Five Non-Financial Business Metrics to Track

Every business will have a series of signals that indicate business conditions are changing. It could be the number of new leads in your pipeline, foot traffic, web traffic, work in progress, contracts awarded, speed of your distribution channel, onboarding, yields or downtime, etc. These business metrics often give an early warning signal before the financial impact is felt.

Here are five business metrics you may like to start to track and improve.

1. Leads and new business

This is the number of prospects in your sales channel. This could be downloads or enquiries from your website, people entering your location or the number of proposals you've been short-listed for. Take note that lead times can vary significantly. Customers on a retailer's website might take a few minutes to decide to buy something. Building companies may have to wait for months (or years) before a lead generates revenue.

Lead metric examples:

• The number of partnerships or strategic alliances. For example, it's common for companies in the construction industry to form groups when soliciting or quoting bids.
• Qualified traffic from your website and the number of registrations for your e-newsletter, product whitepapers, demos, samples, reviews, video explanations or free quotes.
• The response rate to advertising (it's still ok to use traditional media if it works) or digital advertising.
• How many new customer targets and markets you're entering.
• New distribution channels you're launching.
• The number of new products or services you're introducing.

Decide which lead metric is relevant to your business, identify the best way to track it and then set up the reporting cadence that's best (weekly, monthly, bi-monthly, etc.).

2. Customer retention

Your customer retention metric (or customer burn rate) tells you if customers are returning to your business, or dropping off, possibly without you noticing. Customer retention can be down to how well you manage your customer relationships, support for when things go wrong and offer personal one-on-one help. You may want to develop a net promoter score, where at the end of each engagement, customers rate your service. Consistent poor results could hint at future trouble.

Other metrics you may want to track related to customer retention include returns, refunds and complaints, hinting at poor delivery or fulfilment.

3. Production and quality

For many businesses, the amount produced at the right quality is a key metric. For example, agricultural businesses rely on high yields, manufacturers prefer to have their equipment and machinery operating at full capacity and professionals like to bill as many hours as possible in a day.

Other production metrics to measure include:

• Project or cost overruns, indicating poor pricing and costing, or unseen delays due to the supply chain, with no contingencies in place.
• Delivery accuracy and completing projects on time. Small shortfalls add up to lost time and productivity.
• Increase in downtime (staff or machinery) from inaccurate scheduling or mismanagement.
• Quality-specific indicators for construction, or the number of project defects (the ratio of inspections passed to the total number of inquiries).

4. Safety and employee wellbeing

Physical, mental and employee welfare are important measures of risk and liability. For example, you may be less concerned about physical injury in a professional services business but mental health and stress might be a focus. Alternatively, physical safety in building, manufacturing or construction businesses can be much more common.

These metrics can include:

• Your safety or incident rating, record and the number of accidents.
• The number of employees who leave (your turnover rate) or an increase in sick leave (which hints at internal issues).
• Employee happiness and support, especially with any employees working from home who may feel isolated.

5. Environmental and sustainability

Almost all industries are threatened by the effects of climate change, either directly or indirectly. The disruption to a smaller business compared to larger businesses can also be more severe. For example, a flood can ruin a single owner-operator retail business, whereas a nationwide retailer can probably survive. The origin of what you sell, and sustainability practices (recycling, use of environmentally friendly materials), can also be tracked.

Metrics to consider:

• Reputational risk. Customers may not want to see your fleet of trucks leaking diesel fumes, and the media could highlight your failure to participate in avoiding climate change.
• The number of customers switching to suppliers to those that embrace climate change and can demonstrate their green credentials.
• Recruiting employees who want to work for a business that better fits their ideal business culture.

Next steps

As a business, it makes sense to know what non-financial metrics indicate you're doing well or not. Deciding what these are and then monitoring regularly will allow you to detect early what remedies need to be put in place.

• Decide which non-financial triggers you want to track and set regular performance measures.
• Measure your carbon footprint and then plan to reduce it over time.
• Seek help from sustainability experts or talk to other small business owners to discuss environmental action.