Title: Explain what key performance indicators (KPI) are and how they are used.
Course: Entrepreneurship, Advanced (12053-II) > Section: Projecting Financial Requirements

Explanation should include

- return on investment (ROI)—the amount earned as a result of investment; yearly net profit/startup investment x 100 = ROI %
- return on sales (ROS)—a ratio expressing a company’s operational efficiency, showing how much of each dollar of sales the business keeps as profit, also known as profit margin; yearly net profit/total sales x 100 = ROS %
- customer acquisition costs (CAC)—the cost associated in persuading a customer to buy a product/service; incurred by the organization to convince a potential customer
- customer retention costs (CRC)—the cost of keeping an existing customer purchasing
- lifetime value (LTV)—the prediction of the net profit attributed to the entire future relationship with a customer
- social return on investment (SRI)—assessment used to evaluate effect of stakeholders, identify ways to improve performance, and enhance the performance of investments.

Process/Skill Questions:

- What strategies can be used to obtain a desired percentage return?
- How can a high return on sales affect the profit of a business?
- How can entrepreneurs use ROS and ROI information?
- What is the difference between ROI and ROS?
- What is the difference between acquisition costs and retention costs?
- Why is it important for entrepreneurs to consider CAC and CRC?
- What is SRI, and why is it a consideration for entrepreneurs?
- How does a business retain customers?
- What is customer acquisition marketing?
- What is a good CAC ratio?
- How does a business increase customer LTV?