What are the Important Metrics Should You Focus on to Grow Your Small Business?
When you are looking to grow your small business, it’s necessary to monitor what strategy works and what doesn’t. It’s probably one of the least interesting parts when running a small business.
But it’s very important because if you don’t know where to focus, you won’t be successful.
Although revenue seems to be the most important metric, you should also pay attention to other factors that demonstrate how your business is doing. Track what the audience likes, maintain and improve your visitor numbers and attract more funds.
After all, you always have to adapt and change your business model to succeed. Here are 13 key metrics to focus on to grow your small business.
What are the Most Important Metrics for Small Businesses?
The essential metrics for small businesses are related to marketing and sales, awareness, retention, and consideration. Each system has smaller metrics that can be focused on improving certain key aspects of your business and the way it presents itself to the public.
Let’s see why each key metric matters and how they can be used to your advantage.
Your marketing performance is one of the most important aspects of your business. It consists of metrics that, when verified, show you if your marketing strategies work.
They’re obvious aspects of your business. But it’s worth talking about them, especially when you’re trying to improve and grow your small business.
Why Revenue Matters
It’s the first thing you look at when you want to see how your business is performing. A good marketing campaign can generate clicks. But when it doesn’t bring in revenue, something is not working.
Monitor revenue to see where the money is coming from. And where you’re putting it back into your business.
Be aware that a good marketing campaign could generate the clicks and visits your business needs. When you measure your marketing efforts by revenue, you have a clear picture of your performance. So you can justify investing in the channels that bring in more money and business growth.
Cost of Customer Acquisition
Customer acquisition cost or CAC is easier to track for businesses with a digital presence.
CAC consists of the costs a business takes on to gain a new customer. Once you calculate these expenses, you’ll be able to build a better sales marketing strategy.
To calculate your CAC, divide the amount spent on a campaign by the number of clients it gained.
Customer Lifetime Value
Customer lifetime value or CLTV is the amount a client is willing to spend with your business every time they make a purchase. It takes into consideration how often they return to make a purchase and for how long they’ve been your customer.
Together, CAC and CLTV give you a preliminary view of the marketing budget you’ll need to increase and optimize your sales.
Cost Per Lead
Cost per lead or CPL is just as important to analyze as CAC and CLTV. You calculate it by dividing marketing budgets by leads generated.
This essential metric determines how consistent your lead generation is. It can also give your ideas on how to optimize certain aspects of your business to increase conversions and decrease the cost per lead. You can use social media channels to generate clicks at lower rates.
Another way to decrease your cost per lead and increase clicks is to improve your website. Let’s say you’re looking for someone to give you a hand with website optimization. Find the best website design company to update your landing pages and the rest of your website to increase conversion rates.
Return on Investment
Marketing return on investment shows you exactly how much money you actually earned from your marketing campaign. You can calculate it by dividing the amount of money spent on marketing by revenue generated.
You’ll have a full picture of how successful your marketing efforts have been. And you can make calculations to project future earnings and upcoming marketing investments.
Awareness metrics help you understand how far your marketing efforts go. Let’s see what metrics you should focus on at this stage.
Web analytics tools help you see how much traffic your website is getting. You’ll find all sorts of useful information there, such as who your visitors are, when they click, and what they’re looking for.
Focus on the marketing channels at your disposal: direct reaches, referrals, clicks from social media, organic searches, paid searches, and email marketing campaigns. Use these tools to measure your brand awareness and see where you need to invest more.
Social Media Indicators
Social media content is a great tool to increase your sales and awareness. Your social media reach is indicative of your branding efforts. You can boost your organic and paid traffic to improve your reach on social media.
Organic traffic is the traffic that your business attracts naturally. It’s free, it helps you connect with clients and earn their trust. On the other hand, paid traffic is a way to target your prospective customers, drive them to your website, and increase your brand awareness.
There are many online tools that can help you evaluate your reach and evaluate statistics related to prospective clients, like what content or posts they share or like more. Use them to see which channels are performing well and make changes where necessary to improve the content, reach, and clicks.
Tools like Google Alerts can help you check how often your brand is mentioned online. Circumstances in which your brand was mentioned online are important, too.
Investigate how many people search for your brand on Google, for example, before reaching your website. It will help you understand how many people are actively researching your business.
Focus on engagement metrics to see how your visitors interact with your website. Some of the most common engagement metrics are the average time spent on the website or page and the bounce rate.
The first one shows how much time visitors spend on a certain page. The second shows the percentage of visitors who didn’t navigate to a different page after visiting your website.
Use these metrics to analyze how visitors interact with your website interface. Then, improve your content and design to increase the time visitors spend on your pages.
Landing Page Performance
Your landing page is a separate page that acts as an advertising and marketing platform for a precise service, product, campaign item, or feature.
You want visitors to land here when they click a hyperlink on a guest post, in an email newsletter, on a publisher site, or on social media, among others. It promotes certain services or products that your business offers. In many cases, it’s the homepage.
Monitor landing page traffic because it can be important for your conversions. Focus on total visits, total conversions, traffic sources, and the conversion rate.
See how many visitors your landing page generates, where they come from, how many of them take action, and so on.
Call-to-action (CTA) performance measures how many visitors are actually clicking on your calls-to-action. They’re buttons, lines of text, or images that encourage your visitors, clients, and leads to do something.
Effective CTAs can generate leads from your website, they can encourage visitors to sign up for an offer, share your content on social media or press a button to read more about a certain subject, for example.
Analyze how many visitors respond to your CTA and optimize it accordingly. Small changes, like the button color or different copy, can do wonders to your conversion rates. Slowly work on improving CTA performance in the long run.
Customer Retention Metrics
Existing clients are important, too, which is why you shouldn’t forget about them when you work on growing your business.
Let’s talk about three retention metrics you mustn’t overlook when building your business growth strategy.
Revenue Growth Rate
Use existing customer revenue growth rates to measure how well your business retains clients. If your existing customers buy more from you, then your marketing strategy is working.
It’s an indication that your customers value your products and services. You should reconsider your marketing strategy only when you notice the customer revenue growth rate is dropping.
The calculation is simple. Subtract your revenue at the end of the month from the revenue at the beginning of the month. Divide the result by revenue at the beginning of the month.
Customer churn represents the rate at which customers stop buying from you. It is one of the crucial metrics to consider when working on growing your small business.
It’s highly important for businesses that follow a subscription-based model because a reduced churn translates to a more stable revenue.
Customers leave because they aren’t achieving a specific outcome, they found a better service or product, they think it’s too expensive, or they don’t have enough funds on their cards for a resubscription, for example.
You can calculate your customer churn by subtracting the number of customers at the start of a period of time from the number of active clients at the end of that period. Divide the resulting number again by the number of clients from the beginning of the targeted period.
Net Promoter Score
This metric gives you insights into how happy your customers are with your business. That’s why it’s important to focus on it while growing your business. It’s a great indicator of how eager a customer would be to recommend your business to someone else.
This metric requires the help of your customers. Simply ask them how likely they are to recommend your brand to friends or colleagues on a scale from 1 to 10. Those who reply with 9s and 10s are your most loyal clients and, as a result, your promoters.
Concluding What You Need to Do to Grow Your Small Business
The metrics we talked about in this guide will benefit and grow your business. Your marketing efforts are important in reaching your tactical business goals.
Of course, it’s important to understand how to use the key metrics for awareness, consideration, retention, and marketing to help your business grow.
Make the necessary tweaks based on the feedback you receive from customers and watch your business take off.