Identifying the optimal Financial Metrics metrics can be challenging, especially when everyday tasks consume your time. To help you, we've assembled a list of examples to ignite your creativity.
Copy these examples into your preferred app, or you can also use Tability to keep yourself accountable.
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While we have some examples available, it's likely that you'll have specific scenarios that aren't covered here. You can use our free AI metrics generator below to generate your own strategies.
Calculated by dividing net profit by total revenue, expressed as a percentage. It shows how much profit a company makes for each dollar of revenue.
What good looks like for this metric: 10-20%
Ideas to improve this metric
Reduce operational costs
Increase product prices
Enhance sales volume
Improve customer retention
Optimise supply chain
2. Return on Investment (ROI)
Determines profitability by comparing the gain from an investment to its cost, calculated as (Net Profit / Cost of Investment) x 100.
What good looks like for this metric: 15-25%
Ideas to improve this metric
Choose higher-yield investments
Reduce investment costs
Increase revenue from investments
Enhance marketing strategies
Improve financial forecasting
3. Gross Profit Margin
Calculated by subtracting cost of goods sold (COGS) from revenue and dividing by revenue, expressed as a percentage, indicating the efficiency of production and pricing.
What good looks like for this metric: 20-40%
Ideas to improve this metric
Negotiate better supplier terms
Increase production efficiency
Enhance sales and pricing strategy
Reduce waste in production
Control direct labour costs
4. Operating Profit Margin
Measures what proportion of revenue is left as profit after accounting for operating expenses, calculated by dividing operating profit by total revenue.
What good looks like for this metric: 10-15%
Ideas to improve this metric
Streamline operational processes
Reduce administrative expenses
Enhance revenue streams
Focus on core business activities
Minimise utility and overhead costs
5. Expense Ratio
Expresses the percentage of total expenses to total revenue, highlighting cost management efficiency.
The total revenue generated from all active subscriptions in a month. Calculated as the sum of all subscription values per month.
What good looks like for this metric: $10,000 - $500,000 depending on industry
Ideas to improve this metric
Increase the price of your subscription plans
Upsell existing customers to higher-tier plans
Acquire new subscribers through marketing campaigns
Improve product offerings to reduce churn
Implement annual or semi-annual billing cycles
2. Customer Lifetime Value (CLTV)
The total revenue a business can reasonably expect from a single customer account throughout their relationship. Calculated as average revenue per account multiplied by average customer lifespan.
What good looks like for this metric: $100 - $1,500 depending on industry
Ideas to improve this metric
Enhance customer support to increase retention
Develop loyalty programs
Segment customers for personalized marketing
Offer cross-sell and upsell opportunities
Collect and act on customer feedback
3. Customer Churn Rate
The percentage of customers who cancel their subscriptions over a given period. Calculated as the number of customers who left divided by the total number of customers at the start of the period.
What good looks like for this metric: 2-8% per month
Ideas to improve this metric
Improve customer onboarding experience
Regularly engage with customers through communication channels
Offer limited-time promotions to retain wavering customers
Analyse reasons for cancellation and address common issues
Introduce long-term subscription discounts
4. Average Revenue Per User (ARPU)
The average amount of money earned from each active user or subscriber. Calculated by dividing total revenue by the number of active users.
What good looks like for this metric: $10 - $200 per month
Ideas to improve this metric
Encourage customers to upgrade their plans
Introduce add-ons and premium features
Bundle products and services
Improve user experience to enhance perceived value
Use targeted pricing strategies
5. Subscriber Growth Rate
The rate at which new subscribers are acquired over a given period. Calculated as the percentage increase in subscribers from one period to the next.
What good looks like for this metric: 5-10% per month for growing businesses
Ideas to improve this metric
Invest in digital marketing campaigns
Offer referral incentives
Enhance presence on social media platforms
Partner with influencers or other businesses
Continuously optimize your website for conversions
The percentage of products or services that have defects relative to the total produced, often calculated by dividing the number of defective units by the total number of units produced.
What good looks like for this metric: Typically less than 1%
Ideas to improve this metric
Implement stricter quality control processes
Enhance staff training initiatives
Conduct regular audits and inspections
Utilise root cause analysis tools
Increase customer feedback collection
2. First Pass Yield (FPY)
The percentage of products manufactured correctly and to specification the first time through the process without using rework.
What good looks like for this metric: 85%-95%
Ideas to improve this metric
Improve process documentation
Increase equipment maintenance frequency
Optimise employee onboarding and training
Reduce process variability
Incorporate automated quality checks
3. Customer Complaint Rate
The number of customer complaints received over a specific period divided by the number of transactions within that period.
What good looks like for this metric: Less than 5 per 1,000 transactions
Ideas to improve this metric
Improve after-sales support
Analyse customer feedback for trends
Maintain open communication channels
Enhance product/service quality
Regularly revise protocols based on feedback
4. Audit Compliance Rate
The percentage of audits that pass compliance checks relative to the total number of audits conducted.
What good looks like for this metric: Above 95%
Ideas to improve this metric
Regularly update compliance training for staff
Automate compliance tracking
Engage third-party compliance experts
Conduct more frequent internal audits
Develop corrective action plans for identified issues
5. Corrective Action Effectiveness
Measures the success of implemented corrective actions, determined by the reduction in defects and issues post implementation.
What good looks like for this metric: Reduction in issues by at least 75%
Ideas to improve this metric
Utilise a robust change management process
Track and measure results of actions
Ensure clear communication of changes to all stakeholders
Having a plan is one thing, sticking to it is another.
Don't fall into the set-and-forget trap. It is important to adopt a weekly check-in process to keep your strategy agile – otherwise this is nothing more than a reporting exercise.
A tool like Tability can also help you by combining AI and goal-setting to keep you on track.
Tability's check-ins will save you hours and increase transparency
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