Many modern businesses track valuable metrics in order to analyze their overall performance and the effectiveness of their efforts online. Whichever activities your company is involved in that drives business goals, such as social media marketing, search engine optimization (SEO), content marketing and so on, you must determine if your efforts are driving the desired results.
Tracking valuable metrics and KPIs (Key Performance Indicators) will show you whether or not your strategies are performing well on the market. After all, your business success depends on your ability to capture the attention of your target audience and encourage them to make a purchase from you.
But which metrics should you focus on? Simply put, you must focus on metrics that bring value to your business and the metrics that portray your business growth. Therefore, here are a few metrics you should focus on to grow your small business.
Website traffic is one of the most important metrics you need to focus on. It indicates how your marketing strategies on various channels are performing at driving leads back to your website. The general rule of thumb is that the more website traffic you get the better chances you have of making a sale. However, that’s not always the case. A simple tool, such as Google Analytics can show you how much website traffic you have and from which source it’s originating from.
But just because your strategies are good at driving traffic to your website, it doesn’t mean your business is profiting from it. That’s why you must also measure the bounce rate. The bounce rate indicates how many website visitors left immediately after they’ve landed on your website. A bounce rate of 40% or lower is considered good for your business. Consequently, anything higher than that means your landing pages aren’t designed well enough to hold your visitors’ interest or encourage them to stay on your website.
The value of a customer
Making sales is crucial for every business that operates online. Sales generate revenue and profit for your business, helping it remain operational on the market. The metric you should focus on is how valuable customers are for your business. For example, customer acquisition costs (CTA) help you understand how much you must invest to acquire a single customer. That includes marketing, promotions, offers and so on.
On the other hand, another crucial metric is customer lifetime value (CLV). It shows how much revenue and profits your business gains from a single customer during their lifetime as your customer. If your CLV is higher than CTA it means your business is experiencing organic growth and that your customers see value in doing business with you. However, if this metric is low, it means your efforts aren’t good enough to retain customers. If you don’t know how to improve this metric on your own, you can always consult a business coach from Sydney who can help you better understand this metric.
Don’t focus on vanity metrics
Many businesses get sidetracked by vanity metrics. Although these metrics seem to indicate the popularity of your business and its visibility, they rarely influence your business growth. Vanity metrics, such as the social following, number of post shares and views, likes and comments etc. are good indicators that you’re able to engage your target audience, but that doesn’t mean you’re as efficient as turning them into leads or converting them into customers. For a lot of businesses, vanity metrics are important for various other efforts, such as email marketing, SEO and so on.
Businesses leverage social media to build brand awareness and extend their reach on the market. They also use it to gather relevant data about their potential customers, in order to craft more personalized offers and promotions. However, with the new privacy regulations from EU, obtaining sensitive information about customers may bring more trouble than it’s worth if you’re not careful enough. that’s why it’s important not to let vanity metrics mislead you and instead, focus on metrics that will help your business grow.
Measure your gross margin
Gross margin is essential for growing businesses. It indicates how much your business earns from each sales dollar. If your gross margin is high, you enjoy a good profit, which allows you to cover expenses and make important investments that will help your business grow further. What’s more, gross margin indicates the overall performance of your business and the efficiency of your business operations.
You can calculate your gross margin by determining your company’s total sales revenue, minus the costs of its goods that are sold, divided by the total sales revenue expressed in percentage. If placed in an equation, it would look like this: gross margin = (total sales revenue – the cost of goods sold) / total sales revenue. As an example, if your company’s gross margin is 50%, it means that you only have $0.50 leftover from every sales dollar made to allocate to operating costs.
Tracking metrics is crucial for growing businesses. The main reason is that metrics provide you with valuable information about your business performance and the effectiveness of your strategies. Without metrics to aid you, you have no means of understanding where your business is falling behind or why, nor means to make improvements when needed and help your company grow.
Author Bio: Emma is a digital marketer and blogger from Sydney. After getting a marketing degree she started working with Australian startups on business and marketing development. Emma writes for many relevant, industry related online publications and does a job of an Executive Editor at Bizzmark blog and a guest lecturer at Melbourne University. Interested in marketing, startups and the latest business trends.