As an operations consultant, business metrics and tracking performance are one of my favourite things to do and a task which really promotes business growth and reflection.
By knowing your metrics, you’ll gain confidence in your decisions, be able to follow the money and truly step into your CEO shoes.
Knowing your business intelligence isn’t just a job for your accountant. As a business owner it’s an important task and one you need to learn how to do well.
What are business metrics?
Business metrics are quantifiable measures that are used to track and assess the status of a specific business process.
You may have heard them called KPIs (key performance indicators).
Every business has measurable outcomes.
Business metrics indicate whether a company has achieved its goals in a planned time frame.
You will be able to measure KPIs such as how many sales you make from the amount of leads, or perhaps you prefer to look at feedback scores from past clients.
When we measure business performance, we are looking to compare month on month, year on year to achieve improvement.
Since every business is different, it is essential to establish specific metrics and KPIs to measure, follow, calculate and evaluate that are meaningful to you and your business.
Therefore, it is important to select the right KPIs for your business as they will form the foundations to your reflections, evaluations and even feed into your overall strategy for growth.
3 Key metrics everyone can track
Cost of Acquisition: The CAC is the expense incurred by a business in acquiring a new client. We usually focus on sales and marketing expenses- for example running Facebook ads.
Customer Lifetime Value: The CLV shows us how much a customer is worth to us financially and if the customer purchases from us again and again. It’s best used in conjunction with the CAC.
The Net Promoter Score is a score that tells you how much your customers like you and gives you insights into whether or not they are going to stay as customers. It’s for business owners who want to measure and understand how good or bad their customer relationships are and how their customers’ loyalty correlates with the growth of the company.
How do I track business metrics?
Pen & paper, spreadsheets, a fancy piece of software… it doesn’t really matter in the first instance so long as you’re doing it.
It’s incredibly important to know that our clients are generating more income than it costs to acquire them, or what our clients truly rate our service.
If you want something free and easy, use Google sheets or Excel, so you can start to see a pattern- you can even turn your yearly numbers into a graph to see the trends.
Get your hands on instant-access metrics tracking, lead management templates, checklists for service providers and SO much more inside the Service Pro Toolkit
