How to Track Business Metrics
In business, we may feel that it would be nice to have the perfect dashboard, a team of 500 and everything running smoothly. However, in the early stages, it might just be you and a few contractors, you and no contractors, or you and a cofounder. Although this might be the case, you are the common denominator here and your habits translate into the habits of the business. Tracking business metrics is an important habit to be able to measure where things are healthy in the business and where things need attention. It’s similar to the weather channel: is it going to rain? Or be sunny? Then you can prepare for conditions by taking an objective stance. Read on for easy ways to track your business metrics for growth optimization.
Financial Metrics
One financial metric to track is total revenue. This is taking stock of whether the business is growing. Sometimes “vanity metrics,” or how many views you are getting, might be great, but analyze if they are making sales. Also look at your profit margin, which is the percentage of revenue compared to costs. Net vs. growth revenue. Expenses. Is the business efficient? Negative margins means you are spending more than you are making. Positive margins means the business is growing. Observe the trends and cash flow; money coming in and out. Keeping a positive cash flow will allow the business to run smoothly.
Customer Metrics
The next metric you should track is customer metrics, or how much it costs to acquire a customer. The less it costs to get a new client, the more profitable you can be. Make sure to allocate funds to customer acquisition and have a powerful offer that ensures a customer that you will bring them value, so you can acquire them more quickly and lower the acquisition cost.
Also take stock of a customer’s LTV (life time value). For example, if a customer stays with you for 5 years paying $100 a month, that is $6,000 toward your business. That is a good value.
Also track how your customer is navigating their journey with you. If you are offering to solve a problem for them, is it a daily problem they have that they have to keep coming back to solve? Take social media, for example. You might feel lonely, so you use social media to connect to others. However, you have to do this every day to mitigate your feelings of loneliness. Does your business have a similar effect on a customer? Think about what is the average amount of time a customer will stay with your business, and try to make it less likely that a customer will stop using your product.
Productivity
How are you measuring productivity? How efficiently is your company providing goods and services? Make sure your products and services and high quality and exceeding customer expectations. To find out if they are, use surveys, feedback, google reviews etcetera.
Marketing
One item to look at with marketing is conversion rates. For example, someone might listen to your podcast and then go on your website to book a connect call. How many people come to this and go to that? Is what you are doing now working or not?
Return on investment is very important to analyze. Make sure that your spends are producing more money than you put in. Observe the ROI of all of your marketing campaigns. Are they effective, efficient and converting customers? For example, you spend $500 on ads and every time you do that, you bring on a new client worth X amount. Notice the ROI and if you need to make any changes going forward.
Engagement
Tracking your engagement is crucial. You will be able to learn how much interaction is happening with followers. This helps with brand awareness and customer loyalty. Track week over week, month over month or even daily. Even if you just check once a month, that is better than not at all. Check your business tools and analytics; notice trends. Have each of the numbers have a SMART goal (mentioned in a previous blog post) around them. For example, for next quarter, you might want to focus on increasing your conversion rate by 10%.
Reviewing and Comparing
The more often you review your metrics, the sooner you can pick up on trends. Also, research industry standards for each of those standards and ask yourself “How far off am I?” Of course, you are on your own journey, but comparing to other similar businesses who are successful will give you an idea of if you’re off base and what you can do better. Set up a system, set a reminder and keep it simple. Even if you choose one metric to track and you double down on that, you can get a more thorough understanding of where your business is than without doing so.
We hope you have gained valuable gems from this blog post. You can watch or listen our podcast on this topic here. If you need support in your life and journey, book a 20 minute connect call with us! We would love to hear where you are with your business and help you with some simple steps to move forward in a way tailored to you. Love, light and blessings ✨