In business, information is power. It provides the insights you need to craft your strategy for improved efficiency, better results and helps you win more business. That is why metrics are so important. These KPIs (Key Performance Indicators) tell you how well your business is performing, as well as where you should focus your efforts in order to do better.
Here are five key metrics that will help you make better decisions and take your business to the next stage of its growth.
Every good business needs a sound marketing strategy. How well your marketing performs will determine how many potential customers find you and do business with you. So it’s important to know what’s working and what isn’t. That way, you can focus your efforts and investment on areas where you’ll see most reward.
When it comes to marketing metrics, there are several key areas to look at, but one of the most important is digital marketing metrics because it has the potential to deliver the highest ROI.
Email, for instance, is one of the cheapest ways to market your business. However, simply sending out random emails isn’t going to elicit much success. You need to know how which email campaigns perform best by looking at open and click-through rates, conversions, unsubscribes and revenue per email. By carrying out A/B testing and segmentation, you’ll be able to see which campaigns work best.
You can do the same with social media. Fortunately, these platforms come equipped with tools that can help you see how well certain strategies are paying off.
Finally, your website is the core of all your marketing efforts, especially if this is where sales happen. By monitoring traffic and conversion rates, while making changes to landing pages and blogs, you can see what works best. And, of course, there is a range of useful measurement tools out there to help you do it, such as Google Analytics.
Customer acquisition and churn
It’s important to know how much it costs to acquire customers, especially if you’re targeting a number of different demographics or segments. This tells you what your ROI is and where you can win more business, more cheaply.
Knowing what your customer retention or churn numbers are, is equally important, as this is a key indicator of loyalty. Here, you should be measuring key customer retention metrics such as customer lifetime value. This lets you see how well you are meeting customer needs. Making adjustments to products or services can massively improve loyalty as long as you know how your figures change in response to adjustments. The ultimate goal is to identify and focus on your most rewarding audience.
The more you know about your finances and cashflow the better. Which is why KoalaPays has integrated a number of features into our payment solution to help you manage your income. Your company’s cashflow statement should tell you a lot about how the business is doing. This is where you’ll see all the details of your income and outgoings. As a result, you’ll know how much you have left to reinvest into the business.
On the flipside, it will also let you know if the company is losing money. In which case, you can put a remedial action plan in place as soon as possible.
How productive your employees are will have a massive influence on how successful your business is. And this simply isn’t about how much work they can get done in a paid hour. This is more about how talented they are, and how much they contribute to overall business success. For example, one employee might be able to turn out more product than the employee sat next to him, but whose products are the better quality?
Measuring productivity isn’t easy but it’s essential if you want to know that something is going wrong. It might be a lack of motivation or morale, or it might be that you don’t have the right employee incentives in place. Until you know where the issue lies, you can’t fix it.
Set clear objectives and goals for workers, carry out regular customer surveys to make sure customers are happy with the quality of your products, as well as the service they receive. At the same time, engage with your employees and make sure they have everything they need to do a good job and be happy at work.
Cost of revenue and profitability
Cashflow might give you a good idea of how your business is doing but costs of revenue can offer real insights on where you can take action to improve profitability. This is defined as the total expenses to make a sale. It’s the cost of producing your product, along with the business expenses and marketing expenses required to sell it.
Business owners are often so focussed on numbers of sales that they neglect this important metric. Aggressively reducing the costs required to make a sale can turn out to be more effective than making several extra sales. Alternatively, look at it as an easy way to boost profits without making extra sales.
All of these metrics allow you to evaluate the overall health of your business. Doing this regularly allows you to see what’s going right and where you can do better. The insights you gain along the way give you the information you need to make well-informed business decisions and adjustments that help your business succeed for the long term.