Asides increasing sales, there are two things that are foremost on the mind of every entrepreneur—Business Growth and Success.
Business growth is a constant landmark for any business. It is relative and as such, differs from business to business. However, every business that aspires to be successful must monitor their growth by tracking specific metrics.
Getting to know how well your business is doing can give you insights on what strategies to change and which to maintain. More so, if any aspect of the business is lagging, metrics will help you to not only identify them but determine what and by extension, how to improve in those areas.
What Are Metrics?
Metrics can be defined as values that marketing teams or business owners use to track the performance of their marketing campaigns or strategy.
One of the most difficult things about collection of data for your business is that it can be hard to choose which ones are most important to track at any given time and should be focused on and which ones are not so important at the time.
Below are a few performance metrics that you can use to effectively track your business growth.
Some Fundamental Data Metrics That You Can Use For Your Business Growth
Lately, business people use a lot of tools and platforms in marketing their products or services. Tracking the results manually and individually can be time consuming and challenging hence the need to use certain metrics that would make getting these results easier and faster. Here are some important metrics for effectively tracking business growth:
Website traffic can be broken down to mean the number of visitors that your website receives. In measuring this, you get to know how many people visit your website and from this you can measure the growth.
Some ways to track website traffic are:
- Using various available tools which include Google Analytics and StatCounter etc.
These tools show you the number of people that visit your website and also show the number of people that visit each page of your site and you can use this in the determination of what people find more interesting on your website.
Conversion rate can simply be defined as the percentage of visitors to your website who complete a desired action.
This metric is easily used in determining the effectiveness of your marketing strategy.
It is also a very important metric because it can be used to determine what content type has more effect on your audience (for content marketing).
For example, you have two articles;
- How to be a blogger.
- How to cook fried rice.
After carrying out your metric analysis and you notice that the conversion rate on 2 is way higher than that in 1, then you know that you will have to create more content in the categories of 2 and then refine the contents in the categories of 1.
Customer Acquisition Cost:
Customer Acquisition Cost (CAC) is an important metric that helps you know and understand how much money it costs or will cost to get new customers and how much revenue it can generate over time.
The formula used in calculating customer acquisition cost (CAC) is:
A + B ÷ C = CAC
A= Your sales and marketing expenses in the period under review.
B= Any other costs associated with acquiring new customers which may include product development or employee training.
C= Number of customers acquired in the period under review.
CAC= The total amount of money spent to acquire a single customer.
Retention rate is simply the percentage of customers who remain active with your company over a given period of time.
There are a lot of ways to calculate retention rates but the most common method for calculating retention rates is to divide the number of customers that are still engaged in the product or services by the total number of users at any given time, then dividing that result by 100.
Having a high retention rate can be used in the determination of future growth and can be used to show that what you are doing is working.
Cost Of Goods Sold (COGS):
Cost of goods sold (COGS) is the cost of the items you sell. This includes everything from materials to labor, plus shipping and handling fees. In selling any item or offering any service, it is important to know how much production costs.
In the calculation of COGS, you are to add up all the expenses associated with creating such items in your inventory.
Expenses can include raw materials, cost of labour and even rent/lease fee, cost of machinery etc.
Average Order Value:
This is the average amount of money spent per customer. It helps you see how much customers are paying for your products or services, and also to know if it’s increasing or decreasing over time. If your average order value keeps increasing, that means you’re getting more customers to buy more from you.
Lifetime Value Of A Customer (CLTV):
The Lifetime Value of a Customer (CLTV) can be defined as the total revenue generated from a customer over the entire period of their relationship with a company. It’s important to understand that the lifetime value of a customer doesn’t just mean how much money you’ve made from transacting business with them; it also captures what value your customers bring to your business—and if they’re worth keeping around.
The lifetime value metric can be used as part of different types of analyses which include:
- To determine if there’s room for growth in your business model or strategy.
- To see how well past investments have paid off for each segment of customers within an organization.
This is a critical part of business growth and success. If an employee feels like they matter to their company then that employee has the potential to be more productive and loyal, which will in turn help you grow your business by attracting better and more customers.
To measure employee satisfaction, do this:
- Ask employees how they feel about their jobs
- Ask them if they would recommend people to work there, or if there are any aspects of working here that bother them.
Employee satisfaction is one of the most important metrics for business growth and it can help you determine if your employees are happy with their job and if they are not, it will help you to know how best to make it better.
The best way is by asking them a few questions directly. Questions like:
- “How would you rate our performance on this project?”
- “What would make this better/different?”
If they respond with words like “Better,” “Different,” or “More fun”—you know there’s room for improvement!
This can be used as a guide for how well your company is doing, and they give you a way of communicating with staff members about what’s going on in their lives.
Final Thoughts on Important Metrics to Track for Business Growth
These metrics are important to help you keep track of your business growth and while it can be tempting to focus on how your company is doing in relation to the competition, it is important to not forget the metrics that will help you see where you really stand.
By tracking these key metrics and using them as a baseline for measuring progress over time, you’ll be able to stay focused on what matters most: improving your overall business and growing in the process.