What are the three ways companies can improve profitability?
Increase revenue for the same cost, reduce cost for the same revenue, or do both.
Why are business metrics essential?
They allow companies to measure and track operational performance accurately.
What are business metrics?
Quantifiable measures used to track business processes and evaluate performance.
Who typically monitors business metrics?
Departments monitor their own metrics; executives monitor high‑level summary metrics.
Why is it important to choose the right business metrics?
To focus on what matters most and avoid tracking irrelevant data.
What benefit does tracking business metrics provide for performance improvement?
Shows what is working and where to improve.
What performance areas should every business track?
Sales, marketing, finance, and human resources.
How do metrics improve alignment?
They ensure the entire company is working toward shared goals.
Why are metrics important for compliance?
Some metrics are required to meet government or regulatory standards.
How do metrics enhance communication?
They convey performance to customers, employees, and shareholders.
How do metrics aid in problem identification?
They help detect issues early before they grow.
What are four questions to decide if a metric matters?
Is it relevant to performance?
Does it predict future performance?
Can it be measured reliably?
Can the responsible team impact it?
Formula for net sales?
Net sales = Gross sales – Discounts – Returns – Costs of discounts/returns
Formula for quota attainment?
Quota attainment = Sales achieved / Sales goal
Formula for sales growth rate?
(Current revenue – Previous revenue) / Previous revenue × 100
What is churn rate?
% of customers lost during a period.
Formula:
Churn rate = Customers lost / Starting customers × 100
Formula for lead response time?
Total response time / Number of leads
Formula for Return on Marketing Investment (ROMI)?
(Sales growth – Marketing cost) / Marketing investment × 100
Formula for cost per lead (CPL)?
CPL = Total marketing spend / Number of leads
Formula for customer acquisition cost (CAC)?
CAC = Total marketing + sales cost / New customers
Formula for customer lifetime value (CLV)?
CLV = (Avg transaction value × Avg transactions/year × Retention years) × Profit margin
Formula for customer retention?
(Ending customers – New customers) / Starting customers
Formula for traffic-to-lead ratio?
Leads / Unique website visitors
Formula for conversion rate?
(Conversions / Total visitors) × 100
