Running any business is hard enough, but if you’re not measuring your progress, how do you know whether you’re really making any progress? Here are seven key metrics for your business:
1. Conversion Rate
The bottom line is always the bottom line, and if you’re not making sales you’re not really in business. So, to convert an expensive hobby into a business, we need sales. The easiest measure is simple profit and expense – how much did you spend to create a sale?
To go a bit deeper is to dig into your conversion rate. This tells you about the effectiveness of your communication whether it’s your advertising, your emails, your website, or whatever means you are using to put your products in front of potential customers.
Conversion Rate is the average number of transactions divided by total number of prospect visits. So, if you have 100 prospects open your emails and 3 buy, your conversion rate is 3%, which is the industry average.
2. Average Order Value
This is very easy to track and when you measure this you can easily track the progress of your business. This is not just a function of selling more expensive products; it is a function of selling more products to your customer base.
Divide your total revenue by the total number of orders to get your Average Order Value. You can raise this number with up sells, down sells, and bundling products.
3. Abandoned Carts
How many people are starting to buy, but abandon the sales transaction? 54% is the industry standard according to Forrester Research. You can complete more sales by making more time-based offers, up selling, and cross-selling related products.
4. Page Views
Attracting more customers starts with visitors. Whether they come through a search engine, social media, your advertising, or some other source, page views to your website are a measure of how well you are attracting potential customers.
You can increase page views to your website through Search Engine Optimization (SEO), search engine advertising, social media, email campaigns, and customized landing pages.
5. Customer Acquisition
How much does it cost you to attracts new customers? This is a simple metric that goes right to the heart of your bottom line. If you’re spending one dollar to earn two, three or more dollars, your customer acquisition costs are low enough for you to earn a profit. How much you spend to locate and secure customers is the very basis of your business.
Targeted advertising and marketing is one of the best ways to keep your customer acquisition costs low. Monitor all your efforts at acquiring new customers to determine whether your targeting is on target or far afield.
6. Page Ranking
Did you know that 93% of prospects start with a web search when investigating new products? 75% of those searching don’t scroll past the first page. You need to be on that first page!
How do you get there? First, one more stat: 70-80% ignore paid ads, so let’s eliminate this way of jumping to the top. This calls for SEO, which will increase your page views (see 4 above), and you need an effective content strategy to attract visitors to your website, which will also raise your page ranking.
7. Repeat Customers
Repeat customers save you money on advertising and marketing, and can talk up your brand to others. When you have loyal customers your bottom line will increase.
Here are two metrics on repeat customers: 1) 27% is the industry standard, and 2) 41% of sales from repeat customers is the industry standard. What this means is that 27% of your customers will buy other products from you and these purchases will contribute to 41% of your total sales.
Grow loyal customers and you will grow your business.
That’s seven metrics to watch as your business matures. What metrics would you add to this mix? As always, I welcome your comments below.