Four Key Metrics That Will Assist You With Making Profitable Decisions
As a Bay Area Digital Marketing Agency, we use metrics to guide our decisions and how we deliver our services. Most businesses should be driven by metrics or key performance indicators. If not, your business is running you vs. you running your business! Analytics are the simplest way to manage strategy, clients, their behavior and movement within your sales funnel. From analytics to data to numbers — most of these metrics focus on growth.
However, data is nothing unless you use it as a tool to driveyour business. Therefore, every small business owner should know how to convert data into insights — and insights into action.
Below, we are listing a key set of metrics that can assist you with changing the way you are managing data so you can adjust accordingly and make profitable decisions. Remember though, you can’t expense your way to profit, so focus on driving more sales while managing the bottom line.
Every business should have multiple sources of revenue. If these numbers are changing, it can lead to potential problems. Remember, volume can hide a multitude of sins (expenses). Whether that percentage is based on revenue, consumer spending habits or other trends, it is important to take-action.
For example, if you are own an air conditioning business in the Bay Area and 75% of your revenue comes from new installation, 20% from service and only 5% comes from add-ons, it’s important to focus on narrowing the gap between these numbers.
Acquiring new clients has a metric named “client acquisition cost” which tends to be different. If your CAC is rising, you should be careful and see what is causing that increase. If you’re getting qualified leads and not closing them, then it could be a salesmanship issue. If not, then reassess your marketing spend.
An unwilling staff is another key sign that can have a negative impact on sales and profit. If your employees are frustrated and don’t feel a sense of pride or accomplishment in their work, it’s time to reassess. Ask yourself, “Is it the problem with the process, or is the problem with execution of the process?”
Every business owner knows that there are products that sell faster than others. The only time it really makes sense to have a slower moving inventory is when you are stocking up for seasonal or peak months. However, sometimes certain slow-moving products can indicate consumer behavior. Make sure to review your marketing and pricing strategy to prevent an even greater stagnancy in the future.