Business metrics and analytics are an important part of your business. After all, the only way to know if you’ve achieved your business and marketing goals is to track and analyze the data. With each area of your business, you’ll want to take a few steps to create metrics for that area.
For example, with email marketing you’ll want to know how effective each email message is and how your campaigns change over time. This handy business metrics checklist will help you organize your systems. It will also track the information that matters to your business.
1. Sales
Sales may be one of the most important business metrics to measure. At the very surface level it is also one of the easiest to measure. You simply take a daily, weekly, monthly, and/or quarterly look at income.
* Don’t forget to deduct any returns. Ideally, the fundamental information that you want here is to see your sales gradually increasing. However, there are other components of sales to consider measuring such as:
- How sales correlate with ad campaigns
- How sales correlate to seasons or holidays
- Price changes/promotions/sales
- Cost of sales (do you have to spend more to make more?)
- Other__________________
* Identify and implement a sales metric system. Look for software and technology that support you to quickly and easily see your sales numbers in real time.
* Create a system to routinely analyze your sales data so you can adapt your supporting sales efforts as needed.
2. Measuring Customer Loyalty and Retention
I’m sure that you already know it costs more to get a new client than it does to keep the ones you have. Customer loyalty and retention therefore, are important metrics to stay on top of.
Consider measuring the following:
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- Repeat purchases
- Upsells
- Timing of repeat purchases
- Marketing content that generates repeat purchases
- Engagement on social media as it relates to repeat purchases
It can involve a combination of business metrics. For example, if you’re measuring social media and repeat purchases, then there are two components to that dataset.
There are a handful of ways to directly measure loyalty and retention. They include, but are not limited to:
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- Customer Surveys
- Direct Feedback At Point Of Purchase
- Purchase Analysis
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3. Cost of Customer Acquisition
Cost per acquisition (CPA) is a business metric that shows you how much it costs you for each new customer or purchase. It basically tells you how effective your marketing and advertising campaigns are in terms of sales.
The metrics is calculated this way: divide total acquisition expenses by total new customers over a given period. Like many metrics, you’ll want to create a solid system to measure the data. You’ll also want to create a structure to routinely review the information. Over time you’ll want to see your costs reduce as more and more people become aware of your brand.
4. Overhead Costs
Like sales, this is another system that needs to become part of how you manage your business. It’s essential that you know how much you’re spending each month. Your overhead costs are costs that don’t change. They’re fixed and if you don’t track this method carefully, you may find that you have cash flow problems. That is the fastest way to lose a business. Your accounting or bookkeeping systems should include a reporting function to help you track and assess this metric.
5. Click Through Rate
We’re talking about basic analytics or metrics as they relate to your various marketing channels and efforts. Your CTR (Click Through Rate) measures the number of people who saw your ad or marketing piece and clicked through to your site.
It answers one piece of the puzzle as you determine the effectiveness of a particular marketing piece. Many marketing channels provide the analytics for this metric. For example, your autoresponder will tell you how many people clicked on the link in an email. Your website analytics will tell you how people found your website.
6. Cost Per Click
CPC measures how much it costs to get your prospects to visit your site through a click. Instead of measuring the number of clicks, you’re measuring the cost of those clicks. It’s calculated by dividing your total advertising cost by your CTR.
7. Conversion Rate
This metric measures the percent of people who visited your website and made a purchase or signed up for your offer. It’s calculated by dividing your CTR by the number of registrations or conversions.
8. Set Up Your Systems for Business Metrics
Metrics are relatively easy to manage once you’ve created systems. Your existing accounting, analytics, and marketing channels should provide much of the data that you need. You’ll need to set up the rest. You’ll also want to make sure that you’re reviewing the information on a regular basis. After all, a metric doesn’t do you any good if you are unaware of it. You want your metrics to:
- Focus on metrics that provide direct value to your customers or that help you improve your business.
- Focus on metrics relevant to your company’s mission, vision, and goals.
- Choose metrics that provide useable information that supports you to make knowledgeable decisions about improving your business.
- Ensure your metrics measure performance across time and identify trends.
Use this checklist to help you build a stronger business. The more information you have, the better your business decisions can be.
