An overview of the 7 best KPIs for a transport company

Introduction

In today’s fast-paced business world, it’s paramount for business owners to accurately track and calculate key performance indicators (KPIs). Transportation companies that effectively measure their performance metrics are better suited to make informed decisions that allow them to optimize their operations and increase business efficiency and profitability. This blog post provides an overview of the seven main KPIs for a transportation business, along with tips on how to track and calculate each metric, so that an accurate and detailed picture of performance can be determined.

• Revenue increase
• Cost efficiency
• Timely deliveries
• Client satisfaction
• Customer acquisition rate
• Intercompany communication
• Employee retention rate

The following sections will cover each KPI in detail, illuminating how companies can track and measure the performance of each metric.

Revenue increase

Definition

Revenue growth is a metric used to measure the rate at which a company’s revenue increases over time. It is calculated by taking the current period’s revenue and dividing it by the previous period’s revenue and multiplying it by 100.

Benefits of Tracking

Tracking revenue growth is important for businesses because it helps them identify and understand the factors that are driving their revenue. By monitoring revenue growth, businesses can make informed decisions that will help them maximize profits. Additionally, revenue growth can help companies identify and capitalize on emerging opportunities.

Industry Benchmarks

When it comes to revenue growth, industry benchmarks can help companies gauge their performance. Generally, a company’s revenue is expected to increase over time, however, the rate of growth may vary depending on the industry. For example, in the retail industry, the average revenue growth rate is around 5%.

How to calculate

Revenue growth can be calculated using the following formula:

Calculation example

Let’s say a business had revenue of ,000 in the previous period and ,200 in the current period. Revenue growth for this business would be calculated as follows:

Tips and Tricks for KPIs

• Focus on understanding the factors driving your revenue growth, such as changes in customer demand, pricing, etc.
• Compare your revenue growth to industry benchmarks to understand how you’re performing.
• Regularly monitor revenue growth to ensure you are taking advantage of emerging opportunities.

Cost efficiency

Definition

Profitability is one of the main performance indicators for a transport company. It measures the profitability of a transport company in providing services to its customers. It is usually represented as a ratio of total costs incurred divided by total revenue generated.

Benefits of Tracking

Profitability tracking allows a transportation company to monitor its performance and make improvements. It helps identify areas of inefficiency or waste and enables corrective action to be taken to reduce costs. It also provides an indication of the company’s overall efficiency in providing its services.

Industry Benchmarks

The industry benchmark for profitability varies from company to company, depending on the type of services provided and the size of the transport company. Generally, a 1:1 efficiency ratio is considered desirable, with a higher ratio indicating higher efficiency.

How to calculate

The profitability ratio can be calculated by dividing the total costs incurred by the total revenues generated. The formula is:

Calculation example

For example, if a transportation company incurred total costs of ,000 and generated total revenue of ,000, the profitability ratio is 0.67.

Tips and Tricks for KPIs

• Make sure all costs are included in the calculation, such as overhead, labor costs, and material costs.
• Compare the profitability ratio with industry benchmarks to identify areas for improvement.
• Track and monitor the profitability ratio regularly to identify any changes or trends.
• Take corrective action to reduce costs where possible.

Timely deliveries

Definition

On-time deliveries is a transportation business key performance indicator (KPI) that measures the percentage of on-time deliveries made by the business. This indicates the company’s commitment to meeting customer expectations in terms of timely delivery of goods.

Benefits of Tracking

Tracking timely delivery KPIs allows transportation companies to measure their performance against customer expectations. This helps identify areas where operational improvements can be made to ensure customer delivery expectations are met. Additionally, tracking this KPI can help a company improve customer service by providing customers with accurate delivery estimates.

Industry Benchmarks

The industry benchmark for this KPI is usually set at around 95-98%. This means that 95-98% of the company’s deliveries should arrive on time in order to meet customer expectations.

How to calculate

Timely Deliveries KPI can be calculated using the following formula:

Calculation example

For example, if a transport company makes 10 deliveries and 8 of them are on time, the KPI on time deliveries can be calculated as follows:

Tips and tricks

• Regularly track timely deliveries and compare against industry benchmarks.
• Look for patterns in delivery delays and identify root causes.
• Introduce processes to reduce delivery delays, such as scheduling deliveries more efficiently.
• Provide customers with accurate delivery estimates.
• Rewards drivers who consistently meet on-time delivery expectations.

Client satisfaction

Definition

Customer satisfaction is a KPI metric used by shipping companies to measure the level of customer satisfaction with their services. It is a measure of how well a business meets the needs of its customers and is one of the most important metrics for any successful business.

Benefits of Tracking

By tracking customer satisfaction, transportation companies can identify areas that need improvement and make changes to better serve their customers. It also helps build customer loyalty, as satisfied customers are more likely to come back for repeat business. Additionally, tracking customer satisfaction can help improve customer retention because customers who are satisfied with the service they receive are less likely to move on to another company.

Industry Benchmarks

The average customer satisfaction score in the transportation industry is 85%. It’s important to track customer satisfaction over time to ensure it consistently meets this benchmark. Companies that regularly exceed this benchmark are likely to be more successful because they provide a higher level of service.

How to calculate

Customer satisfaction can be calculated by taking the number of customers who were satisfied with the service they received and dividing it by the total number of customers. The resulting number is then multiplied by 100 to get the customer satisfaction score.

Calculation example

For example, if a transportation company has 200 customers and 180 of those customers are satisfied with the service they received, the customer satisfaction score would be calculated as follows:

KPI Tips and Tricks

• Regularly track customer satisfaction to ensure it meets industry benchmark.
• Solicit customer feedback to identify areas for improvement and make changes.
• Reward employees who consistently exceed customer satisfaction expectations.
• Implement customer loyalty programs to encourage repeat business.

Customer acquisition rate

Definition

Customer acquisition rate is a metric that measures the number of new customers a business has acquired over a specified period of time.

Benefits of Tracking

Tracking your customer acquisition rate is important for businesses because it can provide valuable insight into the effectiveness of their efforts to attract new customers. By understanding their performance in this area, companies can modify their strategies or processes to increase their customer base. Additionally, tracking this metric can help businesses analyze their competitors and ensure they remain competitive in the market.

Industry Benchmarks

Industry benchmarks for customer acquisition rate vary by industry and business type. Generally, businesses should strive to maintain a customer acquisition rate of at least 10% for the best results.

How to calculate

The customer acquisition rate can be calculated by taking the number of new customers acquired during a specific period and dividing it by the total number of customers at the start of the period. The result is then multiplied by 100 to get the percentage. The formula is:

Calculation example

For example, if a business acquired 10 new customers in a month and has 100 customers at the beginning of the month, its customer acquisition rate is calculated as follows:

Tips and Tricks for KPIs

• Regularly track your customer acquisition rate to ensure your business is on track and progressing.
• Analyze data to identify areas where you can improve your customer acquisition strategies.
• Benchmark your customer acquisition rate against industry benchmarks to ensure you remain competitive.
• Be sure to focus on customer retention as well as customer acquisition for the best results.

Intercompany communication

Definition

Intercompany communication is a KPI metric that measures the level of communication between different divisions, departments, and teams within an organization. This is an important metric for businesses large and small, as it helps ensure teams are working together toward common goals and objectives.

Benefits of Tracking

Tracking intercompany communication has many benefits, including:

• Help identify and close any communication gaps between teams.
• Allowing management to better understand how teams work together.
• Help ensure teams work together efficiently and productively.
• Ensure all teams are on the same page and working towards the same goals.

Industry Benchmarks

The industry benchmark for intercompany communication largely depends on the size of the organization and the number of teams involved. Generally speaking, organizations should strive for high levels of cross-company communication between teams. This can be achieved through regular meetings, emails and other forms of communication.

How to calculate

Intercompany communication can be measured by tracking the number of emails, meetings, and other forms of communication between teams. The formula for calculating intercompany communication is:

Calculation example

For example, if an organization has 10 teams and there are a total of 100 emails, 20 meetings, and 10 other forms of communication between the teams, intercompany communication would be calculated as:

Tips and Tricks for KPIs

Here are some tips and tricks for tracking intellectual communication:

• Encourage teams to communicate more frequently, such as through weekly meetings.
• Set up an email newsletter to send important updates and news to all teams.
• Use project management software to keep track of tasks and progress.
• Encourage teams to use video conferencing when possible.

Employee retention rate

Definition

Employee retention rate is a metric used to measure the number of employees who stay with the company over a certain period of time. It is a key performance indicator (KPI) for corporate transportation, as it is indicative of the effectiveness of corporate culture, employee engagement, and job satisfaction.

Benefits of Tracking

Tracking employee retention has a number of benefits for business transportation. It provides an indication of work environment effectiveness, employee engagement and job satisfaction. It also helps identify areas where the business can improve, such as employee development and training, and can help reduce costs associated with hiring and training new employees.

Industry Benchmarks

The industry benchmark for employee retention rate is usually between 80-90%. This means that on average, 8 out of 10 employees stay in their job for a certain period.

How to calculate

The employee retention rate can be calculated by dividing the number of employees who stay with the company over a certain period of time by the total number of employees at the start of that period. The formula is:

Calculation example

For example, if a transportation company has 100 employees at the start of the period and 90 employees at the end of the period, the employee retention rate is 90%.

Tips and Tricks to Improve Employee Retention Rate

• Provide competitive salaries and benefits.
• Offer flexible work arrangements.
• Create an environment of open and trusting communication.
• Provide opportunities for career development and growth.
• Encourage employee feedback and listen to their suggestions.
• Offer recognition and rewards for good performance.
• Provide work-life balance.

Conclusion

Maintaining a competitive advantage in the transportation industry requires operators to effectively track and measure KPIs. The aforementioned seven KPIs for a transportation business provide business owners with an invaluable tool for understanding business performance and how to make better decisions to increase efficiency and profitability. By taking the time to measure, calculate, analyze and adjust KPIs, operators can ensure they are able to maximize their success and stay ahead of the competition.