What is a business metric?
A business metric is a quantifiable measure used to track and assess the status or performance of a specific business function. Metrics are used to measure progress towards short and long-term goals and objectives.
Every area of the business has specific metrics to monitor:
- Finance teams track revenue metrics like MRR or customer acquisition cost
- Executive teams track big picture business metrics like customer lifetime value or annual recurring revenue
- Marketing teams track campaign performance and program statistics with engagement rates and marketing qualified leads
- Sales team track won opportunities and expansion revenue
Business Metric or Key Performance Indicator? What's the difference?
What's the difference between a metric, a measure, and a KPI? Metrics are the units of measurement used in KPIs. KPIs, or key performance indicators, are metrics with a target and timeline baked into them. KPIs are the action; metrics are the measurement.
For business metrics, they are most effective when they are compared against established benchmarks or business objectives. Benchmarks can be internal, external, performance, or industry established. This provides context for the metric.
Context inspires action and impact. For example, $20M in Q4 sounds like an impressive figure, but if you’re a Fortune 500 company, that figure might have you worrying.
Context is where the biggest difference lies between metrics and key performance indicators. The difference is:
- Business metrics are used to track performance across all areas of the business
- KPIs track your progress towards a goal
In action, this would look like this:
A metric measures web traffic compared to a goal or benchmark. A KPI measures how web traffic impacts your SQL pipeline.
Examples of Business Metrics
The business metrics you track will depend on your company and your areas of focus. Check out the performance metrics for industry verticals and departments below to get started. For more inspiration and deep-dives into specific metrics, check out MetricHQ.
Companies rely on revenue to stay in business, and managing and tracking that revenue is a core function of your finance team. Financial metrics carry weight outside your team, too. Potential investors, stakeholders, and customers will be curious about financial data.
Fiscal health is a key aspect of any business. Here are the financial metrics to monitor and track the health of your business and your bank account:
Marketing metrics are used by marketing teams to monitor and display the overall performance of social media channels and marketing campaigns like email or advertising.
Marketing is a data-driven practice with any number of channels and platforms. Depending on the channels your team uses and your goals and objectives with each, the metrics you monitor will vary. Here are a few examples of key marketing metrics:
- Average Time on Page
- Lead Conversion Rate
- Customer Acquisition Cost
- Marketing Qualified Leads
- Return on Marketing Investment
Sales teams, like marketing, rely on data to make decisions and develop a sales strategy. Sales teams are monitoring their pipeline, tracking their sales qualified leads (SQLs) and watching MRR grow and expand.
Sales is a competitive business environment, so being in control of your data is key. Tracking the right metrics and KPIs will put you on the path to success. Here are the sales metrics measured by world-class sales teams:
SaaS (software as a service) companies pay close attention to the metrics that monitor customer retention, recurring revenue, and user engagement in your product. Here are five SaaS metrics that cross-functional teams track:
- Customer Lifetime Value (LTV)
- Monthly Recurring Revenue (MRR)
- Customer Retention Rate
- Daily Active Users or Monthly Active Users
Social media metrics track performance and engagement on platforms like Twitter, Instagram, TikTok, or Facebook.
Social media marketing is a fundamental component of any marketing strategy. Awareness and engagement campaigns are used to drive traffic to your website, generate leads, and at its core: get people talking about your brand.
With so many platforms to monitor, it can be challenging to measure performance across all of them. Here are five key metrics you can track across all channels:
Bonus Business Metrics
Every business has data that is critical to monitor to capture your full business funnel.
MetricHQ is a full library of metrics that you can explore for inspiration and start tracking in PowerMetrics.
Monitor Your Performance With a Business Metrics Dashboard
Business performance metrics keep teams, executives, investors, and customers informed and aware of performance and growth. The easiest and most effective way to stay on top of your company’s performance is by having your key metrics on a business dashboard. Different departments need to keep an eye on different metrics, so what the right business dashboard is will vary from department to department, and from company to company.
Check out our Starter Guide series for everything you need to build a business dashboard: