Are You Using The Right Metrics To Track Your Business?
Business metrics help you track productivity and performance – they can point to improvement areas and help guide your business growth.
“Key metrics, also known as key performance indicators (KPIs), are integral to the success of your business,” says SaaS marketer Michael Keenan in a blog for Cyfe, an LA-based software company known for its business analysis app.
Tracking metrics can lead you to insights that help boost your bottom line, Keenan adds. But watch what you’re measuring, he says.
“Your business isn’t one dimensional – getting an accurate picture on what’s really going on means measuring multiple metrics and observing how they affect each other. So you can understand exactly what is and isn’t contributing to success,” writes Keenan. “Otherwise, you may make poor decisions that undermine your performance.”
Take a closer look at how the right metrics can help you track financial performance and productivity, and help identify ways your business can be more successful.
Tracking Sales Revenues
A key metrics, sales revenues is a measurement to track your financial performance, and provides other valuable insight into your business.
For example, your month-over-month and year-over-year sales revenues tell you how interested people are in purchasing your products or services, and if your marketing efforts are paying off, Keenan says.
Two key metrics every small business should use involving your customers: engagement and acquisition.
Customer acquisition is basically the expenses related to acquiring new customers.
“Business owners should regularly work to understand the average cost of acquiring a certain type of customer relative to the lifetime value of that customer,” says entrepreneur David Brim, founder and chief strategy officer for Bright Impact, a consulting, software and fund administration company.
“Then work to reduce customer acquisition costs by improving marketing while determining ways to retain or upsell existing customers to increase customer value,” he says in a Forbes Finance Council post.
One way to track customer engagement is by comparing social, email, mobile and website engagement to see which channels 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,” says Keenan in the Cyfe blog.
Metrics For Virtual Work
If you have employees working virtually or on a hybrid schedule as a result of the coronavirus pandemic, you’ll probably need to measure productivity differently than before.
This new work model – called “distributed” – calls for businesses to rethink how they measure work efficiencies and employee engagement, according to Rita Selvaggi, CEO of ActivTrak, a workforce productivity and analytics software company.
“A distributed work model requires a new set of productivity metrics that provides visibility into not just when an employee is working but how they are working, the operational result of their actions and existing friction in process or technology usage that must be addressed,” she writes in a Forbes Technology Council blog.
According to a 451 Research report, key productivity metrics for a distributed business include measuring time spent on collaboration and manual tasks. The report also suggests businesses look at how many times an employee switches between different applications.
“This new way of working requires new productivity metrics to identify when employees are doing well or to signal when they — or the processes and technologies they rely on — need further attention,” Selvaggi says.
Tracking employee productivity is a vital financial metric for a small business, says Chris Tierney, partner at Moore Colson CPAs and Advisors.
“Employee value generation is critical,” Tierney says in the Forbes Finance Council blog. “You know what people cost—are they generating enough value to justify these amounts? Too often, employee productivity is not monitored.
“Owners look at the big picture and don’t drill down to the employee level to see if people are generating a positive return. Employees tend to be the most valuable and expensive asset, so see if they’re worth it.”