Revenue is the lifeline of every business. If you are wondering, “How is revenue growth measured?”, then there are certain KPIs for revenue growth you can monitor regularly. Here are the most important revenue growth KPIs for every business that you must track for sure.
Most Important Revenue Growth KPIs for Every Business
1. Revenue Growth Rate
Revenue Growth rate simply tells you the percent growth in revenue compared to previous period. It is one of the most important revenue growth KPIs
Revenue Growth Rate (%) = (Current Period Revenue – Previous Period Revenue) * 100/Previous Period Revenue
It is important to set the measurement period for revenue measurement, which is typically 1 month or 3 months. Anything shorter is too small to see the impact of your efforts. Here’s a graph of monthly revenue growth chart created using Ubiq
If your business is new then your revenue might be low. In that case, measure absolute growth in revenue(current period revenue – previous period revenue), instead of calculating percent growth. Here’s a sample graph created using our BI Reporting Software.
2. Revenue Growth by Plan/Category
Once you start measuring overall growth KPIs mentioned above, it is time to go a level deeper.
Use the above formula to calculate revenue growth rate for each pricing plan (for SaaS business) or product category (for Ecommerce business).
Once you have revenue growth for each plan/category, you’ll know which ones are most lucrative and need to be promoted further.
3. Revenue Growth by Marketing Channel
Similarly, measure revenue growth rate for each marketing channel (SEO, Social Media, Content, Offline, etc).
This will tell you which marketing channels drive the most revenue, and deliver best ROI. Its also one of the key marketing KPIs too. You can use this insight to promote the top earning plans/product category that have discovered above, through your top-performing marketing channels.
These 3 metrics are the most important revenue growth KPIs for every business.
4. Periodicity in Revenue
This might seem like a no-brainer but you must track monthly/quarterly revenue growth KPIs over time. It is advisable to track monthly or quarterly revenues instead of daily/weekly numbers, as it smoothens all the noise involved in day-to-day operations.
While tracking revenue over time, plot at least past 1-2 years’ data to identify periodicity in revenue growth management KPI. For example, you may find your business doing really well in winter and not so much in summer. Again you might find it boom during major holidays every year. Such trends can be discovered only if you monitor past 1-2 years’ worth of revenues.
Discovering periodicity in sales will help you come up with tailor-made campaigns, time your marketing campaigns perfectly and be more effective. Reporting tools can help you track variety of metrics and identify periodicity.
5. Average Revenue Per User (ARPU)
It is important to measure the overall average revenue per user to be able to estimate how much marketing spend you can afford per customer.
Once you have calculated overall ARPU, calculate it for each customer segment based on gender, location, age, demographic.
This will help you identify high-value customers and focus more time & resources on them. Ultimately, you want to have as many high-value customers as possible, to grow your revenue. So you can analyze ARPU by Age of customers.
Create a business dashboard using a dashboard software like Ubiq with the above revenue growth metrics & KPIs and share it with your team. This will help them track performance regularly, set better business objectives and create achievable performance goals.
Here’s a sample revenue growth dashboard created using Ubiq
Hopefully, the above-mentioned revenue growth KPIs & metrics will help you grow your business further. If you want to create business dashboards, reports & charts, you can try Ubiq. We offer a 14-day free trial!