One big question that continues to come up from sole proprietors and small business owners is “How do I measure the success of my business?” Here at NetBiz, we get this inquiry daily from clients. Measurements of success aid in quantifying marketing dollars spent and new product development. These measurements also work to point out flawed marketing tactics. It’s never good to be in the dark when it comes to your business’s performance. There are a few stats or metrics that shouldn’t be overlooked. No matter what industry you’re in, these metrics will be valuable for measuring success.
1) Sales Opportunities
A sales opportunity is defined as a qualified sales prospect. This metric is dependent on some type of sales or marketing activity. Different types of sales activities will produce different types of sales opportunities. It is important to look at the quality and quantity of sales opportunities produced from a corresponding sales activity.
2) Lead Conversion Rate
The ability of a company to convert sales leads to customers is measured by the lead conversion rate. While the first step is capturing leads, the actions used to convert sales must be highly considered. This metric is calculated by the percentage of customers produced from the total number of leads. The sales process is essentially a funnel. Converted leads represent the bottom of the funnel.
3) Customer Churn
Customer churn (also know as customer attrition) is defined by the number or percentage of customers lost in a given period. Cancellations on a recurring service will be the most common activity attributed to customer churn. If your business has a high customer churn, improvements in customer service, product delivery, and customer interaction may help decrease the lost revenue.
4) Marketing Campaign ROI
ROI (return on investment) is calculated from the incremental sales volumes produced from an initial investment. With marketing, ROI is relevant to a specific campaign or overall marketing efforts. When considering this metric, define the specific scope of investment as it directly relates to sales. E-mail marketing, digital media buys, PPC, SEO and social media are common online marketing approaches that can produce a quantifiable ROI. It is beneficial to test different marketing methods simultaneously and evaluate which methods have the most positive effect on the overall ROI.
5) Revenue Growth
Growth in revenue is one of the most important and basic metrics that should be tracked by a business owner. This metric is also one of the most honest representations of marketing effectiveness. At the end of the day, if your marketing efforts can be quantified by revenue growth, you’ve done something right. It is calculated simply from the percentage increase in sales.
(Beginning Revenue – Resulting Revenue)/ Beginning Revenue