Business performance measurement is a critical task for a business owner. The old phrase “what gets measured gets managed” is true. When you can quantify results it becomes an easy task to develop strategies to improve those results.
That statement seems self-evident, but doesn’t really answer the question: what are the key performance indicators for my business?
The answer is unique to your business, your industry, and the stage of growth in the business lifecycle you’re currently in.
Since that is too evasive of an answer, let me suggest four areas within your enterprise that you should be using to measure business performance.
Top 4 Metrics To Measure Your Business Performance
- Marketing
What channels are you investing in? Do you have a way to monitor the actual leads and conversions from that channel? What is the return on your investment?While you should be utilizing multiple advertising channels to reach your ideal prospects, not all channels are created equal.For example, if you have a small number of visitors to your website each month it may seem like your retargeting investment is a waste of money because it is not generating a lot of impressions.However, if those impressions result in five prospects who returned to your website and became customers then is it really a poor investment?
The point here is that each channel needs to be evaluated against itself. Carefully track the numbers for a period of three months to establish a baseline. Then measure future campaigns against that standard. Don’t fall into the trap of comparing email open rates with Google Ads clicks.
- Operations
How well are you delivering your product or service? Are there bottlenecks in your internal processes that need attention? What do your customers say about your company? What can you do to make them more satisfied? - FinancialsMost of us as business owners pay close attention to this area. We have a pretty good awareness of our monthly statements and monitor weekly cash flow closely.But what about other metrics?
When we begin working with a client one of the first questions we ask is, “what is the acquisition cost of a new customer?” And “what is the lifetime value of a customer?” Most of the time the client is not aware of these critically important data points. The reason these are so important is the answers will tell you how much your marketing budget should be. (You can learn more about this concept here: https://vimeo.com/600195257)
- LeadershipHow effective are you at setting the direction of your business? Not just creating a list of goals or objectives, but sharing them with your key people and getting them excited about what can be accomplished? Can you delegate, or do you want to be involved in every aspect of the business? How well do you recruit, hire, and train new team members?
This ‘standing in front of the mirror’ exercise might be the most difficult of the four categories, but is certainly the most valuable for the growth of your business.
Measurement in business is essential. By carefully analyzing these four components of your business and creating key performance indicators for each, you will be laying the foundation for growth. You cannot scale a business without knowing your numbers!
