6 Key Points and Metrics for Business Success

“You can make a million excuses for why something didn’t go well, but ultimately, just fix it and get on with it. Be a solutions person,” famously quipped Emily Weiss, CEO of Glossier, an American beauty brand.

But to fix things and come up with the solutions needed to push your business toward success, you need to measure data. And not just any data. You must have specific criteria and metrics to quantify and assess your operations so you could make amendments quickly to address bottlenecks and anything else impeding success.

Remember, business metrics are not about mindlessly tracking data. If you leverage them right, they can become the cornerstone of data-driven decision-making that sets you in motion to achieve your goals.

But which aspects are critical for business success? Here are six that every organization should measure.

1. Profitability

The ultimate goal of any business is to make profits. Everything you do, from manufacturing high-quality products to marketing them, is aimed at achieving this single objective.

Key metrics to gauge the profitability of your enterprise include:

• Gross Profit Margin

This is the gross profit taken as a percentage of total sales. It indicates the revenue left once you deduct the cost of goods sold.

• Net Profit Margin

The NP margin shows the profit you make per every dollar of revenue. It is computed by dividing the total net profit by revenue and multiplying by 100.

• Return on Investment

Calculated by dividing net profits by cost, the ROI is an excellent metric for assessing the profitability of an investment your business has made.

2. Productivity

Many organizations constantly obsess about improving their productivity so they could identify gaps and areas to improve, optimize workflows, improve efficiency, and boost profitability.

But measuring productivity is not as simple as dividing outputs by inputs. Certain metrics can help you put things in better perspective and compare the operational success of your enterprise over a specific time frame.

Metrics you can apply to measure this include:

• Revenue Per Employee

Used frequently in the services sector, this metric is calculated by dividing total revenue per year by the number of employees.

• Units Produced

In manufacturing settings, you can measure productivity based on how many units are produced per labor hour.

• Operational Downtime

The higher the downtime, the lower the productivity of your workflows.

3. Product Quality

According to a 2024 PWC study, quality was a major factor that determined consumer trust for 79% of people surveyed.

High-quality products lead to repeat purchases, recommendations, and improved brand image. They also prevent unnecessary costs relating to defects, returns, recalls, and complaints, which gives a better return on your investment.

The specific features to focus on when measuring quality will largely depend on your product. But at a broader level, you can use the following metrics.

• Defect Rate

This is usually gauged by the number of items with defects identified per labor hour or production batch.

• Returns

How many customer returns your business gets per month or year can serve as an indication of the faulty products that reach the market.

4. Customer Conversion

This lets you know the efficacy and success of your enterprise’s marketing and sales efforts. You can compare it against results over a period of time or even against your competitors to see how well you fare.

A lower conversion rate could point you toward critical improvements required in the customer journey and your sales and marketing activities. A higher rate, on the other hand, will help identify the strategies that work so you can apply them more.

How you measure the customer conversion rate can vary based on your sales channels and business. For example, in online retailing, you can assess this by dividing the number of customers who purchased by the total site visitors.

Sometimes, conversion doesn’t need to involve a product purchase. It can refer to any type of desired action, like signing up for a loyalty program or requesting a demo.

5. Customer Retention

Studies confirm that existing customers spend a lot more than new ones—67% more, to be exact, according to Business.com. Besides, acquiring a new client is significantly costlier than nurturing a relationship with someone who has already bought from you.

So, it makes every sense to look after your customers and keep them happy. For this, you need to actively track and measure your business’s client retention rate (CRR).

Here’s the basic formula to calculate it.

CRR = (Customers at year end)-(New customers acquired during the year) x 100

Customers at the beginning of the year

There are other metrics you can use besides the CRR to get a deeper understanding of how well your business is doing when it comes to developing a loyal customer base. These include the churn rate, average customer lifetime value, and monthly recurring revenue.

6. Employee Satisfaction

Employees are the biggest asset any enterprise possesses. When your team is happy, they stick around longer, collaborate better, become more productive, and go the extra mile to deliver superior service. And this is good for both your customers and your bottom line.

But how can you measure employee satisfaction? Here are a few metrics to consider.

• Employee Satisfaction Score

Employee surveys could help you calculate this by dividing the number of staff who have given a high rating by the total workforce.

• Employee Retention Rate

This indicates what percentage of employees who were there at the beginning of the year have remained with your company until year-end.

• Employee Net Promoter Score

Happy employees will recommend your business to others as well. And that is what this metric enables you to gauge.

Finally…

Although the criteria to measure business success remain pretty much universal, the exact metrics you should use may vary from industry to industry. They can also differ based on scale. So, take stock of your enterprise when selecting the precise metrics that suit your firm.

Once they are in place, track data religiously. More importantly, be honest in your assessments. Tweaking things just to make the numbers look good will not do anyone any good. When done right, these metrics can guide all your data-driven decisions for success.