Each area of your business has key markers that will help you see if you need to give more attention to one segment of your business than another. As your business grows, you’ll easily be able to spot weaknesses and fix them before they become catastrophes.
There are about 30.2 million small businesses in the United States, and the economy is growing at a rate of about 3.4 percent. However, not every business that gets started thrives, and each year thousands shut their doors for good.
If you want to ensure your success as a small business owner, you must stay on top of different areas of your business and carefully measure what’s going well and what isn’t.
Here are four metrics you should pay close attention to moving forward:
Customer Acquisition Costs
In order for your business to grow, you need to find new customers while keeping your current ones. However, you also need to carefully monitor how much it costs on average to attain a new client. The more you can reduce your spending in this area, the more profit you’ll make or the more money you’ll have to commit to acquiring even more clients.
Tracking online marketing is usually pretty straightforward. You can easily see the return on investment (ROI) on ads or marketing campaigns by creating different landing pages and tracking where visitors come from and who purchases or converts.
Tracking offline acquisition costs isn’t always as easy. For example, if you place a newspaper ad in your local paper, how can you tell who read the ad and acted on it? One method is using a discount code so you know where they saw your ad and what brought them into your store. You might not be able to track every marketing effort, but the more you can track, the more you can lower your overall marketing expenses.
Retention
Even though it’s important to attract new customers, you also need to keep the customers you currently have. Studies show that acquiring a new customer is as much as seven times as expensive as keeping one you already have. Current customers also tend to spend more per transaction.
Your loyal customers can be your biggest cheerleaders, telling others about your brand and sending additional business your way without any extra effort on your part.
Track how many customers stay with your brand and at what point they seem to exit. If you notice they only order from you once, you can send out a coupon to customers after their first order, offering them a special deal to sign up for a subscription or place another order. Make sure you offer an incentive to get on your regular mailing list so you can reach out over and over again.
Website Bounce Rates
How “sticky” is your website? If visitors land on your page and leave immediately, not only are they not engaging with your site, but you may also be driving the wrong audience to your page. Tracking your website bounce rates is quite easy. You need to sign up for a Google Analytics account and link it with your website so you can track how different pages are doing. Once you see where people stop engaging with your site, it’s easier to tweak things and improve your conversions.
You can also look at heat maps for your site to see where users are spending the most time and what they are clicking on, and to eliminate things they don’t seem as interested in. Focus on your main goal for your landing page and cut anything that doesn’t move users through the buyer’s journey.
Net Profit Margin
Just tracking your sales isn’t enough. You have to know how much profit you’re actually making on each sale. You might discover that a product or service actually costs your company money.
No matter how popular that offering might be, if it isn’t making you money, it should either go or you should raise the price. At the same time, you must remain competitive with rivals who might buy the item in larger quantities and get a better price on it.
Analyze Everything
These are just four of the main metrics that will help you track the overall health of your business. However, if you want to remain profitable for the long haul, you must get a handle on every aspect of your company and find small ways to improve every week.
With a little attention to detail and some in-depth analysis, you’ll be able to spot trouble areas before they derail your business and turn them around into successes.
