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11 KPIs to watch in times of crisis

How has the COVID-19 crisis affected your business? Beyond closed restaurants, nightclubs, bars or museums, it is all very small businesses, SMEs and large groups that are affected, sometimes positively, often negatively…

Behind the closure of over-hyped establishments, many entrepreneurs suffer in silence: loss of customers, lengthening payment terms or increased online advertising spend. Every entrepreneur struggles to survive, to adapt to economic upheavals or to take advantage of new opportunities.

Before suggesting remedies, Correct diagnosis must be made, For this, we provide you a list of 11 KPIs to watch in times of crisis To do the right thing and adapt to the new economic situation. See these KPIs apply to all businesses, although some will be more familiar with digitized businesses.

1. Business

Let’s start with a great classic: your turnover. Obviously it will be necessary to look at a more accurate KPI a second time, but monitoring the development of its turnover allows for observation and concrete action to be taken before.

How has your business been affected during various imprisonments and exits? Has your business increased or decreased compared to the same period last year? Have you seen an upward or downward trend since the start of the crisis? study the variations more than the raw number.

2. EBITDA

EBITDA or Earnings Before Interest, Taxes, Depreciation and Amortization is an indicator that allows you to Measure your business’s wealth creation, This indicator, like turnover, is essential when you want to have a complete view of the financial health of your business.

You can measure this by subtracting purchase and outside fees, personnel costs, and other charges from your turnover.

3. WCR

Last financial KPI on this list: WCR or need money, This allows you to measure your cash flow requirement to pay your current expenses while waiting to receive your business receivables.

In other words, there is always a lag between the establishment of trade receivables and their payment. WCR represents The money you need to keep your business running while those loans are paid off,

The WCR is calculated as follows: Trade Receivable + Stock – Debt.

WCR tends to grow in times of crisis with longer payment terms. A number of solutions exist to offset this increase, and especially if your working capital becomes very important such as specific actions on bank loans, factoring or reducing payment terms.

4. Late Payment

According to a study by KPMG, Payment Terms 3.5 Days Increment Average in the year 2020. This may not seem like much, but an increase in payment terms can have a disastrous effect on a company such as its inability to pay off its debts or increase in working capital.

The problem of late payment is difficult to solve. Companies that take a long time to pay you may be in a difficult position and have a better customer who pays 3 days late than a non-paying customer. A simple tip: talk. Find solutions that work for both parties.

These top 4 financial KPIs are useful whether you are facing economic slowdown or high growth. They make it possible to detect friction and optimize your strategy, but other more specific KPIs must also be monitored in times of crisis.

5. Average Basket

Has your average basket of customers changed since March 2019 and the first imprisonment? The economic crisis results in a contraction in consumption. While some sectors are doing better, negative GDP growth (or decline) means less consumption.

Consumers buy less or buy less, and your average basket may be affected. If your customer acquisition cost remains the same, it becomes problematic and you have to tweak your strategy.

6. Lifetime Value

Lifetime Value or LTV tells you how much your customers are earning over a long period of time. Simply put, it is the average customer basket over the long term.

The LTV is calculated as follows: (purchase frequency x average basket) x customer lifetime.

Imagine a cashier software that targets restaurants, with the restaurant closed, the length of the subscription will decrease, and if the average basket doesn’t go up, the LTV will go down.

When the average basket or LTV falls, it means that each new customer is earning less than before, Therefore it is necessary to optimize its customer acquisition cost or its operating cost To maintain margin at the same level.

7. Customer Acquisition Costs

Many entrepreneurs invest in digital channels (Facebook ads, Google ads and any social network + ads). Normally, the cost of social media advertising goes up every year, but the COVID-19 crisis is only accelerating the trend. This is understandable, there are more advertisers and more requests for your potential customers and therefore worse conversion rate,

Be careful that your customer acquisition cost remains constant, especially if your average basket or LTV goes down.

Customer acquisition cost is measured by dividing all marketing costs and selling costs by the number of customers acquired.

8. Accident Rate

The churn rate or churn rate is the percentage of customers you lose compared to the number of customers you have. The COVID-19 crisis runs the risk of raising your attraction rate regardless of you.

There is a risk that the company’s liquidation will increase, though for now, State financial aid covers the event, The job loss rate especially increases with companies that cut back on their spending and choose to sacrifice your product or service. It’s the same mechanism for individuals that, if they lose purchasing power, will have to arbitrate between their various expense items, sometimes to the detriment of your business.

Monitoring your average basket, your LTV, your customer acquisition costs and your job layoff rate will allow you to see the evolution of the crisis in your business. You can go even further by studying more qualitative KPIs.

9. Prospect / Customer Conversion Rate

With the COVID-19 crisis, buying triggers have changed. Your customers, whether businesses or individuals, are changing their behavior and you need to ensure that your prospect/customer conversion rate remains constant.

More interesting than the increase or decrease of this KPI, Analyze the reasons for this change To customize your sales pitch and your marketing messages. Your prospects may be more sensitive to ecology, price, or ability to test. Analyze why your prospects are converting more or less and adapt.

10. Customer satisfaction

crisis or not, You should focus on customer satisfaction, Are your customers always satisfied? Is your experience still as good? Customer relationships evolve with crisis. Think of training as taking place online instead of face-to-face or the rise of click and collect. New audiences are going digital and you need to optimize your customer experience.

To do this, measure your customer satisfaction carefully and optimize your processes. The companies that emerge out of the crisis will be the ones that meet the needs of their customers. Consumer support for struggling businesses will only last if they take care of their customers over time.

11. Internal Productivity

For this last KPI, we were hesitating between internal productivity or the commitment of your employees. Your employees are also suffering from this new situation that is left, Telecom and stress can take a toll on your team’s happiness.

Loss of productivity or a lack of commitment to your employees are two consequences of the same problem: setting up a more complex than teleworking one or a work environment that respects health directives.

It’s not about “competing” your employees’ productivity, but providing them with the elements (office chairs, computers, equipment) they need to maintain an optimal work environment. Talk to and take care of your employees,

Last 2 KPIs are most important to us, without happy customers and happy employees your business will be difficult to survive.

If you want to delve deeper into the topic of KPIs, you can check out the following articles on KPIs to Optimize Your Website, Your Marketing Videos, or this guide with more than 60 KPIs.

Our last tip: Don’t tell yourself that this is a temporary situation and everything will be the same. As long as the COVID-19 crisis persists, the behavior of your customers, individuals or businesses will change. Adopt and anticipate the future needs of your customers. This Tough Crisis May Be Full of Opportunities Whoever manages to catch them.

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