For Canadian exporters, profit, revenue, sales, cash flow and access to financing are critical measures of success. But they don’t tell the whole story of a company’s achievements or struggles, and how they can optimize one and mitigate the other.
By using quantifiable metrics called key performance indicators (KPIs), exporters can uncover a more refined narrative about their business growth, roadblocks and future success.
How many export metrics a company uses and what they measure depends on several factors.
Why you should track export KPIs
A well-designed KPI dashboard can drive export success, enhance operational efficiency and ensure competitiveness in the global market when they’re aligned with business goals.
For example, some export KPIs shed light on inefficiencies, or identify risks in target markets. Others provide a clear picture of how well an exporter’s operations are functioning—from sales and international marketing to logistics and customer service. Results can be used to measure financial or operational health, as well as incentivize performance and adapt to evolving business environments.
Done well, KPIs are powerful tools for assessing the past and taking a nuanced look into the future. But too many KPIs, export metrics that aren’t baked into a business strategy, or those built without a clear objective, can create their own pitfalls. If your KPIs are measuring the wrong thing, you may not achieve your desired outcomes.
Choosing the right export metrics
Exporters face unique challenges, including fluctuating exchange rates, varying regulatory requirements and diverse market conditions. Understanding KPIs and how to choose them is as important as being familiar with Incoterms 2020, the universal trade terms used in sales contracts worldwide.
“For exporters, the first step is to develop a strategic plan to set appropriate targets, monitor the results and adapt their strategies,” says Lora Rigutto, a Certified International Trade Professional (CITP) and Partnerships and Community lead for the Forum for International Trade Training (FITT).
An export KPI dashboard can include several indicators that work in synergy to create a dynamic snapshot of business performance. Most businesses should track export metrics related to several business functions:
- Financing and revenue
- Market share and customers
- Supply chain and logistics
Financing and revenue
Orders, invoices and accounts payable may give a measure of a company’s well-being and future growth, but there are several export KPIs that can explain why you’re being profitable and where there are issues.
Revenue growth and profit margins
Revenue growth measures the increase in a company’s sales over a specific period. Profit margins indicate the percentage of revenue that exceeds the costs of production. Together, these indicators reflect the financial health and profitability of operations.
Return on investment (ROI)
By incorporating initial investment in areas, like research, prospecting, acquisition, overhead cost and marketing into performance indicators, ROI can show the overall benefit of time and investment.
Gross profit margin
This KPI is an indicator of financial health by measuring the difference between revenue and the cost of goods sold. But gross profit margins don’t account for operating costs, so they should be bundled with other performance metrics. The data can guide pricing strategies and cost management, supplier terms, production processes and reduction of operational costs.
Sales growth rate
Assessing a sales growth rate as the percentage increase in sales over a specific period—either quarterly or year-over-year—can measure market penetration and the effectiveness of sales strategies. This KPI can also guide companies in adopting new markets, diversifying product offerings and investing in targeted marketing campaigns.
Currency exchange impact
For exporters, currency exchange rates can significantly impact profitability, pricing strategies and overall financial performance. With this KPI, businesses can make informed decisions about hedging strategies and pricing adjustments to mitigate risk. Exporters can explore EDC’s Foreign Exchange Facility Guarantee, which protects profit margins by locking in exchange rates in advance.
Trade financing cost
Tracking financing export activities, including interest rates and the cost of customer transactions, can help determine if cash flow is supporting trade or operations, and how each impact available capital. For qualified exporters, EDC offers financing solutions such as the Export Guarantee Program (EGP) that helps extend a line of credit and provide term loans by sharing the risk of borrowing with your financial institute.
Market share and customers
How much does it cost your business to acquire new customers, and once engaged, are they loyal? Export KPIs focused on entering a new market, establishing share and customer engagement can help define where and how you can grow your export enterprise.
Channel partner engagement
Channel partner engagement is a KPI to track partner satisfaction, says Rigutto.
“Partner satisfaction could ask how satisfied a distributor is with an exporter’s brand, including co-marketing initiatives, collaboration at trade shows and events and co-sponsorships with local ambassadors and influencers,” she says.
Robust partner engagement is also tied to lead conversion rate, a KPI that assesses the percentage of leads provided by the partner to convert into sales.
“This data could answer questions about how many retailers a partner has in a network and how many they are able to convert. The exporter must manage the success of the channel partner to determine if the partner is the right fit,” says Rigutto.
Customer acquisition cost (CAC)
CAC calculates the cost of acquiring a new customer. By monitoring this KPI, exporters can evaluate the efficiency of their marketing efforts and optimize their spending. Strategies to reduce CAC include leveraging digital marketing, improving lead generation processes and enhancing customer retention programs.
Customer retention rate
Customer retention is a key indicator for business resilience because it measures the percentage of customers an exporter retains over a specific period. It can guide customer satisfaction and engagement strategies, plus expose complacency in sales tactics. It can also prompt a deeper dive into specific reasons for customer churn.
Market penetration and customer acquisition
How well a product or service is recognized and understood by consumers is key for measuring the impact of marketing. This is particularly important when exporters are establishing a foothold in a new region such as the Indo-Pacific, where success is determined by thorough market research, adapting to local preferences and building strong relationships with distribution networks.
Market penetration can be measured by customer acquisition, which tracks the rate at which new customers are gained. Together, the KPIs shed light on market share, effectiveness of marketing strategies and growth potential.
Net promoter score (NPS)
NPS gauges customer satisfaction and loyalty by asking customers how likely they would recommend the company to others. A high NPS indicates strong relationships and can lead to increased referrals and repeat business. NPS is impacted by exceptional customer service, addressing customer feedback and ensuring timely delivery of products. For exporters, it can be important to separate local and international scores to clarify regional and global performance.
Supply chain and logistics
With exporting comes risk, particularly in relation to shipping and supply chain management. Export KPIs can help define and mitigate risk with data tied to delivery times, order fulfilment time and warehousing costs.
Freight cost per tonne shipped
Shipping goods is a major cost for exporters, making the calculation of shipping per tonne of goods an important tool for maintaining profitability. By monitoring this KPI, exporters can look at alternative shipping and negotiate better rates with carriers.
On-time transportation delivery rates
On-time delivery rates are all about the percentage of orders delivered on, or before, the promised date. For exporters, the complexity and importance of this metric grows with the number of orders, shipments and destinations. On-time rates are also key for partners and other players in the ecosystem, as any delays can create issues down the line.
International shipping and transportation logistics
On-time delivery metrics are intricately associated with highly complex international shipping and logistics. Efficient international logistics ensure smooth operations, reduce delays and minimize costs. By tracking percentage of missed deadlines, monthly rates of damaged orders, wrong or lost orders, out-of-stock wait times and shipping capacity, you can minimize logistic issues and better respond to them in real time.
Lead time and yard costs
Lead time is an important metric for warehouse and stock management because it measures the total time from receiving an order to delivering the product to the customer. For warehouse management, understanding how lead times impact supply chains can also reduce yard costs associated with labour, storing, sorting and shipping. An associated KPI is purchase order (PO) tracking which is important when an exporter is also an importer.
Order fulfillment time
Efficient order fulfillment is critical for maintaining customer satisfaction and competitiveness. With this KPI, exporters can reduce order fulfillment time by streamlining their supply chain, implementing advanced inventory management systems and improving co-ordination with logistics partners.
On-time delivery
Like order fulfilment indicators, on-time delivery measures efficiency. It captures the percentage of orders delivered on, or before, the promised delivery date. High on-time delivery rates indicate reliable logistics and customer satisfaction. This metric can be improved by optimizing supply chain processes and collaborating closely with logistics partners. EDC InList can help match Canadian companies with vetted freight forwarders and logistics providers.
Export documentation accuracy and trade compliance
In international trade, the accuracy and completeness of export documents ensure smooth interactions with customs and reduce the risk of delays, penalties and legal issues. A KPI tracking invoicing, packing lists and certificates of origin can reduce costly errors and increase supply chain efficiency, as well as insuring regulations are met.
Supplier and fulfillment order rate
Where exporters can use their own delivery rates to improve internal systems, they can also measure on-time delivery by suppliers. Tracking the percentage of orders delivered on, or before, the agreed-upon date can help ensure a smooth supply chain.
Inventory turnover ratio
How often is export inventory sold and replaced in a month? For exporters, a high inventory turnover ratio indicates efficient inventory management and strong sales. This ratio sheds light on how to optimize inventory levels, forecast demand and reduce lead times.
Inventory to sales ratio (ISR)
By comparing the average value of idle inventory to net sales during a period, companies gain insight into inventory management. ISR is usually part of a cluster of metrics, including average number of days inventory is held and inventory turnover ratios. Roughly speaking, growth in ISR means investment in inventory is outpacing sales.
Carrying cost of inventory
Carrying costs fit neatly with ISR, as it measures the cost of holding inventory. This KPI pulls in costs associated with storage, insurance and obsolescence. Carrying cost data can improve strategies, like just-in-time inventory practices.
How to measure export KPIs
Measuring export KPIs involves more than just running a marketing campaign and checking the results. It requires a comprehensive approach that encompasses various aspects of the business.
“Well-designed KPIs are essential for the success of Canadian exporters in the global market. By tracking and leveraging key metrics, exporters can drive growth, enhance operational efficiency and maintain competitiveness,” says Rigutto.
Define clear objectives
Establish specific, measurable, achievable, relevant and time-bound (SMART) goals for each KPI. This ensures that the KPIs are aligned with the overall business strategy.
Collect accurate data
Use reliable data sources and tools to collect accurate and up-to-date information. This may include sales data, customer feedback, financial records and supply chain metrics.
Analyze and interpret data
Analyze the collected data to identify trends, patterns and areas for improvement. Use data visualization tools to make the information easily understandable.
Benchmark performance
Compare KPI performance against industry benchmarks to gauge competitive position. This helps identify areas where a company excels and areas that need improvement.
Regularly review and adjust
Continuously monitor KPIs and adjust strategies as needed. Regular reviews ensure that KPIs remain relevant and aligned with changing business conditions.
Engage employees
Involve employees in the KPI tracking process and communicate the importance of these metrics. Engaged employees are more likely to contribute to achieving KPI targets. Learn more about how to set the right metrics for your business from the Business Development Bank of Canada (BDC).
Access EDC’s expertise
In partnership with FITT, EDC offers the EDC x FITT Lite Learning Series, with units on establishing sales channels internationally, understanding foreign currency risks, crossing borders and managing customs and other useful topics. To access, sign up for a free MyEDC account.
Ask and learn through the Export Help Hub
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