Important Metrics Every Business Should be Tracking

July marked the start of Q3 of 2019. We’re officially in the third quarter of the year. As a business owner, this is the best time for you to review the past two quarters, examine your strengths, celebrate the areas you’ve improved on and identify your weaknesses so you can work on them properly. The only way to do this effectively is by tracking the proper metrics. 

What are business metrics?

A business metric is a measure that can be calculated. Businesses use these to track and assess how they’re doing in different core areas. Smart business owners rely on metrics to measure their performance over time and see how close they are to achieving their set goals.

So what metrics should you be tracking?

Every business is unique, and thus the metrics that are important to you and your business may not be important to the next business owner. Also, you can’t just use one metric to measure your business. Here are some metrics you should start tracking.

  1. Sales revenue.

Why it’s important:

One way to tell the health of your company is by measuring how much money you’re making. A high sales number shows that people are interested in your products and your marketing efforts are effective.

How to measure:

To calculate your sales revenue, add up all the income you made from client purchases/payments and subtract any costs. 

Ways to improve:

To improve your sales revenue, you will need to make more sales. This involves other factors such as improving your marketing strategy, improving the product and offering discounts.

  1. Cost of customer acquisition 

Why it’s important:

This tells you how much money you’re spending to acquire new customers. It also shows how effective your marketing strategies are. If you’re spending 5000 naira to acquire a new customer who is only likely to spend 2000 naira at your company, there’s a problem you need to fix.

How to measure:

Add all the money you’ve spent on marketing within a specific period of time. Divide this amount by the number of new customers you got within the same time period. E.g, if your marketing budget for May was 100,000 naira and you gained 20 new customers, it means your cost of acquisition is 5,000 naira.

How to improve:

If you’re spending too much money on customer acquisition, it means that you need to redo your marketing strategy in order to make it cost effective or find ways to make more sales through existing customers.

  1. Customer loyalty and retention

Why it’s important:

One of the best ways to measure how good your product/service is by measuring the number of customers who return. Having loyal customers means that you’ll always make sales and you don’t have to spend too much money on acquiring new customers only for them to leave after making the first purchase. Having a high return rate also helps your business grow through word of mouth. 

How to measure:

This may remind you of math class, but it’s actually a really simple formula. 

Retention rate+ ((CE-CN/CS)) X 100

Where:

 CE= number of customers at the end of a certain period

 CN= number of new customers acquired during the period

 CS= number of customers at the start of the period

Ways to improve

The only way to do this is to improve the quality of your products, services and improve your customer service.

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  1. Staff productivity

Why it’s important:

Your staff’s level of productivity determines whether you will achieve set business goals or not. If they keep missing targets, you’re very unlikely to. Simply believing that your staff is doing what they’re supposed to do without having any data to prove it is unhealthy. You should track every single person’s productivity. The idea is to help everyone operate at the most optimal level.

How to measure:

Set key performance indicators for everybody. Assign roles and responsibilities to everyone. This way, you can easily track their progress by seeing whether they have achieved the goal or not. Doing this gives you valuable insight and helps you to find ways that each member of staff can become as efficient as possible.

How to improve

Boost your team’s morale by ensuring they feel like they’re an important part of the organisation, involve them in processes and respect them. Also, compensate them fairly.

  1. Website Traffic

If you don’t have a website for your business, you need one. We can help you set one up, just reach out to us and let us know what you need. 

Why it’s important:

It’s impossible to run a small business successfully without an active and attractive website. Not only does it help you build a brand, but it also helps you reach more customers.

How to measure:

Google analytics is the best way to track your website performance. It provides you with valuable insight including visitor’s location, how long they spend on your site and the pages they visited. 

Ways to improve:

Make sure your site is visually appealing. If you’re not satisfied with what you currently have, we can help you improve it. Just shoot us an email. You should also provide engaging content and keep promoting via social media. Improving your SEO is also another great way.  

  1. Social Media Metrics

Why it’s important:

Social media is amazing for growing your business. It helps you grow your audience and engage with your existing ones.  

How to measure it: 

Major social media channels have tools for analytics. This shows you how best to engage with your followers and shows you exactly who your customers are. You can also track the ads that you put up on the site and see how well they worked.

How to improve: 

Post the type of content that is valuable to your audience. Try not to be too salesy, actually, engage with them without shoving your product down their throats. Let it be organic. 

To get the full picture of where your business is at, you need to track various metrics and piece them together to form a whole. What metrics will you start tracking? Let us know in the comments! We hope that by Q4 you’d see a marked improvement in different key areas of your business.

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