Do you know if your business growth is going in the right direction you want? Have you got objective data and turn this into the information you need to show you whether or not you’re achieving your business goals? And do you therefore know what to do to keep your business growing?
Information technology enables you to track data and analyse metrics and there are an abundance of computer software programs that automate calculating the data you need. In addition, Google Analytics offers an array of free metrics.
But which metrics do you need?
Here are the five crucial metrics which you really need to track of in you want to sustain and grow business.
1. Return on Revenue (ROR)
Your revenue return rate is how much profit your company is making after the expenses are subtracted. You need to calculate the total income coming into your business and then subtract your operating expenses. This important calculation must include all of the day-to-day expenses, and in addition, all the expenses that aren’t as easy see such as rent and office supplies, and also non-cash factors like inflation or depreciation of properties.
2. The Run Rate
Your run rate is a calculation of your future business performance based on your present performance. Which means you take the last two years of data and calculate a monthly average. Once you have that figure, you can then look at the next year ahead and multiply this number by 12. If you haven’t got two years trading figures, then use as large a sample of past data as you possibly can.
3. Your Average Customer Spend
Your average customer spend shows you the average for how much each one of your customer’s spend when they purchase from you. So, you calculate this figure by taking your total revenue and dividing it by the exact number of your current customers. This metric is very important because it gives you an indication of how your business is actually performing.
4. Your Customer Acquisition Costs And Retention Rate
You need to have this metric because this tells you the cost of all the efforts you put into getting a prospective customer to buy your product and service. This is important because it shows you how much all your marketing planning, implementation and the resources that you have used …are working, plus the end result, the conversion of your marketing leads into a customer sale. And by calculating this figure you can use the outcome to predict future finances as you grow.
Your customer retention rate lets you know what percentage of your customers then stay with you and buy for you again. Remember that it costs much more to bring a new customer on board due to your front end marketing and sales costs than it is to keep existing happy clients. If it turns out that your rate of retention is low, then your business is actually losing money. Which means if you have a ow customer retention rate then you really need to step up both your marketing efforts to engage and offer value to your potential customers, and also have a great sales conversion process in place.
5. Return on Advertising Spend
This metric looks specifically at the cost of all your offline and online advertising promotions and the amount of revenue it’s earning you. This figure shows you whether or not your marketing budget is working for you. If it is, then do more and test and measure if you can beat your control advert. If it’s not, then you need to go back to your marketing plan and either consider more effective or less expensive advertising methods.
In conclusion, business metrics are essential to help you assess whether or not you’re achieving your business goals. And, if you really want to see your business growing, you should schedule marketing activities and resources within a planned period of time and measure your progress towards achieving them. You can then test, measure and tweak changes to get the results you want.