5 Metrics to Increase Company Performance

3-24-2016 | by Benjamin Fleshman

Every company needs to be aware of the issues and statistics pertaining to its corporate survival. Companies that perform well do so because they are in tune with even the minor levels of management and movement within the company base.

Best in class companies use various performance metrics to measure how their employees are doing, and the general direction of their company overall. If your company is going to thrive, these are five of the most basic and important metrics to keep in mind.

Customer Satisfaction

Never underestimate the amount of information to be gleaned from your customer base. Customer surveys can indicate to you whether or not your marketing techniques have been effective, general satisfaction levels with your products, awareness of your company and product, and a host of other things. Knowing these statistics can help you to identify areas where your company needs to improve in order to connect better with your customer base. 

Lead Response Time

For companies who have a heavy emphasis on marketing, it is imperative to generate leads often and take advantage of those leads as quickly as you possibly can. Keeping careful track of the average lead response time will inform you about the general rate of sales.

When analyzing the average lead response time, also track the variables that could be affecting the lead response time. If it is taking too long for your reps to respond to potential leads, then decide which changes would be most beneficial in order to decrease the amount of time between generating a lead and capitalizing on it. 

Internal and External Cash Flow

The two main things to keep a careful eye on with regards to cash flow are Days Payable Outstanding (DPO) and Days Sales Outstanding (DSO). DPO refers to the average number of days that your company takes to pay off its creditors or vendors. DSO is essentially the opposite, or the average number of days that it takes for your company to collect their outstanding payments or accounts receivable.

A high awareness of the flow of capital within your company is essential to managing the company well. If, for example, your company tends to pay vendors more quickly than it collects revenue, that would be a problem to be addressed. Keep a close eye on the movement of your money, both within the company and across corporate borders. 

Average Deal Size

Measuring the average size of your deals can give you a good benchmark for how your company is doing. It will indicate to you which deals have been most valuable, and further denote potential deals that may not be worth your time. It will also tell you whether or not your sales team is using their time wisely to gain the most revenue. If they are spending too much time with smaller deals, and larger potential clients are flapping in the breeze, you may need to make adjustments.

Assess the general size of the deals your company is striking. Are they sufficiently large? Do they generate adequate revenue? If not, then decide what the best course of action will be to generate more revenue through larger sales. 

Gross Margin

Perhaps the most significant indicator of a company’s overall health and wellness is the gross margin statistic. Higher gross margins mean better company production and profit, meaning better predictions for the future. Use the gross margin metric to stay in touch with the overall progress of your company, especially in between quarterly and annual reports. Managing the gross margin, and being aware of the direction of your company, is one way to prepare for, and reduce the number of, nasty surprises and downturns. Anticipatory action should be taken to avoid economic crisis when your gross margin starts to sink.

This is not a comprehensive list of performance metrics, and your company should certainly be flexible and open to the use of other performance metrics. There will be times when some metrics may need to be watched more closely than others, and you should be aware of the needs of your company. If you are ever going to thrive, however, these are five of the key performance metrics that you should implement into your company’s management system.