Business metrics are important for data-driven companies to make the right decisions to increase revenue, maximize profitability, and reduce risk. There are three main types of business metrics: revenue metrics, profitability metrics, and risk metrics. Revenue metrics are outward facing and measure marketing and sales effectiveness. Profitability metrics relate to operational efficiencies and reducing costs. Risk metrics track potential dangers to the company like cash flow and customer churn. Different types of companies should focus on the appropriate metrics, such as years to breakeven for startups or conversion rates for digital businesses.

1. Business
Metrics
For Data-Driven Companies

2. Why Business Metrics Matter?
To make the right decisions for your business. Decisions to increase
revenues, maximum profitability and reduce our risk.

3. What change, in our business processes,we can
and should make "right now"?

4. What does “right now” really mean?
Ideal answer is: “we have decisions in real time.”
Next best answer is: Just-In-Time
Third best answer, which is still good: ASAP

5. Knowing the Difference
Between Business Metrics
Revenue Metrics Profitability Metrics Risk Metrics

6. Revenue Metrics
They are outward facing
They tell how well or badly is the company marketing and selling
Example:
Sales Funnel: potential customers who have been identified and where
they are in the step by step process of moving towards making a
purchase
How effective marketing campaigns are, how many people have seen a
particualr ad or marking piece and how many have responded

7. Profitability Metrics
They are sought by the operations team
They relate to the efficient of the process by which the company
creates and delivers products or services
Large companies with little room to increase revenues can often
achieve significant increase in profitability by focusing on
improving the operational efficiencies
Example:
Unsold invetory, Spoiled or Wastage, Defective Goods
How much is pent on the variable and overhead cost
how often company is unable to meet urgent customer needs and
hence loses sales

8. Risk Metrics
Related to tracking and reducing the potential dangers to a
company
Example:
Net cash out , most important to track. How many months can the
company survive at present burn rate?
Churn rate: a company with a subscription revenue model that has a
very high churn rate (rate of people dropping out) has fewer new
customers to target

9. Types of
Companies
General Consulting
Traditional Bricks and Mortar
Software Focused Consulting
Hardware and Software Companies
Digital Business

10. General
Consulting
Paid-for advice
How to improve business
process
Focusing on Business
Analytics
e.g. Deloitte, Mckinsey and
Company

11. Traditional
Bricks &
Mortar
Fixed Location
Retail or whole-sale
Hotels, Real Estate,
Transportation

12. Consulting
with
Software
Consulting with software/IT systems
integration focus
Specialize in building or installing custom
software systems
Accenture, Opera Solutions

13. Hardware &
Software
High FC and Low VC
R&D and initial
development is very
expensive
Dominate a niche e.g.
Microsoft, Adobe, IBM, SAP,
Cisco, Intel, etc.

14. Digital
Many compete against brick-and-mortar
companies like taxis, lodging,
loans, etc.
Products are offered cheaper, faster
Uber, Lyft, Airbnb, Amazon, LinkedIn,
Google

15. Playing with the
right metrics
years to breakeven
debt reputational risk
default
churn rate
burn rate
accounts receivable
negative float
positive float
sales "funnel"
rack price
promotional rate
qualified lead
Price per click-through (CPC)
latency
conversion
sunk cost
variable costs
profitability
return on equity
gross profit

16. Thank You