How do you know if your business growth is going the way you want?
You need objective data to tell you whether or not your business growth plan is working or not.
It is important to identify exactly what you need to do to take your business to the next level.
Here are the five essential metrics you need to track.
Today’s technology makes it easier than ever to track these metrics and do it yourself in-house without hiring an analyst. Google Analytics offers a robust array of metrics and is free to use.
There are also paid software programs you can use that automate calculating the data you need to help you plan and measure your business growth.
1. Return on Revenue (ROR)
The revenue return rate is how much profit your company is making after expenses are subtracted. Take your total income and subtract your operating expenses. The calculation must include day-to-day expenses, as well as expenses that aren’t as easily seen (such as rent and office supplies) and non-cash factors like inflation or depreciation of properties.
2. Run Rate
The is a little known but very important metric for your business growth.
The run rate is a calculation of future performance based on present performance. If you have two years of data, calculate a monthly average. Then, if you’re looking at the next year ahead, multiply this by 12. Use as large a sample of past data as possible.
3. Average Customer Spend
Your average customer spend tells you how much each customer buys from you. It’s calculated by taking your total revenue and dividing it by the number of current customers you have. This metric gives you an indication of how your company is performing.
4. Customer Acquisition Cost
This metric is the cost of convincing a potential customer to buy your product or service. It tells you how much your sales and marketing efforts are paying off, and what resources you need to convert leads into customers. You can use this to predict your future finances as you continue to manage and measure your business growth.
5. Customer Retention Rate
The customer retention rate tells you what percentage of your customers stay with you and buy again. It costs much more to gain new customers than to keep existing ones. If your rate of retention is low, your business is losing money. Low customer retention means you need to step up your efforts to engage and offer continuing value to your audience.
6. Return on Advertising Spending
This metric looks specifically at the cost of advertising and the amount of revenue it’s earning you. It tells you whether your advertising spending is paying off or not. If it’s not, you need to consider more effective or less expensive methods.
Metrics help you assess your progress, but if you really want to see growth, you should set goals and timeframes for achieving them. You can then make changes and tweak if you’re not seeing the results you want.
Do you want to know how to achieve the business growth you desire and reach your goals?
Then check out my Business Growth Fundamentals Checklist and BONUS 1-Page Cheatsheet
6 Ways to Jump Start Your Business Growth