Every entrepreneur who ever started a business did it because they saw the potential for success. You are no different. When you hatched the idea for your start-up, a key ingredient in your passion and drive was an undeniable belief that you would find success — and not just modest success, but massive success. To make that dream a reality, you must step back, hold your business at arm’s length and ask yourself: “How successful is this product that I am building?” Just making a guess is not helpful when it comes to this vitally important question and can be downright harmful. You can monitor and evaluate individual aspects of your business by using metrics. Business metrics are quantifiable measurements that track the progress of specific aspects of your growth. Knowing the right metrics to pay attention to can clue you in on exactly how successful your company is. Here is a list of some of the most important.
Yes, you heard that right. The first step in knowing whether your business is successful begins not with the customer, return on investments or drop-rates, but on the people who work beside you and for you every day. There are many ways to build your employee’s investment in your company, but defining employee engagement and what works for your business is unique to the needs of your team. Is it a focus on continuing education and advancement that they are interested in? What about incentive programs and recognition for going the extra mile? Could it be that your employees want a financial stake in the company itself? Take a pulse on your own unique community of employees to find what incites the most excitement.
Second only to how engaged your employees are, an understanding of customer engagement is paramount in knowing how to best reach them. If your customers are engaged, they are tied to your process and excited to go along on the journey with you. If your customers aren’t excited to turn the next page on your story, you aren’t going to keep them for very long. One easy way to measure customer engagement is using social media analysis. Over the last several years, social media has become the king of customer engagement. It is the most effective tool you have to get your customers dialed in. The good news is that social media has built-in traffic analysis to illustrate both success and areas for improvement. There is an ever-growing list of platforms to engage with your customers on. Depending on your audience, Instagram, Facebook, Twitter or TikTok may be most effective in getting your customers to come along for the ride.
Another important metric that shows whether your business is hitting the right notes is customer satisfaction. If your customers walk away from an interaction pleased with both the product and the service they received, they are likely to become return customers. It costs much less to keep an existing customer than it does to acquire new ones. While it is easy to measure other quantifiable numbers like revenue, this metric cannot be overlooked. The easiest way to measure whether your customers are pleased with their experience is by using a CSAT (customer satisfaction) score. Poll your customers on their experience by using a scale range that you have created. It doesn’t matter what images you use (smiley faces, etc.) or how many numbers are in your range. Make it unique to you. After performing your poll, add up the numbers and divide by the number of respondents to give yourself an average customer satisfaction response. If this reveals a number that doesn’t represent your vision going forward, consider a change in employee training or product development.
Tracking your sales revenue is the best way to show how you’re stacking up financially. Find this number by taking the sales you make and subtracting the undeliverable products and the cost of returns. This number can paint an accurate picture of whether to make an adjustment like lowering your overhead cost. This cold hard number shouldn’t be looked at in a vacuum, though. Be sure to consider it in the bigger picture with your other metrics.
Customer Attainment Costs
“You have to spend money to make money” is an oft-quoted verse in the Bible of entrepreneurs. Gaining new customers is the reason you are in business, but each new customer you gain has a price tag attached. The customer attainment costs metric shows you whether customers are paying for themselves. If they are not or if your margin of revenue is too small, it might be time to scale back and see if that affects your customer growth. Don’t leave the success of your business up to guesswork. If you are aware of the right metrics to watch, you can get a clear picture of the direction you are heading. Knowledge is power, and you can use that knowledge to navigate your endeavor's bright future.