The growth of a business is determined through four primary aspects: revenue, profit, sales and customers. Along with these, several secondary factors define whether the business can achieve its objectives. Whether a startup company or an established business, a consistent accelerating graph proves that the business is moving in the right direction.

At the end of the day, a business needs to earn adequate revenue to grow. Yes, the scaling of the business is an important factor that both the business owner, the team of operations, and the management need to keep in mind. Though the calculation of the progress of a business may seem immeasurable or subjective to many, the businesses of today, and their growth can now be easily measured. This is done on the basis of the specific parameters and how a particular business performs against them.

The growth of a business largely depends on various metrics. If you can get the numbers right, it will help you predict a business’s success or failure. Accordingly, as a business owner, you can formulate strategies to drive sales. Every company, online or not, regardless of it being one from the healthcare industry, retail, fashion, food and more, it requires a proper data assessment.

So, it is always better if you have proper indicators to determine the metrics, and collect data accordingly via the same. This is where the KPIs are introduced. KPI has constantly been discussed among digital marketers, finance and sales managers and HRs, and has been hugely implemented these days, in various organizations across industries.

Based on the KPIs, you can customize the process, make critical adjustments to the lead generation strategies, and easily achieve the business goals. So, without further ado, let’s get a more detailed idea about the KPIs, what they are, and why they are necessary.

What is KPI, and Why is it necessary?

In literal terms, KPI stands for Key Performance Indicator. It can be defined as a quantifiable measurement that tracks a company’s success against a set of parameters. These parameters are the key targets or objectives that are brought in notice to the management and the employees of the company, who need to focus on them and achieve them in due time. The number of parameters varies with the type, size and more of the businesses.

There are multiple KPIs, and based on the business goals, the KPIs must be chosen. Otherwise, you will have a set of data and metrics but wouldn’t know how to work your way out. This is where digital marketers can help to get the correct measures.

Though KPIs sound much like the metrics, many organizations have separated the KPIs from the metrics. They have defined the KPIs as something different from the metrics. This has mainly been done one the basis of the importance, where KPIs have been indicated as the key targets that the businesses should track, which makes the most impact for them. The metrics, on the other hand, have been defined as the parameters that measure the everyday success of the businesses, and are something that supports the larger, and more important, KPIs.

KPIs can be of different categories that focus primarily on the customers, process performance, and financial goals. All of these 3 major KPs play a crucial role in ensuring that a particular business is essential running in the direction towards growth!

KPI is reasonably necessary for any business as it helps to:

  • Determine customer retention and customer satisfaction
  • Monitor operational cross-organization
  • Manage team performance and keep them aligned
  • Determine the risk factors and act as a financial indicator
  • Adjusting the success and failure rate of a business
  • Analyze the patterns to modify the strategies

Both the traditional business and those that are built on cutting-edge technologies are extensively leveraging the KPIs. Marketers today are significantly focussing on the KPIs even for the startups that are focused on marketing automation, AI, ML and more such technologies.

5 Best Sales KPIs To Boost Your Business Revenue

KPI is the quantifiable data that decides where the business currently stands, and where it will stand in the forthcoming years. You get a clear assessment of how the business would perform if you keep following the pre-decided strategies. So, let’s check out the 5 core KPIs that are a must for every business.

Average Length of Customer Lifecycle

This is considered a challenging KPI but provides the most profound insights into the health of a business. It specifies where you need to focus on improving customer satisfaction. Based on the buying history, visit frequency, referral rate, positive reviews and loyalty programs, the time for which a customer would stay loyal can be predicted.

Thus, you get to evaluate the revenue you can expect from a single customer throughout the lifetime of the business. This will help you to calculate the acquiring and retaining cost. It provides a more holistic view of the customer and business relationship based on the business type. Analyzing the KPIs can help revamp the customer interaction and management policies.

Customer Retention Rate

How effective the business is can only be determined through the customer retention measures. If your business has the capability to retain customers over a long period, then it is on the right track. Moreover, engaging new customers draws out more resources, whereas retaining old customers does not require a high investment.

According to Invesp, attracting new customers costs 5X more than retaining the existing customers. This will also help focus on the business reputation, streamlining the customer service process and building campaigns. According to Forbes, 81% of customers make a purchase decision based on the brand value, services, products and trust.

Cost Per Lead

Cost of lead or customer acquisition is the process of accessing the cost involved at every step of acquiring a customer. Starting from reaching out to the customer to manufacturing products, researching, and marketing – the budget requirement can be predicted. Through this KPI, you get to understand how much you need to invest in each new customer or while making a conversion.

This will help you determine a path that would cut down costs as per the business budget, and enhance the efficiency of the business. You can also choose the product priorities by comparing the cost per customer acquisition. The effectiveness of marketing campaigns and online advertising options can be shuffled according to the business need, and this involves AdWords or social ads. A lower number of leads with a large number of viable leads states gives an insight into a successful cost per lead.

Average Conversion Time

Every website is designed with the goal of fulfilling certain objectives. By accessing the conversion rate, you get the measure of the number of visitors who have reached you and turned into leads. If you have a high conversion rate, it states that you have successfully created unique and attractive marketing campaigns.

WordStream says the average conversion rate for all industries is 2.70 % on search networks. It would help if you worked on conversion rate optimization to determine a successful conversion rate. For example – A/B testing to optimize a web page. To track the conversion rate, you can try out this formula: (Conversions / Total Visitors) * 100%

Existing Client/Customer Engagement

Customer engagement has many parts, including satisfaction, efforts in referrals, positive feedback, etc. Understanding customer satisfaction can help you detect the number of customers who are willing to trust your products or services. If they are eager to put in efforts to fill up a customer feedback report, this indicates a positive step towards building brand reputation. This also portrays their willingness to promote to a friend or acquaintance, thus increasing the lead organically.

You can also use the metric to take the effort towards solving customer problems and improving the set of services and products that your company offers. This also helps you understand whether you are using the right marketing strategies, products and services to engage your customers, and whether the customers are sticking to your brand. A happy customer is more likely to add to the revenues generated. This also helps to determine the churn rate.

Thus, you can work out a plan to help the customers rejoin your brand who had dropped out earlier due to the lack of customer engagement. Accessing all the preventive measures and implementing the right strategies to engage the customers, thus, becomes easier via this KPI.


A loyal customer would not only help you to increase your sales but also bring in more leads. According to Nextiva, 33% of the customers would depart from the brand if it lacked personalization. Thus, KPI plays a central role in guiding you through and helping your business accomplish the goals that it has earlier set. It is quite versatile, which makes it easy for you to choose the ones based on your project, timeline and necessity.

Furthermore, geared with a set of personalized KPIs, you can also plan up, and eventually get through the slowest quarters of the financial years successfully, and plan accordingly to scale up. Now that you have a better understanding of KPIs, all that is left is optimizing the business for a better long-term profit by minimizing the risk. So, gear up!