How To Measure Business Growth

If you don’t measure business growth, it’s difficult to know how well (or not) or your business is doing. Is there a statistic that you use to gauge the health of your company? What are you going to do with the data you’ve collected? 

If you don’t monitor your business metrics and use what you’ve learned to inform your decisions, you are losing out on an opportunity to improve your business.

So, here’s how to measure business growth.

Definition Of Key Performance Indicators

To gauge the health of your organization, you need to use a set of metrics known as Key Performance Indicators (KPIs). They may be used by any company, regardless of its size, to monitor and analyze many aspects of its operations throughout time.

These KPIs will provide you with information about your organization’s annual, monthly, and even daily performance trends if you collect enough data.

Customer Lifetime Value (CLV)

A CLV makes it easier to track individual clients and their interactions with your business. A CLV is the income you may anticipate earning from each client throughout their engagement with you. There are several ways to determine how much money you need to spend to gain and maintain a client.

For example, spending $800 on direct marketing for your clothing store that results in a consumer with an average lifetime value (LTV) of $700 indicates a loss. Because of this, it’s clear that increasing your investment in direct marketing tactics will not provide the results you want. Instead, you should concentrate on creating a stronger connection with your customers and urge them to buy more often.

Net Promoter Score (NPS)

If you want your company to be successful, you need to know how satisfied your consumers are with their experience with you. This is achieved via the Net Promoter Score (NPS), which is also a strong indicator of a customer’s devotion to your company. 

To determine their NPS, a company will often ask customers how likely they are to suggest their company to friends and family on a scale of 0 to 10. With 0 being a very improbable outcome and 10 representing an extremely likely one.

Return On Investment

The amount of money you get back from an investment is known as the return on investment (ROI). Whether it’s a new employee, a new piece of equipment, or even a new marketing campaign, you need to invest in anything that will help your company expand. Using this indicator, it is possible to assess the long-term profitability of a certain business decision.

Let’s imagine you pay $5,000 to advertise your construction company on billboards throughout your city. After a few weeks, you realize that leads from those advertisements produced $20,000 in sales, resulting in a profit of $15,000. To calculate your ROI, you’ll divide the profit received by the entire cost of investment.

Conversion Rate of Lead-to-Client

The lead-to-client conversion rate is what tells you how many of the people you are reaching through your growth strategies are turning into actual satisfied clients. As a result of tracking customer conversions, you learn more about what is working and what isn’t.

To calculate your conversion rate, divide new leads by new customers. If your results aren’t what you were hoping for, it’s time to get back to the drawing board!

Churn Rate

Losing a client reduces your profit margins. You must do everything you can to maintain your current clients. That’s because acquiring a new one costs five times as much as keeping an existing one. 

You can figure out your churn rate by dividing the total number of consumers you’ve lost by the total number of customers you had when you started. As an example, if you had 50 clients signing up for your laundry service at the beginning of the month, and that number reduced to 46 at the end of the month, your churn rate would be 8%.

“A five percent boost in client retention rates would provide between a 25 to 100 percent rise in earnings across a broad variety of businesses,” says Fred Reichheld, author of The Loyalty Effect.

Customer Retention

Depending on how low you want to go, the cost of obtaining a new client may be distilled from numerous different variables. Fortunately, if there is a hitch, you can usually discover it at a higher level if it exists. Deep-dive analytics may be best suited for times when the company is doing well. 

To determine your per-customer acquisition cost, you can divide your acquisition expenditures by the number of new customers you’ve acquired over a certain period.

Selecting which acquisition costs, such as marketing and advertising, to include is entirely up to you. After initial growth and maturation, the cost of acquiring new customers decreases over time in a healthy trend.

Revenue From Sales

The most obvious way to tell whether your company is doing well (or not) is to look at its revenue. A company’s income is a reflection of many distinct facets of its operations. 

A few options are available to you if your income falls short of expectations. In addition to increasing your product options, you may also run marketing campaigns, implement clever discounts, or fine-tune your workforce.


There are hundreds of additional KPIs that may assist you in analyzing your organization. The importance of each measure of business growth varies for every company. So, you should only focus on the ones that are meaningful for your business specifically.