We're living in a data-driven economy, with advanced metrics giving organizations greater insight into their customers' behaviors and the effectiveness of their own initiatives and procedures. We're better equipped than ever before, with data at least, to make educated guesses on what will best impact our business's bottom line.
And while more information isn't a bad thing, CEOs can find themselves drowning in a muck of numbers. What should CEOs be tracking?
The start of a new year, however, is a good opportunity for business leaders to zero in on which key performance indicators are most important to the business, and which will paint the clearest picture of achievement vs. projected outcomes. Once you've aligned your vision and your mission as a company, you'll have a baseline to measure against your chosen KPIs.
For busy CEOs, the KPIs you monitor should tell a quick story and give you insight into both external and internal trends. Here are five to keep tabs on this year:
Tracking profits is more than just making sure you're staying in the black, it can indicate how sustainable the investments you're making in your business are and if they're growing your customer base. Sometimes the story these numbers tell can be more vital than the numbers themselves.
For instance, breaking down your profit indicators by customer, employee and product helps you stretch your budgets further as well. By seeing how much your customers are spending and what they're spending it on, you can refine your offerings so your big profit drivers play a larger role.
Same goes for your own people - does it make more sense to give current employees more responsibility or is it necessary to bring on new talent to fill gaps? Tracking profits at a more granular level will give you clear insight into which levers you may need to pull to get more return on your investments, be it people, time or product.
Revenue and Revenue Growth Rates
Tracking your revenues throughout the year is an important exercise in benchmarking. It also requires you to be diligent and flexible.
Setting annual revenue targets is important, but be careful not to adhere too strictly to your forecasts. Review and adjust the numbers at least every quarter so you keep your team engaged and thinking realistically.
Revenue tracking will give you the most blunt indicators of success for your initiatives, your departments and how well you've kept up with the changing needs of your customers. If you follow the numbers closely and break them down by category, you can easily compare them to past years' growth rates and identify trends that are affecting your bottom line.
KPIs aren't strictly a numbers game. The most important indicator of your growth potential has less to do with percentages and more to do with attitudes.
How do your employees feel going into work every day? Are they aligned with your company mission and ready to uphold and even share it? Or are they going through the motions, checking job board sites and biding their time for the next opportunity?
There are a variety of ways to gauge this whether through retention rates, employee performance, Leo the Slackbot, or anonymous happiness surveys. This could also be an opportunity to check in on your company culture and how strong it is.
Net Promoter Score
It's no secret that a recommendation from a trusted friend or colleague is the most effective form of marketing. That's exactly what your net promoter score (NPS) measures, and it's a simple yet powerful indication of customer satisfaction.
Ask your customers post-purchase, "how likely would you be to recommend our product/service to someone you know?" (on a scale of 1-10). Depending on the answers, you'll get a range of respondents in one of three categories: promoters, passives or detractors. Promoter percentage minus detractor percentage equals NPS, giving you a crystal clear indication of how effective your overall customer experience is.
You can follow up with more open-ended questions to get a sense of what exactly is working or lacking, helping you turn your NPS into action.
Order or Project Fulfillment
You're only as fast as your slowest order gets out the door. At least that's true in the eyes of your customers. Tracking the speed with which you fulfill orders (and therefore the speed at which you can bill) is important for CEOs keeping an eye on process.
Same goes for project monitoring. You should know why delays are happening and have a plan to fix them. Keeping tabs on organizational downtime goes hand in hand with project fulfillment. The more you look at KPIs like this, the quicker you'll be able to stop bad habits and prevent negative patterns from becoming the norm.