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9 Essential Metrics To Track To Reach Small Business Goals

by | Jan 25, 2023

Numbers are key to understanding your small business. While you may have an intuitive understanding of how well your business is performing, tracking certain metrics can help you fill in the details that really matter. If you don’t know the metrics that make up your business, you’ll have a hard time determining which strategies are working and how to make good business decisions moving forward.

By tracking metrics, you can catch onto trends in your business—whether good or bad—and make the right moves. Let’s assume you’re already tracking key numbers like revenue, expenses, and profits. That’s what you’re in it for, after all! The metrics we’re talking about today get more specific and provide finer detail. We’ll break down what these metrics mean and how they can impact your business.

 

1. Cash Flow

Cash flow represents the amount of money moving in and out of your business over a specific timeframe.

A positive cash flow means that more money is moving into the business than moving out. A negative cash flow means more money is moving out of the business than moving in. This is a key metric to track in order to understand your ability to cover expenses and flexibility to make new investments.

 

2. Budget vs. Actual

Compare your budget with how you actually spent money throughout the month. This helps you understand how realistic your budgeting has been and allows you to make necessary adjustments to align with actual expenses.

You will also be alerted to any areas with unnecessarily high spending that might need addressing. Staying on top of your expenses will allow you to cut costs and maximize your profits. Let your VA help with your bookkeeping and budgeting.

 

3. Average Customer Acquisition Cost

Your Average Customer Acquisition Cost reveals how much money your business spends to gain one new customer on average. This includes sales, marketing, and customer service costs.

The number is usually proportionate to the cost of your product or service. More expensive items or services will require a higher investment in customer acquisition. Compare this number with Customer Lifetime Value below to understand if your current business model is sustainable.

 

4. Customer Lifetime Value

Customer Lifetime Value tells you how much a single customer is worth to your business. In many cases, this number will work to emphasize how important it is to maintain great customer service so you can keep customers coming back.

Keeping one existing customer will always be cheaper for your business than trying to gain one new customer. This number might also inspire you to increase your customer base, but don’t let that get in the way of properly servicing your existing customers!

 

5. Average Monthly Leads

Understanding how many leads you are bringing in each month is a great way to analyze how well your sales and marketing strategies are performing. The more leads you bring in, the more sales you will make.

A drop in this number might alert you to ineffective marketing or sales strategies. It may also be a warning sign of a new competitor or other unfavorable changes in the market.

 

6. Average Conversion Rate

Average Conversion Rate can help you understand how many leads you need to gain a single customer.

Let’s say that for every 20 new leads that visit your e-commerce website, you make a single sale. That means your conversion rate is 5%—which is actually a fairly high number as far as lead conversions go. In this case, your goal for lead generation should equal 20 times however many sales you hope to make. To get deeper with this metric, try to understand why your customers converted by conducting surveys. With this information, you try to increase this rate by convincing more leads to buy.

 

7. Customer Retention Rate

The Customer Retention Rate represents how frequently customers stop using your product or services over a specific period.

This helps you understand more about your customers, especially when they are most likely to leave your customer base. That way, you can put effort into keeping them engaged during that risky period. Drastic changes in this number will alert you to problems with your sales or customer service.

 

8. Social Media Reach

For many businesses, Social Media Reach is a fairly accurate representation of your reach in the market.

While some businesses still benefit from traditional marketing like TV and radio ads, understanding your social media reach is a good way to measure the effectiveness of your digital marketing. This metric tells you how many people see or read your communications over a certain timeframe.

Many social media platforms have metrics available right on the platform, but you can also use tools like Hootsuite that aggregate your performance across platforms into one dashboard

 

9. Social Media Engagement

While reach tells you how many people have seen your communications efforts, Social Media Engagement gives you a picture of how excited your audience is about your brand.

Users won’t comment or share your social media content unless they like it and want to get behind your message. Engagement is also the best way to widen your reach. As more people interact and share your content, more new people will enter your brand’s orbit—which eventually results in leads and sales.

Get Help Tracking Metrics

Tracking your metrics only helps you if you have the time to review them and use them to make better business decisions! When you’re a busy entrepreneur, making time for this can be difficult. You’re already focused on running your business. Even with the many benefits of metric tracking, looking back at performance might not be your top priority.

Thankfully, with the help of a Virtual Assistant, you can always have this valuable information at your fingertips. Your VA can help track metrics for you and provide reports with the essential information. They can also help with other daily tasks like email and calendar management, giving you the extra time to review metrics and have a clear understanding of the state of your business.

Learn how a VA can help your business.

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