How to measure a company’s success? With countless business metrics available, it can be a challenge to figure out which ones are worth tracking. The good news is that it does not make sense to measure all available metrics. Depending on our business goals, we should track the metrics that are truly relevant to our industry. Since every business sector operates differently, we need different key performance indicators (KPIs) tailored to the specific industry. Below is a summary of the most important KPIs for four sectors: fintech, SaaS, logistics and clean-tech, each with unique performance indicators reflecting their operational nuances.
Software as a Service (SaaS)
The SaaS market was estimated to reach 232 billion U.S. dollars by 2024 (Statista). Due to its significant growth, the market has become increasingly competitive. To stay ahead of the competition and understand the health and performance of the business, it is important to keep an eye on SaaS metrics. Here are the key metrics for SaaS companies:
Monthly Recurring Revenue (MRR): The predictable and recurring revenue generated from subscription-based services on a monthly basis.
Annual Recurring Revenue (ARR): The total value of recurring revenue generated annually from subscription-based services. It provides a longer-term perspective on revenue growth and customer retention.
Customer Acquisition Cost (CAC): The cost incurred to acquire each new customer, including sales and marketing expenses.
CAC-to-LTV Ratio: Represents the lifetime value of customers relative to the total acquisition cost spent to acquire them. It provides a comprehensive view of the marketing program’s effectiveness.
Churn Rate: The percentage of customers who cancel their subscriptions or stop using the SaaS product within a specific period. Managing churn is crucial for maintaining customer retention and revenue growth.
Expansion Revenue: The additional revenue generated from existing customers through upselling, cross-selling, or upgrading to higher-tier subscription plans.
Gross Margin: The difference between revenue and the cost of goods sold (COGS), expressed as a percentage. Gross margin indicates the profitability of the SaaS business model and its scalability.
Customer Retention Rate: The percentage of customers retained over a specific period, typically measured monthly or annually.
Average Revenue Per User (ARPU): The average revenue generated per user or customer over a specific period. It helps SaaS companies understand the value they derive from each customer segment and identify opportunities for monetization.
Free Trial Conversion Rate: The percentage of users who convert from a free trial to a paid subscription. It measures the effectiveness of the SaaS company’s onboarding process and product value proposition.
Lead-to-Customer Rate: This metric demonstrates how many leads turn into paying customers.
Net promoter score (NPS) and Customer Satisfaction Score (CSAT): Measures how much value customers gain from the SaaS product.
Fintech
Fintech metrics need to combine several measures, from assessing a company’s performance and competitiveness, customer loyalty, to risk management capacities. Key metrics for fintech companies may vary based on their specific business model, target market, and growth stage. However, these are the main metrics that fintech companies rely on:
Customer Acquisition Cost Efficiency (CACE): Measures the efficiency of customer acquisition efforts.
Churn Rate: Reflects the percentage of customers who stop using the service within a specific period.
Net Promoter Score (NPS): A measure of customer satisfaction and loyalty based on the likelihood of customers recommending the fintech product or service to others.
Cost per Transaction: Calculates the operational cost associated with each transaction.
Monthly Recurring Revenue (MRR): The predictable revenue generated from subscription-based services or recurring transactions monthly to track the company’s revenue stability and growth trajectory.
Average Revenue Per User (ARPU): The average revenue generated per active user over a certain period. It helps to understand the value they derive from each customer and identify opportunities for upselling or cross-selling.
Customer Lifetime Value (CLTV or LTV): The total revenue generated from a customer throughout their relationship with the company. Comparing CLTV to CAC helps determine the long-term profitability of acquiring customers.
Loan Default Rate: Measures the percentage of loans that go into default.
Total Transaction Volume (TTV): The total value of transactions processed through the fintech platform or payment gateway. TTV reflects the scale of payment activities and indicates the company’s market penetration.
Active Users: Shows the number of users actively engaging with the platform.
User Growth Rate: Reflects the rate at which the user base is expanding. Monitoring user growth rate helps evaluate the platform’s scalability and market demand.
Conversion Rate: Measures the percentage of visitors who complete a desired action, such as signing up for a service or making a purchase.
Average Ticket Size: Indicates the average value of transactions or loans. It helps identify trends in customer spending behavior and revenue generation.
Fraud Rate: Determines the percentage of fraudulent transactions detected and prevented.
Regulatory Compliance Metrics: Evaluates the fintech’s adherence to regulatory requirements.
Logistics
Logistics is the process of procuring and providing goods, services and information. It encompasses everything from purchasing, warehousing, distribution, transportation and delivery, along with resource management at each step. Numerous KPIs are pertinent to logistics and different KPIs are required for the various services and stages of the supply chain. However, this article focuses solely on general metrics crucial for assessing operational efficiency, customer satisfaction, and performance benchmarking within the industry.
On-Time Delivery (OTD) Rate: The percentage of deliveries completed within the scheduled or promised timeframe. It reflects the company’s reliability and ability to meet customer expectations.
Order Accuracy Rate: The percentage of orders fulfilled accurately without errors or discrepancies.
Pick and Pack Costs: Measures and monitors all costs associated with picking and packing process.
Inventory Turnover Ratio: The number of times inventory is sold and replaced within a specific period. It evaluates how fast products move through a company. A higher inventory turnover ratio suggests efficient inventory management and minimized holding costs.
Inventory to Sales Ratio: Evaluates the relationship between available inventory and actual sales volume. A lower ratio signifies efficient conversion of inventory into sales, whereas a higher ratio may indicate surplus stock or potential issues with product demand.
Average Dwell Time: Measures a carrier’s waiting time at a specific location before being processed for pickup and delivery. It is a critical metric used to assess operational efficiency, identify bottlenecks in the supply chain, and optimize resource allocation to minimize delays and improve overall logistics performance.
Warehouse Utilization: The percentage of available warehouse space utilized for storing inventory. Optimizing warehouse utilization ensures efficient use of space and minimizes storage costs.
Fuel Efficiency: The average fuel consumption per kilometer travelled by transportation vehicles. Improving fuel efficiency reduces operating costs and environmental impact.
Vehicle Downtime: The amount of time that vehicles are out of service for maintenance or repairs. Minimizing vehicle downtime ensures fleet availability and reliability.
Safety Incidents: The number of accidents, injuries, or safety violations occurring during transportation or warehouse operations. It enforces a sense of responsibility in the workforce and ensure adherence to safety protocols to prevent accidents.
Customer Satisfaction Score (CSAT): The measure of customer satisfaction based on feedback surveys or ratings. CSAT reflects the overall customer experience and loyalty towards the logistics company.
Operating Ratio: Shows the relationship between the revenue and the operating cost of running the business.
Clean-tech
In recent years, the clean tech sector has gained significance due to the climate crisis. Statista stated that global investments in energy transition technologies have nearly tripled since 2015, surpassing one trillion U.S. dollars in 2022 for the first time. This sector is expected to further increase from 2024 to 2050 in order to limit global temperatures to 1.5°C by the end of the century. For clean tech companies, key metrics play a crucial role in assessing their environmental impact, operational efficiency, and market viability. However, the clean-tech sector is a relatively young sector, with KPIs ranging from ESG metrics to the Gold Standard for carbon offsetting. A growing number of experts are starting to formulate more sophisticated metrics and issue certification. In this article, I present some benchmarks without diving deeper into the technical analysis of it.
Carbon Emissions Reduction: The amount of greenhouse gas emissions reduced or avoided through the implementation of clean technologies. Tracking emissions reduction helps quantify environmental impact and measure progress towards sustainability goals.
Energy Efficiency: The ratio of energy output to energy input, expressed as a percentage. Improving energy efficiency helps clean tech companies optimize resource utilization and minimize waste.
Water Conservation: The amount of water saved or conserved through the use of water-efficient technologies or practices. Water conservation efforts help address water scarcity and minimize environmental impact.
Waste Reduction: The amount of waste generated per unit of production or operation. Implementing waste reduction strategies helps clean tech companies minimize landfill waste and promote a circular economy.
Return on Investment (ROI): The financial return generated from investments in clean technologies, expressed as a percentage. Calculating ROI helps assess the economic viability and attractiveness of clean tech projects.
Customer Adoption Rate: The percentage of customers or users adopting clean tech solutions compared to the total target market. Increasing customer adoption rates indicate growing market acceptance and demand for clean technologies.
Regulatory Compliance: The degree to which clean tech solutions comply with environmental regulations and standards.
Supply Chain Sustainability: The sustainability performance of suppliers and partners in the clean tech company’s supply chain.
Technology Scalability: The ability of clean technologies to be scaled up or replicated across different markets or applications. Assessing technology scalability helps identify opportunities for growth and expansion.
Toxicity Reduction: The parameter to monitor and minimize harmful substances in manufacturing processes or product making.
Customer Acquisition Cost (CAC): Evaluates the cost incurred to acquire each new customer or adopter of clean tech products or services.
Customer Satisfaction and Retention: Measures customer satisfaction levels and retention rates to assess the efficacy of clean tech solutions in meeting user needs and expectations.
Conclusion
From SaaS to fintech, logistics and clean-tech, each sector has its unique KPIs that are tailored to its operational nuances and goals. We are using KPIs to track business performance for two main reasons: First, these metrics serve as invaluable tools for companies to evaluate their efficiency, profitability, impact, and sustainability. Second, metrics enable both companies and investors to utilize data-driven decision making. It enables businesses to not only evaluate qualitative and quantitative measures, but also to navigate challenges and seize opportunities within their respective industries and beyond.
