Business Studies

Strategic Management Topic 7 Q2 Business metrics or key performance indicators (KPIs) are useful in determining the success of change management efforts by providing a measurable value against which the company can then compare its desired business goal or outcome. Research three business metrics and describe how each is used to measure performance and how a business can use the results from each metric to improve its performance.

ANSWER

Business Metrics

Customer Satisfaction

Determining the satisfaction of customers is central to analyzing the performance of an organization. Customer satisfaction is not dependent entirely on sales and marketing but the commitment off all departments of the organization, hence tracking the performance of the organization’s customer service is significant to measuring a company’s impact and reputation. In measuring performance using the customer satisfaction business metric, customer satisfaction is used by organizations by understand the feelings of customers to learn how the business is performing (Budur & Poturak, 2021). The results derived from using customer satisfaction metric can be used by companies to implement better organizational strategies.

Sales Revenue

Tracking the profit returns from sales assists in measuring an organizational financial performance. By calculating the sales revenue acquired from product sales, organizations can understand their performance and competitor performance, and the level of interest of people in buying the company’s products. Results acquired from assessing sales revenue can be used by companies to understand the needed changes to improve the sales revenue. For example, a company may realize the need to hire more staff to boost its performance (Dawes, 2020).

Customer Churn

Customer churn, the number of customers cancelling the use of a company’s products and services over a particular period is a significant business metric. Organizations can calculate their churn rate by considering the number of customers who have stopped using the company’s services and products, dividing it by the total number of customers, and multiplying by 100 to get the customer churn percentage. The results can be used by businesses in making early changes to maintain business sustainability.

References

Budur, T., & Poturak, M. (2021). Employee performance and customer loyalty: Mediation effect of customer satisfaction. Middle East Journal of Management, 8(5), 453-474.

Dawes, J. (2020). Do Customer Satisfaction scores link to business revenue over time?. Available at SSRN 3657826.