Measure & Test your way to excellence... #42
- Adrian Dionisio - business737 owner
- Nov 19, 2021
- 6 min read
Updated: Apr 8, 2024
Why measure & test?
Measure and test your business activities so that you can make well informed decisions. Without measuring and testing, your decisions will be based on assumptions and speculation. Go beyond guessing and hoping. The results of your tests and measurements will guide you through important decision making processes. There will be significant improvements when you have a greater understanding and insight into the activates within your business.
Do you know where your customers come from? How effective are your marketing campaigns? What about your sales process? What needs to be improved? What activities need to be stopped? Perhaps your conversion rate is high but your leads are few. Maybe it's the other way around Maybe you're doing well in both lead generation and conversion, but you're not selling enough high priced items. This is the reason why we measure and test, to answer questions about performance and to allow you to make informed decisions moving forward.
Look at your numbers
One of the most important things to do with your business is to continually track the numbers, no matter what business, what industry. These numbers can be used to determine if your business is operating as you intended and if the results are sufficient. Ultimately your business must be profitable and bring in enough money to justify the time and energy you are investing.
Financial analysis can be used as a foundation to make decisions such as how to allocate money, time and resources. Accounting ensures data used for finance decisions is as accurate as possible. I would encourage everyone to be involved with their business accounts where possible. It will give you greater control and understanding when it comes to decision making in your day to day business activities and operations. Click here to read more
Look at your customer
The more you know about what your customers need, the easier it’ll be to handle increased numbers of customers. To capture customer feedback, you can use sales data, complaint forms, questionnaires and social media.
Collecting feedback from customers helps to identify where improvements can be made to your products or services.
The more you can provide a unique valuable experience for your customer, the better for your business. Your business will grow when you pay close attention to your customers and their needs. If you make people happy to do business with you, they will want to do business with you regularly.
With this in mind get customer feedback to gauge how they feel about your business. There are countless ways to measure and test customer satisfaction. You can create communities, generate surveys, offer rewards for feedback, run contests and so forth. Getting feedback from your customers will be easy as long as you implemented a structured process.
Remember that reputation spreads. Happy customers will become your best recruiters and will do your advertising and marketing for free! Word of mouth recommendations and positive reviews are the best form of advertising that exists and this is why happy and loyal customers are the most important. (Read more here)
Performance Indicators
What exactly are your trying to achieve? Know what you want to achieve and then find was how to measure it.
Lead generation
Increasing sales
Better customer service
Increasing profit margin
Increasing production efficiency
Capturing bigger market share
These are all examples of certain things you may want to achieve within your business. From these goals you can develop Key Performance Indicators (KPIs).
The KPIs help you measure performance against the goals you’ve identified.
Choose KPIs that mean something to your business, that can be measured and provide outcomes to achieve your goals.
Any KPI should include:
A Measure – Every KPI must have a measure. The best KPIs have more expressive measures.
A Target – Every KPI needs to have a target that matches your measure and the time period of your goal. These are generally a numeric value you’re seeking to achieve.
A Data Source – Every KPI needs to have a clearly defined data source so there is no grey area in how each is being measured and tracked.
Reporting Frequency – Different KPIs may have different reporting needs, but a good rule to follow is to report on them at least monthly.
Examples of Sales KPIs
Number of New Contracts Signed Per Period
Monetary value for New Contracts Signed Per Period
Number of Engaged Qualified Leads in Sales Funnel
Hours of Resources Spent on Sales Follow Up
Average Time for Conversion
Net Sales – Dollar or Percentage Growth
Examples of Financial KPIs
Growth in Revenue
Profit
Net Profit Margin
Gross Profit Margin
Operational Cash Flow
Current Accounts Receivables
Examples of Customer KPIs
Number of Customers Retained
Percentage of Market Share
Net Promotor Score
Average Ticket/Support Resolution Time
Examples of Operational KPIs
Order Fulfilment Time
Time to Market
Employee Satisfaction Rating
Employee Churn Rate
Examples of Marketing KPI
Monthly Website Traffic
Number of Qualified Leads
Conversion Rate for Call-To-Action Content
Keywords in Top 10 Search Engine Results
Blog Articles Published This Month
E-Books Published This Month
Examples of Profitability KPIs
Operating margin
Gross profit margin
Net profit margin
Return on capital
Example of Employee Performance KPIs
sales per employee
contribution per employee
profit per employee.
Examples of Online Media KPIs
Unique visitors
Page views
Share ratio
Social referral growth
Time on site
Top metrics to measure your business performance
1. Sales Revenue
Tracking your sales revenue will tell you many things about your business. It will help you gauge people's interest in your business. It reflects the success of your marketing and sales activities. It also provides some sort of benchmark of your performance compared to your competitors.
2. Customer acquisition Costs (CAC)
This is the cost of convincing a potential customer to buy a product or service. It is calculated as sales and marketing expenses divided by the number of new customers. Understanding CAC can help improve marketing return on investment, profitability and profit margin.
CAC is a key business metric. Many companies fail because they do not fully understanding their customer acquisition cost. You want your CAC to clearly show that marketing and advertising are paying for themselves. If they aren’t then things need to change. Analyse the ROI from your different engagement channels (social media, SMS, email, etc.) to identify what’s working and what isn’t.
3. Profit Margin
This is the difference between what a business makes minus the costs, expressed as a percentage. Ideally a business will want their profit margin to be as high as possible. The higher the profit margin, the stronger the business.
Profit Margin is important because it shows the general health of a business. It gauges the degree to which a company or a business activity makes money. It is very simple to calculate profit margin and very important for any business to be aware of their profit margins when it comes to decision making, strategies and planning.
4. Customer Churn
This is the percentage of customers that stopped using your company's product or service during a certain time frame . You can calculate your churn rate by taking the number of cancellations over a specific period and dividing it by the total number of customers over the same period, and then multiplying that by 100. Reducing churn is crucial for business survival because acquiring a new customer can cost 5 times more than retaining an existing customer. Keeping a close eye on this metric helps you take action before things get out of control.
5. Employee satisfaction
Employees are a company's most valuable asset because they determine the organization's overall success. That's because when employees are happy, they tend to be more productive, which then contributes to the company's profitability. By regularly measuring employee happiness through feedback and surveys, you can ensure that team members are satisfied with the company and its role.
6. Customer Engagement
Looking at Customer Engagement can allow for opportunities to improve your offering and customer service (and, in the process, scale your profits upwards). For instance, you might want to work out how your customers prefer to interact with your business. To do this, you could compare social, email, mobile and website engagement to gauge which channels (e.g. Facebook or SMS) are providing the most value.
You can also measure this metric through customer feedback. Surveys, quizzes, and polls excel at helping you understand your customers’ likes and dislikes. Do they enjoy daily communication? Do they like promotions over helpful blogs? Gathering this intel teaches you how to adjust your approach to get the most out of your marketing efforts.
7. Website traffic
Measure the number of visitors to your website within a specified period. This will give you an idea of the effectiveness of your marketing efforts. There are many tools available that allow you to track your website's monthly traffic in addition to the sources of these visits. This data allows you to understand how people are finding your company and site. You can improve your website traffic by:
Increasing the budget for marketing and advertising.
Improving the site's SEO.
Enhancing the company's social media presence.
Securing press coverage.
When you test and measure your business you will have a better understanding of your strengths and weaknesses. It will give you a better awareness of your market and enable you to find new business opportunities. Understand how to correctly review and assess your performance. Learn how to make the most use of this information. It will set the foundation for the growth and prosperity of your business.
Comments