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Outcomes measurement: Top 5 practices used on business

Outcomes measurements is an essential practice for companies acting in a strategic way. By using relevant and realistic data, it is possible to make fast decisions with a higher assertive level, besides optimizing the results in the market.

So, it is necessary to count on some performance indicators (or KPI’s – Key Performance Indicator). These ones are bonded to the productivity, quality, and capacity of your business.

Having all this in mind, we developed a post specially for you. Keep on reading and check the best practices found on business!

1. Net Promoter Score (NPS)

Having satisfied clients is mandatory to any organization. The reason is explained by Sam Walton. According to Walmart’s founder, clients can fire everyone in a company by simply buying somewhere else.

This way, owning the knowledge of how to measure the clients’ satisfaction is one of the most important business activities. So, we use the following tool: Net Promoter Score (NPS).

Calculating NPS is considerably easy, although it demands some initial research. Finally, there is only one question to be asked with a specialized software:

  • From zero to ten, based on your experience with us, how are you likely to recommend us to a friend?

Based on the responses, it is possible to classify the clients as: detractors (grades 0 to 6), those who talk the company down; neutral (grades 7 to 8), those who are impartial; and brand promoters (grades 9 to 10), those who recommend the company.

After that, it is necessary to apply the following calculation to set the level of client’s satisfaction:

  • NPS = % of promoters – % of detractors

A good NPS result ranges from 50 to 74 points. More than that, it’s excellent! However, if the result is below this range, then it is about time to rethink your costumer’s service policy.

2. Return On Investment (ROI)

With this indicator, it is possible to measure the results or preview the investments return of the company. Its use is related to the financial department, but knowing your ROI is a necessity for all the company.

This calculation depends on two main data: the initial investment on the project, and the outcome obtained after its implementation. Check how it is done:

  • ROI = (Return obtained – Initial investment) / Initial investment

We will present a clarifying example. Suppose an IT company’s director invested 10.000 in a modern project management system. After its implementation, he/she noticed that the company increased its income in 40.000.

ROI = 40.000 – 10.000 / 10.000

In this case, the final result would be 3 – a return three times higher in comparison with the initial investment. In order to reach a percentage, you must multiply the final value by 100. Thus, in this example, the return from the new system will be 300%.

Besides being a considerably simple formula, it is also necessary a good management system to subside the required information for the calculation. To define the return more precisely, it is important to count on a good financial system.

Have in mind that ROI has a limitation: it doesn’t take into consideration the time necessary to receive a return. That means, a high ROI score does not always mean a good investment. In the previous example, if it takes a century to have a 300% return, besides 300% looking high, the time it would take is absurd.

3. Churn Rate

This is another fundamental metric bonded to costumer’s service. However, differently from NPS, its main goal is to set the percentage of clients who left the company within a range of time – usually a trimester or a semester.

Also known as clients’ evasion index, its use is easy as its calculation requires only two data: the number of active clients at the company, and the number of cancelled contracts within a period of time.

  • Churn rate = Total amount of cancellations / Total amount of clients in a specific period of time

This rate is specially used by telemarketing companies or by those whose commercial bonds are based on contracts. On the other hand, it is not excluding for a retailing store to check its losses on customers.

For these last ones, the calculation can be more complex. It is important to count on a Customer Relationship Management (CRM) system, and on the customers’ service manager.

4. Average Ticket Indicator

The average ticket represents an average sales value. Be it from industries, service or commerce companies, this indicator is a relevant source of information. By knowing your Average Ticket, it is possible to avoid wastes and search for new revenues.
Finding the average sales value is not an impossible task, besides, it is much simpler than it seems. The calculation is done by taking into consideration the total gross revenue during a determined period, and its total amount of sales.

  • Average Ticket = Gross revenue / Sales

All this information must be extracted with a sales system, so it is important the use of a really efficient software. Having the results in hands, it is possible to trace new strategies for market acting.

5. Turnover Rate

Satisfied employees are more productive, competent, and committed to the results of the company. Otherwise, they will soon find a way to leave the company, and search for new job offers.

So, the Turnover calculation is an important results indicator. With it, it is possible to evaluate the percentage of employees who left the company within a period of time. This number is essential for a series of strategic decisions.

The Turnover Rate can be acquired with these two main data: the total number of employees who were part of the company within a period of time, and the total number of quitting employees.

  • Turnover Rate = Total number of quitting employees / total number of employees within a period of time

This calculation is generally done within a year, but it can also be in shorter periods. Besides counting on a professional from Human Resources, it is necessary to search for information in a reliable database.

The turnover rate depends on the department, and there is no ideal rate to be considered, so it is highly important to know which the perfect value to you is.

These are the main indicators for any company. They are bonded to the quality in attendance, return from investments, employees’ satisfaction, and the sales average value. All thesee calculations demand real and objective data, so use the technology in your favor.

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