Running a business can be quite a hassle. Your business may be doing fine as it is but there is a lot of improvement you can get from knowing how well to evaluate what you are doing. In this post, we will talk about the business metrics that encourage growth in your business.
A lot of business owners and managers tend to micromanage so many things and so, the business growth is limited to their presence.
But it doesn’t have to be that way.
As a business owner, your job is to identify the key business metrics that matter the most to your business (that actually brings in the money), focus on that and don’t bother too much about anything else.
You see there are only 3 ways to grow a business and every single activity carried out in your business is connected to one of these 3 things:
- Increase the number of customers (i.e. get new customers)
- Increase the average transaction value per customer (i.e. get these customers to spend more)
- Increase the frequency of transactions per customer (i.e. get them to buy over and over again)
To really know the right time to hit the “scale-up” button, you need to keep a tab of key metrics and properly understand them and how you can use them to your advantage.
Whether your business is online, offline or both these are 5 business metrics you should pay attention to if you are looking to scale your business in 2020.
If clients have little or no engagement with your brand either online or offline, you are at risk of not getting any customer patronage. Customers need to know you, like you and trust you and this is built on the pillar of continual interaction with the marketplace. Engagement is done through the content you put out on different channels. It could be done through emails, social media updates, guest posting on influencer blogs, answering questions on relevant forums (Quora), podcasts, videos, and the list is endless.
So here are some of the metrics you can track and monitor to assess engagement are:
- Email Replies,
- Appointments, etc.
#2: Cost per Lead
Leads are people who have indicated an interest in what you have to offer and have given you their contact information with permission to tell them more.
The bottom line, leads are potential clients.
Every lead has a financial cost to your business.
You need to know how much it would cost you to get an interested person to engage with your business (i.e. a lead). When you know this, you are able to know how much you can invest in getting in more interested people, and ultimately, make strategic business decisions.
#3: Cost per Acquisition
Acquiring a new client is the most important part of your business.
There are numerous ways and sources to get these clients, and each source has its quality and cost.
The cost of getting a client through a newspaper ad is much more expensive than getting a customer through Facebook but the quality of a customer acquired through a newspaper ad might be much higher than that of Facebook.
The bottom line, know how much it costs you to acquire one client. Then, you can make strategic decisions and know what you need to acquire 2, 3, 10 customers.
#4: Conversion rates
Conversion rates cut across the board of every sale funnel you have set in place in your business. As the customer moves along the different stages of the customer journey, he is being converted.
Monitoring conversions shows you how well your activities are doing in moving the prospective customer from one stage to the next stage of your sales funnel.
Some of the most important conversation rates are:
- Lead Conversion Rate: What percentage of your visitors become leads?
- Sales Conversion Rate: What percentage of your leads become customers?
One look at your conversion rates and you will get a vivid picture of the growth potential of your business.
You can work on improving these conversion rates to seeing more returns in your business.
#5: Average Value of Transaction
This means you want to know and track how much on average a client spends with you on each transaction. When you know this, you want to determine how to steadily increase this average transaction value.
In other words, how do you get them to spend more with you each time?
But of course, the starting point is knowing what this number is first.
The ultimate goal of a business is to close a sale and the first sale should not be a one-off transaction but the beginning of a long term relationship with your client.
Ideally, every sale should cover the cost of all your marketing efforts and set the stage for a profit maximizer.
As a business owner, your role is to systemize your business to the point where you can take a look at the metrics and tell if your business is healthy or needs more attention.
And this gives you incredible insight when you’re deciding whether to scale or not.
What metrics do you track in your business?