Cool kpis from Thomas Taylor - a legend
What you can measure, you can manage
There are some universal marketing KPIs that are applicable to most businesses and startups such as:
Cost of Customer Acquisition = total costs of acquiring customers / number of customer
Lifetime Customer Value = present value of (future profits from client X estimated lifetime of client)
Cost Per Lead = cost of outbound marketing / number of leads
And of course, the traditional accounting KPI's that suit most businesses such as:
Annual Growth Percentage = (revenue now - revenue last year) / sales last year
Net Profit (EBIT) Percentage = net profit / revenue
Gross Profit Percentage (margin) = gross profit / revenue
Return on Equity = net profit / value of equity in business
Return on Investment = net profit / total amount of cash you have invested
Debtor Days = value of debtors / revenue x 30
There are also specific KPIs for particular industries. KIPIs for some of the industries I work with are listed below.
Professional Services and Creatives
Utilisation Percentage = time spent working on billable client work / time available for work
Average Rate = amount billable to client / hours spent working the produce that amount
Realisation Percentage = amount billed to client for a piece of work / (amount of time spent X standard billable rates)
Gross Profit = amount billed to client for a piece of work - total directs costs of employees, contractors and expenses incurred in producing that work (doesn't include marketing, admin and overheads)
Revenue Per Consultant = revenue from consultants / number of consultants
Gross Profit from Contractors = revenue from contractors - direct costs of contractors
Software as a Service
Average Revenue Per User = sales / users
Monthly Recurring Revenue = predictable revenue stream
Committed MRR = revenue if all sales and marketing stopped
New MRR = MRR from new customers
Expansion MRR = MRR from existing customer upgrades
Churn MRR = MRR lost cancelling customers
MRR Growth and Percentage = (New MRR plus Expansion MRR Less churn MRR) / Previous MRR
E-commerce
Average Order Value (AOV) = revenue / number of orders
Conversion Rate = number of orders / number of visits
Bounce Rate = percentage of visitors that leave immediately
Shopping Cart Abandon Rate = percentage that start checkout but don't complete
Recruitment
Revenue Per Consultant = perm revenue and temp margin / number of consultants
Temp Margin Percentage = temp wages and on-costs / temp revenue
Percentage Consultant Cost = all direct costs of employing consultants including commission / total perm revenue and temp margin
For seriously cool recruitment KPIs check out the RIB report, especially the new electronic version. I wish other industries that a great service like this.
It's said that a KPI is something that can affect profit and cash, but most important things do. The trick is to use common language and make sure everyone is onboard and has a clear understanding of what's being measured and why. Then make sure you stick to the same ones and learn to, if not love, live them.
If you are looking for a good system to report KPIs as well as your financials check out Spotlight Reporting. They have some great new templates for some of these industries that inspired this blog. Thanks guys.
Cheers,
Thomas