The number one priority for business owners is typically profitability. When it comes to tracking financial metrics, they steer towards numerical values that equate to extra dollar signs. Some might start vigorously tracking various KPIs in order to be able to report that to investors, board members or even internal departments.
What is often overlooked are the non financial metrics and how these relate to revenue.
The problem with much financial analysis is that it happens after the fact. You can take the bank statements and financial reports and determine what just happened over the past month, quarter or year.
But leveling up your financial analysis requires predictive metrics. These are often data points, outside of your financial system that allow you to look forward and plan different scenarios. Many times, the KPIs you most need to analyze are nowhere to be found in a bank statement.
It might be time to add in some of these metrics into your portfolio. Take a look at these 7 non-financial metrics to track and how they can help with your company’s growth.
Team Metrics
Let’s start with Team Metrics. These are tough to calculate as it is always difficult to gauge cooperation since teams are so dynamic. Without your employees, there is no product or service to sell so it’s important to track these workforce metrics.
- Headcount
Startups are always in a position to shift goals or priorities at a moment’s notice which makes it hard to plan and budget for the need to hire more support. Take into account not only full-time employees, but any part-time employees as well as contractors or outsourced workers.
Reporting headcount allows you to easily make sure the business still has enough force behind it to maintain its financial projections. You don’t want to be in a situation when you start to grow rapidly and can’t keep up with the demand.
- Communication/Collaboration
It’s challenging to try and measure how your employees are working together or if they even are. Take notice and observe the following.
- Is there equal decision making happening amongst everyone on a team?
- Are your teams meeting their goals on time?
- Do team members take accountability when things go awry?
- Are skills being developed within each team?
It will make it even more difficult to grow as a company if your teams can’t grow together. Tracking collaboration across departments and within teams is crucial to building an organization that can scale. Schedule meetings with your departments to ensure that none of the members feel neglected or succumb to the groupthink mentality that can so often occur.
Lead Generation
Most owners will start tracking their CAC and LTV once they have enough data thinking it can help gauge the profit made by each customer. What occurs before you even acquire a customer is essential too and can sometimes be overlooked. The good news about lead generation is it is easy to follow and provides a nice percentage to showcase. It is dependent on your goals as a business so use these two definable metrics to get started.
- Conversion Rate
How do you know whether or not people are actually buying what you’re selling? From your sales, yes, but what actually attracts your consumers to your product or service? Conversion rate is the metric to track. This shows how many people are actually doing what you want them to do. The rate doesn’t have to be about actual purchases; it can be defined by whatever goal you outline.
For example, it can either showcase how many people have clicked on a blog post on your website or how many customers have made a repeat purchase from your site. This determines what is driving people to buy your product and what interests your consumers. Keep in mind there is no perfect conversion rate because it does depend on what you are tracking and how you price your products or services.
- Length of Conversion (Buying Cycle)
Now that you have your conversion rate, let’s look at how long it actually takes for a lead to become a customer. This is a great way to improve sales. If you can understand how many leads you need consistently to earn revenue, you can forecast for the future and budget based on conversation rates.
Find out why your customers love you and repeatedly come back for more and then keep improving upon that. The goal is to decrease your length of conversion so start tracking it to be able to beat it.
Customer Service and Support
If you’re tracking your CAC, you likely know it’s expensive to gather new customers. Customer retention is just as crucial. These metrics can improve your support process to decrease costs and potentially increase profitability through customer upsells as well as referrals.
- Response Time
The time it takes to respond to an issue is very relevant to customers of any business. Most consumers want their problems solved but more importantly, they want them solved fast. Any time someone is reaching out to customer support, they are likely in the middle of a busy day so they want a solution right away or that it is being handled. Make the time to start tracking this in order to decrease your response rates to increase customer retention.
- Resolution Time/Rate
The response rate is important but arguably, even more meaningful is the actual resolution rate. Customers will be patient up to an extent. If they consistently have to deal with the same issue on your platform or with your product, they likely will not stick around.
The solution to a problem is key and tracking why your customers are looking for support is crucial to any business. Utilizing a ticketing system is advantageous since it can document all problems that customers call in for and can be referenced for future cases. Customers then feel appreciated as well when you understand their past issues and can easily resolve any problems based on past support.
- Net Promoter Score
Tracking your NPS score will help provide insight into what works and what doesn’t for your customers. It might not provide much detail depending on how your client’s answer but it will give you data on who to gather more feedback from.
This is also a way of proactively offering customer support before the customer comes to you. They might not have an immediate issue to solve or a broken link they can’t get working, but any detractor scores could imply some dissatisfaction. Gathering more information from those customers can lead to better retention and improving your product or service as well.
Use a tool like SuveyMonkey to create a list of questions and gather helpful feedback. Customers then also know you are willing to hear their concerns and will feel more comfortable staying with a company that does so.
Ready to track the right metrics?
As important as your gross margin is, remember these non financial metrics can drive a lot of the sales that relate to your profit. As an owner, you need to be in touch with all aspects of your business including the non-finance pieces that can influence your revenue.
These metrics may be a little more challenging to track, but they are worth it as you see how they drive more growth within your company. Need some help getting started? Pasquesi has worked with a collection of startups and knows the importance of tracking all types of metrics. They can assist by setting you up with a virtual CFO that can track these metrics for you and align them with your business goals.