If you own or manage a trucking company, you need to know the key performance indicators (KPIs) that are crucial to the success of your company. KPIs may differ per company and certainly per industry, but for the most part most trucking companies rely on a common set of business metrics to evaluate performance. Identifying and tracking the KPIs that are appropriate to your companys performance is comparable to using a map and compass to evaluate direction and progress towards your strategic goals. Identifying the KPIs for your Trucking Company Selecting the appropriate KPIs to monitor is the first step in aligning business metrics with your trucking companys strategic goals. There are numerous KPIs to choose from that gage financial status, customer scorecards, process efficiencies and more. The best way to determine the KPIs relevant to your organization is to research and understand some of the most important metrics. To be effective, a KPI must: Be well defined and quantifiable Be crucial to achieving your strategic goals Be thoroughly engrained throughout your organization Metric Categories The relevant KPIs commonly shared by most trucking companies are grouped under four metric categories; financial, process, customer and people. Financial Metrics 1. Profit: No doubt, this is the most important performance indicator to measure the success of your company. Analyze both gross and net profit margins to determine how successful your business is at generating a desired return. 2. Revenue vs Target: This is a comparison between projected revenue and actual revenue generated. Monitoring the discrepancies between these two numbers will help to identify how well your fleet is performing. 3. Cost-per-Mile: Knowing what your operational costs are on a per-mile basis allows you to manage expenses efficiently and determine an appropriate per-mile rate to charge shippers. Determining your companys cost-per-mile is a simple calculation that should be performed weekly to best control expenses. 4. Day Sales Outstanding (DSO): This is a measure of the average payment days of your customers. This important metric is vital in determining the state of your companys cash flow and to help prevent unnecessary credit risks. Calculating DSO is a simple equation that should be assessed on an ongoing basis. It is well worth noting that a common financial strategy used by trucking companies to improve cash flow and gain immediate access to working capital is to utilize invoice factoring. A popular choice among owners of trucking companies is Flat Fee Factoring, a simple factoring solution designed specifically for the transportation industry. Process Metrics 5. Freight Claim: Analysis of the number of claims filed, claims resolved and resolution time will enable you to monitor and improve customer service to build customer loyalty and command the best price for your service. 6. Equipment Utilization: Efficiency is measured differently in every industry. For trucking, maximizing equipment utilization is the key to increased profitability. Measure your equipments usage verses idle time to determine productivity levels. Customer Metrics 7. Customer Lifetime Value (CLV): CLV is a prediction of the net profit attributed to the entire future relationship with a customer. Use this performance indicator when searching which channel helps acquire the best customers for the best price. 8. Customer Acquisition Cost (CAC): Divide your total acquisition costs by the number of new customers in the time frame youre examining. This will help determine the best channels for securing new business. People Metrics 9. Driver Turnover Rate (DTR): Determine your DTR by dividing the number of drivers who have departed the company by the average number of drivers in your pool. If you have a high DTR, spend some time examining your workplace culture, compensation packages and benefits. 10. Employee Satisfaction: Happy employees work harder, more productively and remain on staff longer. Measure employee satisfaction through surveys and other metrics such as interviews and reviews. KPIs should match your companys strategy and goals. Make sure to examine as many performance indicators as possible to determine the most appropriate KPIs for your unique operation. Once selected, integrate them throughout your organization and focus employee attention on the importance of maximizing performance. About Accutrac Capital Accutrac Capital is an invoice factoring company that specializes in the trucking industry. By virtue of our combined industry experience, business management skills and financial solutions, Accutrac Capital is widely recognized as a thought leader within the trucking space. For more information about maximizing profitability or to learn about cash flow solutions designed specifically for the trucking industry, call 855-790-0906.