Try This Strategy.
He Names Brands for Amazon, Meta and Forever 21, and Says This Is the Big Blank Space in the Naming Game
Business Solutions

Learn to Build a ChatGPT Bot for Only $30

If you want to see what AI can do for your business, grab this course bundle today.

Business News

I Live on a Cruise Ship for Half of the Year. Look Inside My 336-Square-Foot Cabin with Wraparound Balcony.

I live on a cruise ship with my husband, who works on it, for six months out of the year. Life at "home" can be tight. Here's what it's really like living on a cruise ship.

Thought Leaders

The Collapse of Credit Suisse: A Cautionary Tale of Resistance to Hybrid Work

This cautionary tale serves as a reminder for business leaders to adapt to the changing world of work and prioritize their workforce's needs and preferences.

Health & Wellness

5 Essential Steps to Expand Your Vision and Start Living Your Dream Life

It's time to break free from your comfort zone and expand your vision. When you refuse to settle for a mediocre life, you can start building a life you love.

Business Ideas

55 Small Business Ideas To Start Right Now

To start one of these home-based businesses, you don't need a lot of funding -- just energy, passion and the drive to succeed.

Business News

These Are the Most and Least Affordable Places to Retire in The U.S.

The Northeast and West Coast are the least affordable, while areas in the Mountain State region tend to be ideal for retirees on a budget.