The Essential KPIs
A KPI (Key Performance Indicator) can be defined as a number or rate useful for measuring the Essential KPIs effectiveness of a financial business, marketing, sales, Customer service, Search Engine Advertising, Emailing, or HR system.
How to define your KPIs?
Each company needs to monitor different KPIs. It is up to you to define the most important KPIs to follow. This can be the MRR (Monthly Recurring Revenue) for a SaaS software, the number of active users for a social network or the average basket for a DNVB (Digitally Native Vertical Brand). Our advice: define KPIs for each of your teams and global KPIs.
Essential KPIs
1 – Turnover (Revenue)
Definition of turnover
Turnover (Revenue) is the sum of sales of goods or services over a financial year.
This widely used KPI is an excellent indicator of the health of a company and allows you to know its market share and the evolution of its performance from one year to the next.
Calculation of turnover
Turnover = sale price * quantity sold
2 – Net income
Definition of net income
Net income is the difference between a company’s revenue and expenses.
This KPI indicates whether the company is in profit or in deficit.
Calculation of net income
Net income = income – expenses
It is possible to obtain the net result with another formula.
3 – Monthly Recurring Revenue (MRR)
Definition of MRR
Monthly Recurring Revenue (MRR) is a KPI favored by SAAS software or companies operating on the subscription model.
Calculation of the MRR
MRR = sum of all revenue received
Where
MRR = average revenue per user * number of users
You can get the ARR (Annual Recurring Revenue) using the same model over the year.
4 – LifeTime Value (LTV)
Definition of LTV
The LifeTime Value (LTV) or Customer LifeTime Value or even the customer lifetime allows to know how much the customers bring back in the long term. Thanks to the LTV, you know your long-term turnover and the marketing budget that you can allocate.
LTV calculation
Customer LifeTime Value = (Purchase Frequency * Average Basket) * Average Customer Lifetime in Years.
The average customer lifetime depends on your business, it is easy to know for a subscription model, it is less so for a one-time model. To go further, you can consult the excellent article of ABtasty on the calculation of the LTV.
5 – Cost per lead (CPL)
Definition of PLC
The definition of cost per lead (CPL) is simple, it is the price spent to acquire a commercial contact or prospect.
CPL calculation
Cost per lead = total marketing spend / number of leads.
This KPI is very useful for knowing the effectiveness of your digital marketing actions.
6 – Customer acquisition cost (CAC)
Definition of the CAC
Customer acquisition cost (CAC) is the price spent to acquire a new customer.
Calculation of the CAC
Customer acquisition cost = total marketing spend + total sales spend / number of customers.
There is also a definition and an alternative method of calculation for the CAC which takes into account the payroll.
If you follow correctly, companies have every interest in having their CAC lower than their LTV.
7 – Number of customers
This indicator speaks for itself and does not require definition. Knowing your number of customers is useful for your communication. Revenue is often more relevant to your business.
Would you rather have 2,000 customers paying $700/month or 11,000 customers paying $120/month? You have 30 minutes. The calculator is prohibited.
8 – Return on investment (ROI)
Definition of ROI
The return on investment (ROI) is a ratio that allows you to measure what your initial investment will bring in (starting capital, aid for setting up a company or part of your marketing budget). The purpose of this performance indicator is to know how many euros will bring you a euro invested.
ROI calculation
ROI = (investment gain – investment cost) / investment cost.
We spare you our speech on the ROI. The ROI is the base and there are still 58 KPIs to see.
9 – Churn rate (lost customers)
Definition of attrition rate
The attrition rate or churn rate allows you to know the percentage of lost customers. Having new customers is not an end in itself, they must be retained and satisfied. Literally, attrition is gradually making something weaker and destroying it
Churn rate calculation
Churn rate = number of customers lost / number of total customers * 100
The work on the attrition rate is sometimes neglected when it should be at the heart of your marketing strategy and a priority objective. Retaining a customer costs less than acquiring a new one.
10 – Market share
Definition of market share
Your market share can be defined as the percentage of sales you make in your market/industry. You can also benchmark your competitors to find out what level you are at.
Calculation to know your market share
Market share = company turnover / sector turnover.
11 – Average Basket
Definition of the average basket
The average basket is the average amount spent by your customers.
Calculation of the average basket
Average basket = turnover / number of customers.
The average basket is a very interesting indicator to study crosswise with your demographic data or your commercial operations and easily accessible from most software. billing or accounting software studied by Tool Advisor.
12 – ADR or Average Daily Rate
Definition ADR or Average Daily Rate
ADR or Average Daily Rate is a very important KPI for freelancers to track. This is the amount billed for one day of work. It can be set according to many criteria, here are some tips to define your TJM. The TJM can also be calculated simply:
Calculation of MDR
TJM = turnover / number of days worked.
The use of the TJM is multiple for freelancers. It allows you to position yourself in relation to the market average and to improve your profitability as it increases. A good strategy for freelancers is to increase your TJM regularly (when your schedule is full or when you increase your skills).
13 – Revenue growth rate
Definition of revenue growth rate
Revenue growth rate is a rate of change applied to your revenue. It is measured from one year to the next and is expressed as a percentage.
Calculation of revenue growth rate
Revenue growth rate = ((Turnover year N – Turnover year N-1)/Turnover year N-1) x 100.
A company’s growth rate is an essential KPI for measuring the evolution of your business and analyzing your growth strategy. It is very interesting to compare it with previous years and to go into detail on your growth by making comparisons by month or week.
Essential KPIs for Marketing
Un KPI marketing est un indicateur qui sert à analyser la performance d’une action visant à booster la génération de leads pour permettre à une entreprise d’atteindre de nouveaux clients. L’acronyme KPI est issu du terme anglais key performance indicator et signifie en français : indicateurs clés de performance.
14 – Number of Marketing Qualified Leads (MQL)
Definition of an MQL
An MQL is a lead qualified by the marketing or web marketing team who has shown interest in your product or service with their actions (visiting a page, downloading a white paper, etc.).
It is interesting to monitor the KPI of cost per MQL based on channels and time periods.
15 – Number of Sales Qualified Leads (SQL)
Definition of an SQL
An SQL is a lead qualified by the marketing team and who can be contacted by a salesperson. An MQL becomes an SQL thanks to scoring: with each action carried out the lead earns points and at a certain score it passes to SQL status and all this automatically thanks to marketing automation software.
Just like with MQLs, it’s interesting to track the cost per SQL.
16 – Breakdown of traffic / MQL / SQL / customers / turnover by acquisition channel
Breaking down the above KPIs by channel makes it easier to analyze the channel effectiveness of your marketing campaigns.
A marketing acquisition channel can be defined as the circuit through which the visitor got to know you: Google Ads, Facebook Ads, Linkedin Ads, SEO, social networks, e-mail, affiliation, offline, word-of-mouth, etc.
Monitoring the distribution of traffic by channel, with Google Analytics or alternatives for example, allows you to compare the different conversion rates. Imagine that 15% of your MQLs come from Google Ads (formerly Google Adwords) compared to 25% of your customers, this means that the leads coming from Google Ads are more qualified.
17 – Time spent per page
Thanks to this KPI, you will be able to check the interest of your visitors for your product or service: by definition, the more time a person spends on a page, the more interested they are.
If the time spent per page is very close to 0, there is a problem. Similarly, if there are too big differences depending on the channels, remember to check your campaigns.
18 – Pages per session
The number of pages per session is a similar indicator to the time spent per page. The more pages a person sees per session, the more interested they are in your product or service.
19 – Bounce rate
Definition of bounce rate
The bounce rate or bounce rate corresponds to the percentage of visitors to a website who consult only one page and leave. This KPI helps to know the relevance of its marketing campaigns and the differences between the channels.
Bounce rate calculation
Bounce rate = number of visitors who only saw one page / total number of visitors * 100
20- Desktop/tablet/mobile distribution
Monitor this KPI to know by which device device (computer, tablet or mobile) your visitor found you.
This distribution is not anecdotal. On the one hand, you can select only one of the devices on the paid acquisition channels. On the other hand, too big a difference can mean that your website is not mobile-friendly (phone-friend?) and therefore that you have to revise the design.
KPI definition
Don’t overlook this last point, a site that is not mobile friendly equals lost leads and customers.
21 – Cart abandonment rate
Definition of cart abandonment rate
This KPI, very important in e-commerce, is used to monitor the quality of your “sales tunnel”. Thanks to this KPI, you will know the share of people entering your sales tunnel who do not buy your product or service.
A secure checkout page, testimonials from happy customers, auto-complete forms, and a short funnel are factors to consider in lowering cart abandonment rates.
Cart abandonment rate calculation
Cart abandonment rate = number of cart abandonments / number of cart creations * 100
The reasons for cart abandonment are varied: lack of reassurance, absence of certain means of payment, too long tunnel or too high delivery costs.
22 – Product return rate
Definition of the product return rate
This e-commerce KPI allows you to know the proportion of products returned after receipt.
Product return rate formula
Product return rate = number of products returned / number of products delivered * 100
Product returns cost e-commerce a lot of money and are an ecological disaster. There are many examples of optimization: you can lower your product return rate by improving your product sheets, tightening your return conditions or improving the quality of your products.
SEO KPIs
SEO, Search Engine Optimization or more commonly natural referencing refers to traffic from search engines like Google, Bing, Yahoo or Qwant. Some KPIs (key performance indicators) are specific to this channel. It is sometimes possible to follow them directly from SEO software.
23 – Click through rate (CTR) based on your position on the SERPs
SERP is the acronym for Search Engine Ranking Page and corresponds to the search engine results page (Google, Bing, Qwant, etc.). The click rate or click through rate (CTR) in English is the number of clicks recorded compared to the number of times the element was displayed.
Why is the CTR based on your position on the SERPs important? Because each position on the SERPs corresponds to an (approximate) click-through rate.
The estimates are as follows:
These estimates depend on the number of ads, your industry, and your titles and meta descriptions. If your CTR is too far from what it should be, optimize these elements.
24 – Number of MQL and SQL per page
You know from KPIs 12 and 13 what MQL and SQL are. Consider MQL and SQL based on your site or blog pages.
If a blog page brings you a lot of SQL, focus your SEO efforts on it rather than on a page with little SQL input.
25 – Number of backlinks
Definition of a backlink
A backlink is a link from another site that points to yours. We won’t go into the do-follow/no-follow details, but be aware that there is a correlation between your position on search engines and your number of backlinks, even more so if they come from quality sites. The combination of well-targeted keywords and quality backlinks is very effective for your natural referencing.
The more backlinks you have, the better you will be positioned, the happier you will be.
26 – Number of referring domains
Definition of a referring domain
Referring domains are a complementary concept to backlinks. Multiple backlinks can come from a single referring domain. This KPI completes the number of backlinks.
It is also more relevant to retain the number of referring domains than backlinks. To give you some examples, it is better to have 1 link from 500 sites than 500 links from a site and 1 link from Le Monde is more interesting than 50 links from 10 disreputable sites.
27 – Domain authority or domain authority (DA)
Definition of domain authority
Domain Authority (DA) is a metric that was created by Moz and consists of a score between 1 and 100, with 100 being the best score. This DA measures the strength of your website.
The closer your domain authority is to 100, the more likely you are to rank well on search engines.
You can check your domain authority (or similar notion) with many tools: Ahref, Semrush and Moz.
28 – Charging Speed
Improving your loading speed is a fundamental element for your SEO. The reason is simple: the longer your site takes to load, the more visitors will leave before it’s fully loaded, the angrier the search engines will be.
Want to piss off the search engines? Bad idea.
Emailing KPIs
This part on emailing includes all the detailed key performance indicators (definitions, calculations and explanations) of emailing, newsletters or transactional emailings.
29 – Spam rate
Definition of the spam rate
The rate of spam or unwanted mail corresponds to the number of complaints and arrivals in the spam of your emails. It is very important to keep this KPI as low as possible.
Spam Rate Calculation
Spam rate = (number of emails reported as spam + number of emails that go straight to spam) / total number of emails sent * 100.
Too high a spam rate can have terrible consequences on your deliverability. Imagine if your registration confirmation emails arrive in spam.
30 – Bounce rate
Definition of bounce rate
The bounce rate KPI for emailing corresponds to the number of undelivered emails.
Bounce rate calculation
Bounce rate = number of undelivered emails / total number of emails sent * 100.
Some emailing software allows you to break your contract if your bounce or spam rate is too high.
31 – Open rate
Definition of the opening rate
The opening rate of an emailing campaign corresponds to the number of emails opened for your campaign.
Open Rate Calculation
Open rate = number of emails opened / total number of emails sent * 100.
32 – Click Through Rate (CTR)
Definition of CTR
The CTR KPI adapted to emailing corresponds to the number of emails in which your recipient clicked on a link.
Click-through rate calculation
Click rate = number of emails clicked / total number of emails sent * 100.
33 – Churn rate
Definition of Churn Rate
Unsubscribe rate refers to the number of people who unsubscribed from your mailing list.
Churn Rate Calculation
Unsubscribe rate = number of unsubscribes / number of people in the mailing list * 100.
Search Engine Advertising KPIs
Search Engine Advertising refers to paid referencing and channels such as Google Ads, Facebook Ads, Linkedin Ads, all social networks + Ads, display and affiliation.
34 – Relevance score
Definition of the relevant score
The relevance score (from Facebook) and similar scores from other social networks are the SEA bias of domain authority and meet the same definition. It is a score given by social networks to assess the relevance of your paid campaigns.
Be careful. A poor quality score/relevance score will increase the CPC of your ads.
35 – Cost per click (CPC)
Definition of CPC
The cost per click is the B.A-BA of SEA and refers to the price you pay for a click on one of your advertisements.
Cost per click calculation
Cost per click = total budget / number of clicks * 100.
Be careful not to focus on this KPI, CPC is less relevant than CPL in most cases. Remember to define the KPIs to follow upstream.
36 – Cost per lead (CPL)
Definition of CPL
The cost per lead is a preferred method of remuneration for the affiliate channel. It is also interesting to calculate the cost per lead within the framework of your SEA campaigns.
Calculating the cost per lead
Cost per lead = total budget / number of leads * 100.
For affiliation, the cost per lead is defined upstream following an agreement between the advertiser and the publisher.
37 – Cost per thousand impressions (CPM)
Definition of CPM
The cost per thousand impressions (CPM) can, like the CPL, be a mode of remuneration in affiliation where the advertiser pays the publisher every 1000 impressions. The CPM price is set before the trade.
38 – Click Through Rate (CTR)
Definition of CTR for SEA
The CTR KPI adapted to the SEA refers to the number of clicks in relation to the display of your ads.
Click-through rate calculation
Click rate = number of ads clicked / total number of ads * 100.
How to easily track all your KPIs for SEA: use Google’s Campaign URL Builder.
Social media KPIs
39 – The number of subscribers
If the number of subscribers is an important KPI, we can only advise you not to buy subscribers, fans or followers.
There is nothing more depressing than a page that has 10,000 followers with no post interactions.
40 – Scope of publication
Definition of publication scope
Post reach is the number of people who received impressions from a post. Reach differs from the number of impressions because one person can receive multiple impressions.
41 – Number of shares or comments
The number of shares and comments is also a KPI to follow for social networks. Set your goals well. This channel is not always relevant depending on your sector.
Business KPIs
42 – Number of calls
The easiest metric to track is the number of calls made by your sales reps. Invest in good tools (CRM or softphone) to improve the efficiency of your teams and the number of calls.
A complementary KPI to the number of calls is the number of appointments when your salespeople meet your prospects.
43 – Win Rate Essential KPIs
Definition of win rate
The win rate is a very interesting key performance indicator to compare your sales department to that of your competitors.
Win Rate Calculation
Win rate = number of times you competed head-on with another player / number of customers won * 100.
The win rate only works when you have identified your competitor well.
44 – Turnover per salesperson
A great classic of KPIs for salespeople: the amount of signed turnover.
You can take this a step further by comparing signed revenue with customer LTV to verify the quality of customers signed per salesperson.
45 – The sales deadline
The Time-to-Sell KPI is the amount of time that has elapsed between when the lead is created (SQL) and when the customer is signed.
46 – Breakdown of reasons for lost opportunities
Knowing the conversion rate of SQLs to customers is a good thing, knowing the reasons for non-conversions is even more important to improve your business process.
Too expensive, lack of features, lack of responsiveness, online reputation to improve, poor definition of needs: this is often a very powerful KPI to make a leap forward in your prospecting.
47 – Repurchase rate
Definition of repeat purchase rate
The repeat purchase rate consists of measuring the purchases made by people who are already customers in a given period.
Repurchase rate calculation
Repurchase rate = customer who bought at least twice during a period / total number of customers during this period * 100.
The repeat purchase rate is an excellent indicator for knowing the loyalty of your customers and the effectiveness of your up-selling actions. Loyalty is one of the key points to make your business profitable because it costs more to have a new customer than to keep it.
48 – Pipeline value
The pipeline value is the dollar amount of open business opportunities. If you know your conversion rates, you will be able to know the value of contracts signed in the future with the value of your current pipeline.
An example :
The value of all your SQLs is €100,000, if you know that you transform 15% of your SQLs into customers, you will therefore sign €15,000 in turnover. If it is below your objectives, plan actions accordingly.
49 – Lead Velocity Rate
Setting the Lead Velocity Rate
This little-known KPI is very useful for SaaS software. This is to calculate the increase in SQL from month to month. The number of SQLs influences the value of the pipeline explained above and a good lead velocity rate augurs a probable increase in future turnover. The French meaning of lead velocity rate is the velocity rate of prospects.
Lead Velocity Rate calculation
Lead Velocity Rate = number of SQLs of the month – number of SQLs of the previous month / number of SQLs of the previous month * 100.
This key performance indicator allows you to have an optimal view of the future evolution of your turnover.
Customer service essential KPIs
50 – Satisfaction rate
The satisfaction rate is the transformation of the ratings assigned by your customers into a more readable rate.
Calculation of the satisfaction rate
Satisfaction rate = (average of marks obtained / highest possible mark) * 100.
51 – Net Promoter Score (NPS)
Definition of NPS
The NPS is the best-known measure for customer satisfaction, although it remains controversial.
NPS Calculation
Ask the question: how likely are you to recommend (your business name) to a friend, colleague or relative?
Answers on a scale of 0 to 10, with 0 meaning very unlikely and 10 meaning very likely.
Promoters are respondents who gave a score of 9 or 10, passives a score of 7 or 8 and detractors 0 to 6.
NPS = % promoters – % detractors.
Please note that the NPS is not returned in %. This is a score that is between -100 and +100, a positive NPS is considered a sign of good customer satisfaction.
52 – First contact resolution rate (RPC)
Definition of CPP
The speed with which your customer issues are resolved is very important to ensure optimal customer satisfaction. The RPC helps you to know the proportion of the problems solved from the first exchange.
Calculation of the first contact resolution rate
RPC rate = number of requests resolved on first contact / total number of requests * 100.
53 – The average waiting time
As an extension of RPC, another sticking point for your customers is the wait time.
Calculation of the average waiting time
Average wait time = sum of waits (in minutes) / number of requests * 100
Human Resources KPIs
We continue our tour of services with the definitions, formulas and explanations of the KPIs of the human resources department.
54 – Duration of recruitment
The recruitment process is often time-consuming. Your company has every interest in speeding up this process, which costs money.
Calculation of the recruitment period
Duration of recruitment = date of signature of the promise of employment – start date of recruitment.
Taking the signature of the promise of employment avoids the bias of the notices to be respected for new hires which can artificially increase the duration of recruitment.
55 – Delay before maintenance
To reduce your recruitment time, the first solution is to schedule interviews as soon as possible.
An easy-to-follow KPI to check your effectiveness is the time from receipt of resume to first interview.
56 – eNPS
Definition of eNPS
The eNPS is the internal version of the NPS that we told you about earlier. It uses the same rules and the same method of calculation to calculate employee satisfaction.
eNPS calculation
The question is the same as the NPS but adapted to human resources: “Would you recommend your company as a good place to work? »
As with the NPS, responses are on a scale of 0 to 10 and promoters are respondents who gave a score of 9 or 10, passives a score of 7 or 8 and detractors 0 to 6.
eNPS = % of promoters – % of detractors.
If you want to dig deeper into the subject, we recommend the content of our friends at Supermood who have dedicated an entire article to this KPI. Learn more about eNPS.
57 – Churn rate
Definition of attrition rate
The churn rate for hiring helps you calculate the number of employees who left compared to the overall number of employees.
Attrition rate calculation
Attrition rate = number of departures / number of employees * 100.
Too high a turnover rate is, by definition, bad for a company. This costs money by adding up the costs of recruitment, training and lost time, but above all it means that elements of your corporate culture, your remuneration policy, development or training need to be improved.
58 – Internal recruitment rate
Internal promotion advances your employees, gives prospects for development and saves recruitment costs.
Calculation of the internal recruitment rate
Internal hire rate = number of internal hires / total number of hires * 100.
This is a good indicator of the health of your human resources department.
59 – Absenteeism rate
The absenteeism rate is a widely followed KPI in the professional world. There can be many lessons on the financial cost for the company, but above all it is often symbolic of the social climate.
Calculation of the absenteeism rate
Calculation of the absenteeism rate = number of hours of absence for the period / number of hours of work in theory over the period * 100.
The periods are often the week, the month or the year.
Financial KPIs
Financial KPIs are very often scrutinized by executives, managers and investment funds. It is these KPIs that serve as a reference for deciding on budgets and actions to be taken.
60 – Gross operating surplus (EBITDA: Earnings Before Interest, Taxes, Depreciation, and Amortization)
Definition of EBITDA
EBITDA is an essential indicator of the health of your business.
EBITDA calculation
EBE = Turnover excluding VAT – purchase of goods excluding VAT – external charges excluding VAT – taxes and duties – cost of payroll + operating subsidy
EBITDA is more or less the same as its English version Earning Before Interest, Taxes, Depreciation and Amortization (EBITDA).
61 – Working Capital Requirement (WCR)
Definition of WCR
The working capital requirement (WCR) is a KPI that allows you to know your short-term cash flow needs.
WCR calculation
Working capital requirement = current assets – current liabilities.
We offer you the soft version of the BFR, if you want to explore the BFR, you can consult this article from Compta Facile or ask your accountant, he should be able to help you.
62 – Average late payment
Late payments cause cash mismatches and take time to recover them. This is an indicator to monitor to gain serenity in managing your cash flow.
Calculation of the average late payment
Average payment delay = sum of days of payment delays / number of payment delays.
After the many efforts to develop your turnover, it is a shame to let late payments affect your results.
63 – Gross Margin
Gross margin indicates whether your business can make a profit.
Gross margin calculation
Gross margin = turnover – total costs.
64 – Break-even point
Break-even point definition
The break-even point refers to the amount of turnover to be reached in order to be profitable.
Break-even point calculation
Break-even point = fixed costs / ((turnover – variable costs) / turnover)
This KPI should not be confused with the breakeven point which designates the moment from which your company will have reached the break-even point.
65 – Discount rate
Definition of discount rate
The discount rate is used to calculate the future valuation of a project on the current date. It helps to assess the profitability of an investment project.
Discount rate calculation
Hold on tight.
Discount rate = [(Cost of equity × (Value of equity capital markets / Value of equity capital markets + Value of net financial debt)] + [(Cost of debt × (1 – Income tax rate) companies) × (Value of net financial debt / value of equity capital markets + Value of net financial debt)]
66 – The share rate of this article
KPI sharing
Setting the share rate for this article
Ok… This one is easy.
Calculation of the share rate of this article
Share rate of this article = number of people who will share this article / number of readers of this article * 100.
Sources: Investopedia, Databox
Photo credit: ENiemela via Pixabay
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