Which metrics Should YOU Use.

We are all inundated with data and analytics at work. We have plenty of information, but are often left feeling like we lack knowledge about how much progress we’re making on a project or initiative. All the key performance metrics (KPIs) in the world don’t help – you need just a handful of the pertinent metrics.

So which metrics should YOU follow to measure progress?

Your Industry and Business Model Dictates Your Metrics.

Key performance metrics (KPIs) vary significantly depending on your company’s industry and business model, as each has different drivers of success. However, regardless of industry, the right KPIs enable you to measure progress, make informed decisions, and align strategies with goals.

Obviously, we can’t discuss every industry, but let’s look at a few popular industries and the best metrics to follow for each…

Metrics for Product-Based Businesses.

For product-based businesses, especially in manufacturing or retail, critical KPIs include:

• inventory turnover
• gross profit margin
• cost of goods sold (COGS)
• return rates
• supply chain lead time

Inventory turnover reflects how efficiently your company manages stock and demand. Gross profit margin reveals profitability after production costs, while COGS helps track production efficiency. 

Additionally, return rates and supply chain lead time are important to assess quality and operational effectiveness.

​Metrics for Service-Based Businesses.

In contrast, service-based companies focus more on human capital and customer satisfaction. Key metrics include:

• billable utilization rate (hours billed versus available hours)
• customer satisfaction (CSAT)
• net promoter score (NPS)
• customer retention rate
• revenue per employee
• project margin

These help measure how effectively services are delivered and how clients perceive the value received. For consultancy and agencies, revenue per employee and project margin are also important to gauge performance.

​Metrics for SaaS.

If you work at a software-as-a-service (SaaS) business, recurring revenue models mean different priorities. Important KPIs include:

• monthly recurring revenue (MRR)
• customer churn rate
• customer acquisition cost (CAC)
• lifetime value (LTV)
• active users
• engagement rate

Tracking active users and engagement rate can also indicate product adoption and potential for upselling. A low CAC and high LTV indicate efficient growth.

Metrics for e-Commerce.

E-commerce companies track similar metrics to retail, with emphasis on digital engagement. Key KPIs include:

• conversion rate
• average order value (AOV)
• cart abandonment rate
• customer lifetime value (CLTV)
• traffic sources
• cost per acquisition (CPA)

Traffic sources and cost per acquisition (CPA) are essential for evaluating marketing performance. Fulfillment metrics, like delivery time and order accuracy, are also critical.

Metrics for Financial Services.

In financial services, risk and return are central. Metrics to track are:

• return on equity (ROE)
• net interest margin (NIM)
• non-performing loan (NPL) ratio
• customer growth rate
• assets under management (AUM)

To understand your profitability and risk exposure, look at your return on equity (ROE), net interest margin (NIM), and non-performing loan (NPL) ratio. To gauge scale and trust, focus on customer growth rate and assets under management (AUM).

The Takeaway.

Ultimately, the metrics you follow must align with your strategic objectives. For any business, tracking a mix of financial, operational, and customer-focused metrics ensures balanced performance monitoring. Your choice of metrics should reflect not only your industry but also your company’s growth stage, competitive landscape, and core value proposition.

What about you? Which metrics do you follow? Please comment – I’d love to hear your thoughts.

Thanks,
Tom Myers