If you own a freight or trucking company, chances are you want that business to perform well and exceed expectations. In order to reach the goals you’ve set forth, you’ll need to ensure your business remains organized with up-to-date information.
One of the easiest and most practical ways businesses keep track of your progress is by tracking KPIs, also known as key performance indicators. These won’t be the same for every company and will vary tremendously depending on the industry you’re in.
For truck drivers and freight companies, understanding the KPIs that matter most in your industry will act as a catapult to your success. After all, it’s essential to know your strengths and weaknesses so you can improve when and where it’s needed.
The 10 KPIs You Need to Track
The 10 key performance indicators that every trucking company should keep their eyes on will fall into one of four categories — finances, processes, customers, and people. These will be the four main areas you’ll want to be covered when measuring success.
First, let’s take a look at the two KPIs that fall into the customer category.
- Customer Lifetime Value – When you sign a new client, you want that client to continue producing revenue for your business. The customer lifetime value will indicate the estimated amount of lifetime earnings from that client.
- Customer Acquisition Cost – This indicator will simply tell you how much it costs your business to acquire a new customer. It’s helpful when building a marketing strategy.
The following two KPIs fall into the processes category.
- Equipment Utilization – How often are you utilizing your equipment? Ideally, you’ll be getting good value out of your investments, but that’s not always the case.
- Freight Claim – This metric will largely deal with customer service processes. When someone files a claim with your company, how quickly is it resolved?
Next, we have two KPIs which will fall into the people category.
- Employee Satisfaction – One of the keys to a successful trucking company is happy employees. After all, you can’t do everything yourself, can you?
- Driver Turnover Rate – Piggybacking off the previous KPI, the driver turnover rate will detail how well your company can keep drivers on payroll. The higher the turnover rate, the more expensive this will be for your company.
Lastly, let’s discuss the four KPIs that fall into the final category — financials.
- Profit – Not being able to turn over a profit will be a major indicator that your business is struggling. If your expenses outweigh your income, it’s time to start finding ways to cut costs or increase sales.
- Cost-Per-Mile – This is an essential KPI that will measure how much it costs your company to travel one mile. It will take everything into consideration including food, lodging, fuel, and any other expense that goes into a load delivery.
- Revenue vs. Target – Every business owner will set a goal each month for their expected revenue margins. By the end of the month, your actual revenue should either match or exceed your expected revenue.
- Day Sales Outstanding – This metric will give you an accurate idea of how long it takes your clients to pay their invoices. Ideally, your clients will have no issue paying on time, but that may not be a realistic expectation, as other businesses may be struggling to pay their own bills.
If you’re finding that your clients aren’t paying you on-time, factoring services could play an essential role in keeping your business alive and running. To learn more about how factoring services can help your freight company, see our list of best trucking factoring companies!
References
Walczak, Magda WalczakMagda. “What Are Key Performance Indicators (KPIs) and Why You Should Use Them.” Einsights, 26 Sept. 2014, einsights.com/key-performance-indicators-kpi/.