All companies face progressing industry dynamics, competition, and changing consumer demands. This makes it essential to measure a company’s operational progress. Business operational metrics also help pinpoint where opportunities and challenges exist.
Today, companies need to monitor and track their performance effectively and leverage analytics to grow their businesses. Below are essential business metrics you can use to gauge your company’s success.
1. Sales Revenue
Your company’s monthly sales revenue reports show whether customers are willing to purchase your products or services. It also shows the effectiveness of your marketing efforts. Sales revenue metrics can also show whether your competitor is doing better than you.
When creating a sales revenue report, remember that the results may be affected by numerous factors. Such factors include previous marketing campaigns, changes in the market trends, and competitive actions.
You can calculate your company’s sales revenue by adding up all the income from product purchases and subtracting the cost of undelivered and returned products.
Analyzing your sales revenue metrics will help you find ways to increase your company’s sales. You can increase your sales by hiring new salespeople, expanding your marketing undertakings, and offering discounts to your customers. Increasing your sales should be a long-term plan instead of a temporary and quick boost.
2. Net Profit Margin Metrics
This is a measure of how efficiently your company is making profits. Profit margin metrics should be measured against the sales revenue. This metric tells you what percentage of every dollar received translates to profits.
Analyzing net profit margins is the best way to predict your company’s long-term growth. It also allows you to see whether your profits surpass the cost of running your company.
To calculate your company’s net profit margin, take your monthly revenue and subtract the cost of running your business. These sales costs include the marketing, delivery, and product purchase costs.
Increasing your business’s revenue will improve the net profit margin. The fastest way to do this is by selling more products and increasing the price.
You can also improve net margins by lowering your production and sales cost. However, ensure you maintain your product’s quality to keep up with competitors.
Improving your business’s net profit margin requires a long-term strategy and detailed marketing research. However, you can’t do both of these actionable insights overnight.
3. The Cost of Acquiring Customers
Do you know how many trivial things contribute to customer acquisition? Your company’s marketing analytics will help you calculate the customer acquisition cost (CAC).
To calculate CAC, divide the total amount used to acquire your new customers within a specified period by the number of new clients.
For example, if you used $4,000 on marketing in January but only acquired 40 new customers that month, your customer acquisition cost will be $100.
The customer acquisition cost should be measured in comparison to the customer lifetime value (CLV). If you used $100 to acquire a new client whose CLV is $790, that’s quite a sensible transaction.
Evaluating the CLV of different customer sections will help you understand how the segments work. You can pinpoint which components bring in more profits. That will help you avoid spending money on clients who are difficult to convert and focus your energy and budgets on more rewarding customers.
4. Monthly Qualified Leads
As your business develops, you will allocate more resources in sales and marketing. Later, you will have dozens of new leads every month. However, most of these leads may not convert into customers.
For this reason, every business needs to measure their monthly qualified leads. This metric will help you know whether your marketing strategies are targeting the right markets. To increase your number of monthly qualified leads, you must target markets with the highest conversion potential.
A lowered number of qualified leads means your company has to re-evaluate its sales strategy and marketing campaigns. Leads can be categorized into three groups which include:
- Marketing Qualified Leads (MQL)
- Sales-Accepted Leads (SAL)
- Sales Qualified Leads (SQL)
The best way to increase your leads is by targeting a niche audience with the highest potential to become clients. Most businesses make the mistake of trying to market their products to every consumer in the world. This can be pretty expensive and may not produce satisfactory results.
5. Website Traffic
The most significant indicator of business success is monthly website traffic. When people know about your products and services, they are more likely to check out your website. According to statistics, over 90% of websites don’t get organic search traffic.
When tracking your monthly website metrics, ensure you measure against your marketing KPIs. You can do this by using free analytics tools like Google Analytics to track your monthly progress. Web traffic analytics will also help you know your primary traffic sources and how people find your website online.
Remember also to measure your site’s page views and page visits. Unfortunately, most people don’t know the difference between pageviews vs visits.
Pageviews are the total number of times a visitor views your site. This metric includes repeat visits and page reloads. On the other hand, page visits are the total number of times visitors come to your page, including the number of repeated views.
You can improve your website traffic by increasing your marketing and advertising budget. However, there are more budget-friendly and efficient strategies such as using social media, free press coverage, and SEO to bet on search engine traffic.
6. Potential Business ROI
Estimating your return on investment from your business development rep (BDR) activities should be a top metric measure. The minimum ROI you select will depend on the size of your company and your industry.
Start by aligning with industry standards and researching to understand what business benchmarks are there. This research will also help you gauge these benchmarks and choose a goal that’s relevant to your team’s bottom-line. Choose realistic ROI numbers to avoid setting unrealistic targets.
Measuring your BDR’s return on investment will help you know how ready and qualified your team is to handle new leads.
Start Using Your Business Metrics to Grow Your Brand
Every company’s goal is to sell high-quality products and services that fulfill their customers’ needs. To ensure your company is on the right path, start tracking your business metrics and measure your progress against your business KPIs.
Use the above tips to grow your business by utilizing the insights gained from business metrics. For more business tips, check out other posts on our blog.