Introduction
Every organization must have metrics for measuring its performance and success. Running a successful business organization requires a good analysis of sales, revenues, finances, employees input, and work in general. These measurements can only be tracked through the use of appropriate business metrics (Hagel, Brown, & Davison, 2010). Business metrics, which are also known as key performance indicators (KPI), are measurable values that shows the progress of a company in terms of its business goals and objectives.
The type of KPI’s differ from one company to another. I have worked with an organization that deals with sale of smartphones as an intern. In our organization, known as DT Electronics, we had a number of business metrics, which included sales volume, sales revenue, gross margin, net profit margin. The sales revenue is an important indicator for a company like DT Electronics because it indicates how people responds to the company’s products. The sales revenue is calculated by summing all the income earned from client purchases less cost incurred with the sales process. Net profit is another important key performance indicator used by DT Electronics. It is a good indicator of long-term growth and the sustainability of a business (Velimirovic, Velimirovic, & Stankovic, 2011). The net profit is calculated by adding all the monthly revenue less the sales expenses. Profit margin of a company can be increased by increasing the revenue, by either raising the price of products, selling more or lowing the cost of sales.
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Conclusion
Business metrics are measurements that evaluate the performance of an organization over a given period. The key performance indicators are specific and measurable indicators that often used by organizations to evaluate their performance. For instance, most companies use net profit margin as an important performance indicator.
References
Hagel, J., Brown, J., & Davison, L. (2010). The Best Way to Measure Company Performance. Harvard Business Review
Velimirovic, D., Velimirovic, M., & Stankovic, R. (2011). Role and Importance of Key Performance Indicators Measurement. Serbian Journal of Management , 6 (1) : 63 – 72
