7 Essential KPIs for Inventory Control SaaS Companies

Introduction

When running a business, it is essential to track key performance indicators (KPIs) in order to monitor and measure performance. While there are a variety of KPIs to choose from, there are seven critical metrics for inventory control software as a service (SaaS) – Customer Acquisition Costs (CAC), order, gross margin, inventory accuracy, on-time delivery rate, average revenue per user (ARPU) and customer retention rate. Knowing how to track and calculate these metrics will help you gain valuable trading insights.

Customer Acquisition Costs (CAC)

Definition

Customer acquisition cost (CAC) is a metric that helps measure the cost of acquiring new customers for a business. It is usually calculated as the total cost of sales and marketing efforts divided by the number of customers acquired.

Benefits of Tracking

Tracking CAC is an important metric for businesses because it helps them understand how much it costs them to acquire new customers. By tracking CAC, companies can make better decisions about where to allocate resources and how to reduce costs. Additionally, tracking CAC can help companies identify areas for improvement in their sales and marketing efforts.

Industry Benchmarks

The average CAC for most industries is between and , although this can vary depending on the industry and company size. It is important to note that the average CAC can also change over time, as the cost of customer acquisition can fluctuate.

How to calculate

To calculate CAC, you must first identify the total cost of sales and marketing efforts. This includes all costs associated with advertising, promotions, sales staff, and other efforts related to acquiring new customers. Once you have identified all the costs, you can then divide them by the number of customers acquired.

Calculation example

For example, if a company had total sales and marketing costs of ,000 and acquired 10 customers, their CAC would be 0.

Tips and Tricks for Tracking KPIs

• Track CAC over time to identify customer acquisition cost trends and make adjustments as needed.
• Analyze the effectiveness of different marketing and sales strategies to understand which efforts are most profitable.
• Evaluate the performance of different channels and campaigns to identify which deliver the best results.
• Identify opportunities for cost savings and improve customer acquisition efficiency.

Completion rate of the commercial order

Definition

Sales order fill rate is a metric used to measure the effectiveness of a company’s inventory control system. It is defined as the number of completed orders out of the total number of orders placed.

Benefits of Tracking

• It helps to identify areas to improve the inventory control system.
• It helps to identify potential bottlenecks in the supply chain.
• It helps identify issues with customer service and customer satisfaction.

Industry Benchmarks

The industry benchmark for commercial order fulfillment rate is 95%. This means that 95% of orders placed are fulfilled without any delays or problems.

How to calculate

The commercial order fulfillment rate is calculated by dividing the number of orders completed by the total number of orders placed.

Calculation example

For example, if a company placed 100 orders and completed 95 of them, the sales order fulfillment rate would be 95%.

Tips and Tricks for KPIs

• Track the fulfillment rate of trade orders on a daily, weekly and monthly basis.
• Set up a system to track the number of orders placed and completed.
• Identify areas for improvement in supply chain and customer service processes.
• Compare order fulfillment rate with industry benchmarks.

Gross margin

Definition

Gross margin is a metric used to measure a company’s profitability. It is calculated by subtracting cost of goods sold from total sales, then dividing by total sales.

Benefits of Tracking

Tracking gross margin can help companies determine their profitability and adjust their pricing and production decisions. It can also be used to compare the profitability of different product lines or services.

Industry Benchmarks

The average gross margin for a SaaS business can vary depending on the industry. For example, the average gross margin for software and services companies is around 80%, while the average gross margin for professional services companies is around 60%.

How to calculate

Gross margin can be calculated by subtracting cost of goods sold from total sales and then dividing by total sales. The formula looks like this:

Calculation example

For example, if a company has total sales of 0,000 and cost of goods sold of ,000, gross margin would be calculated as follows:

Tips and tricks

• Track your gross margin regularly to ensure your business is profitable.
• Compare your gross margin to industry benchmarks to identify areas for improvement.
• Analyze your gross margin trends over time to understand the impact of changes in your pricing and production decisions.

Inventory accuracy

Definition

Inventory accuracy is a key performance indicator (KPI) used to measure the accuracy of inventory records for a business. This is the percentage of items that are accurately counted in inventory records. This KPI is important for measuring the effectiveness of a company’s inventory management system and ensuring that the company is not biased or overwhelmed on items.

Benefits of Tracking

• Ensures inventory records are accurate and up to date
• Helps reduce costs by avoiding overstocking and outsourcing of items
• Makes it easy to track and manage inventory levels
• Enables better forecasting of stock needs

Industry Benchmarks

The industry benchmark for inventory accuracy is typically 95%. This means that 95% of inventory items are accounted for in the records. Anything lower than this indicates that the inventory management system is not working effectively and needs to be addressed.

How to calculate

Accuracy of inventory KPIs can be calculated by dividing the number of items that are accurately accounted for in the records by the total number of items in inventory. The formula is:

Calculation example

For example, if a company has 100 items in inventory and 95 of them are accurately accounted for on file, the inventory KPI accuracy would be 95%. The calculation would be as follows:

Tips and tricks the KPI

• It is important to track inventory accuracy regularly to ensure inventory records are accurate and up-to-date.
• Regularly audit inventory records to identify discrepancies and take corrective action.
• Implement a barcode system for inventory tracking to ensure accuracy.
• Automate inventory management processes to reduce errors and improve accuracy.
• Train staff on inventory management best practices and procedures.

On time delivery rate

Definition

The on-time delivery rate is a key performance indicator (KPI) that measures the percentage of orders delivered within the expected time. It is used to track the performance of a company’s supply chain and logistics operations.

Benefits of Tracking

Tracking on-time delivery rate is an important metric for businesses as it helps gauge the efficiency of their supply chain operations. It also provides valuable insight into customer satisfaction and helps identify areas for improvement. Additionally, tracking the on-time delivery rate can help businesses identify potential bottlenecks and inefficiencies in their operations.

Industry Benchmarks

Industry benchmarks for on-time delivery rate vary by business type. Generally, companies should aim for an on-time delivery rate of 90% or more. However, it is important to note that the actual rate may vary depending on the industry and the nature of the business.

How to calculate

The on-time delivery rate can be calculated by dividing the number of orders delivered on time by the total number of orders. This can be expressed as a percentage by multiplying the result by 100.

Calculation example

For example, if a company had 50 orders and 45 were delivered on time, the on-time delivery rate would be 90%.

Tips and tricks

• Regularly monitor the on-time delivery rate to identify potential issues and areas for improvement.
• Set realistic goals for on-time delivery rate and track progress towards them.
• Analyze customer feedback to identify where customer satisfaction is slipping.
• Ensure delivery times are clearly communicated to customers.
• Investigate potential causes of delays and take action to improve processes.

Average revenue per user (ARPU)

Definition

Average revenue per user (ARPU) is a key performance indicator (KPI) used in inventory control SaaS companies to measure the average revenue generated by a single user over a given time period.

Benefits of Tracking

Tracking ARPU can help companies monitor SaaS businesses to understand how much revenue they generate from each user and make informed decisions about product pricing, marketing, and user engagement strategies. .

Industry Benchmarks

Industry benchmarks for ARPU vary depending on the type of inventory control SaaS business and the market in which it operates. Generally, companies should aim to have an ARPU of at least per user.

How to calculate

ARPU is calculated by dividing total revenue by the number of users over a given period.

Calculation example

For example, if an inventory control SaaS business generated ,000 in revenue and had 5,000 users in a single month, the ARPU would be (,000 / 5,000).

KPI Tips and Tricks

• Track ARPU over time to identify trends and make adjustments if needed.
• Use ARPU to measure the effectiveness of marketing campaigns and user engagement strategies.
• Compare ARPU to industry benchmarks to identify areas for improvement.

Customer retention rate

Definition

Customer retention rate is a metric that measures the percentage of customers who remain loyal to a business or product. It is also called customer churn rate or retention rate. Customer retention rate is a key indicator of the health of a business and is often used to measure the success of marketing campaigns, customer service initiatives, and product launches.

Benefits of Tracking

Tracking customer retention rate is beneficial for any business as it allows you to identify and resolve any issues that may be causing customers to leave. It also provides insight into the success of your current initiatives and strategies, and can help you adjust your approach to ensuring customer loyalty.

• Identify customer satisfaction issues.
• Evaluate the success of marketing campaigns.
• Understand the impact of customer service strategies.
• Measure the effectiveness of product launches.

Industry Benchmarks

The average customer retention rate varies by industry. Generally, businesses in the retail industry tend to have higher customer retention rates than those in the food and beverage industry. The average customer retention rate for retail businesses is around 83%, while the average for food and beverage businesses is around 70%.

How to calculate

Customer retention rate can be calculated by dividing the number of customers at the end of a period by the number of customers at the beginning of the period, then subtracting the result from 1. The formula for calculating retention rate of customers is as follows:

Calculation example

For example, if a business has 200 customers at the start of a period and 180 customers at the end of the period, the customer retention rate would be calculated as follows:

This means that the customer retention rate for this business is 90%, which is considered good.

Tips and Tricks for KPIs

• Track customer retention rate over time to identify trends.
• Compare customer retention rates to industry benchmarks.
• Identify and resolve customer satisfaction issues.
• Measure the effectiveness of marketing campaigns, customer service strategies, and product launches.

Conclusion

Having an understanding of the seven key inventory control SaaS business KPIs and how to track and calculate them is critical to gaining better business insights. It can help you make informed decisions and ultimately lead to improvements in your business. Using these metrics in your inventory control business is key to success.