As a business owner in North Carolina, you know that tracking business metrics is essential. But how do you know which metrics to track? And can you translate those numbers into actionable goals? In this blog post, we’ll discuss crucial metrics for small businesses and how to use them to watch your growth trajectory skyrocket!
What Are Business Metrics?
Business metrics are simply a way of measuring the performance of your business. They can help you understand whether your business is on track to reach its goals and identify areas where you can improve.
Understanding which business metrics to track is essential to running a successful business and can help you make more informed decisions about your business’s future.
Examples of Business Metrics
There are several different business metrics that you can track, but not all of them will be relevant for every business. Some of the most common business metrics for small businesses in North Carolina include:
Revenue
Revenue is the total amount of money your business brings in and is typically the most crucial metric for businesses of all sizes. Monitoring your revenue can help you identify trends and make predictions about future growth.
Expenses
Expenses are the total amount of money your business spends and can be a helpful metric for identifying areas where you may be able to save money.
Profit
Profit is the difference between your business’s revenue and expenses. You can use this metric to measure the success of your business.
Customer Satisfaction
This metric measures how satisfied your customers are with your products or services. Monitoring customer satisfaction can help you identify areas where your business needs to improve.
Employee Happiness
This metric measures how satisfied your employees are with their jobs. Monitoring employee satisfaction can help you retain talented employees and improve morale within your business.
By tracking the right business metrics, you can make informed decisions about where to allocate your resources to achieve your business goals.
But which metrics help you get to the growth you need? Let’s check out the importance of marketing metrics next.
Marketing Metrics Matter
A business metric that companies in the digital age need to watch is their marketing. For example, you might wonder whether your marketing team effectively helps your company create conversions.
Key marketing business metrics may include:
Return on Marketing Investment
Return on Marketing investment measures the revenue your business has created since you started marketing or hired a marketing agency vs. your revenue before. To see relevant metrics, you could mine data from Google analytics and measure your monthly revenue before and after your website redesign. Or you could look at your email marketing strategy before and after.
Marketing Qualified Leads (MQL)
How many people have indicated an interest in what you offer because of your marketing efforts? Online reach of your Google ads translating into actionable leads for your sales team could show you an MQL metric.
Sales Qualified Leads (SQL)
Sales qualified leads are customers who have transitioned from a marketing lead into someone who will now work with your sales department. This metric shows you whether your marketing efforts are creating actionable leads for your salespeople.
Conversion Rate
Look at the % of web traffic to your website who complete a goal vs. the % of those who visit and leave immediately. Goals for a site visit could include a visitor filling out a contact form or downloading information in exchange for their email address.
You can also check out the conversion rate of an email campaign or a sales ad on Facebook.
Brand Awareness
Do people in your community or your sales base know who you are? You might measure this through an online survey or by working with your chamber of commerce to increase your brand awareness while measuring the number of visits to your website.
Engagement Rate
Track how much your desired community engages with your posts, emails, and ads by looking at “likes” and “shares” on social media. Do your existing customers stay engaged also?
Customer Acquisition Costs (CAC)
Customer acquisition cost lets you see how much you spend before you receive a converted customer (i.e., someone who becomes your customer). You can measure your return on investment (ROI) for your client base.
Customer Retention Rate
Measure customer loyalty over time to gauge overall success working with your clients.
Lead-to-Customer Conversion Rate
Customers don’t come from leads. They come from conversations. This business metric lets your sales team know how productive they are in converting leads to customers. Your key performance indicators (KPI) are the metrics you use to determine whether a business process is working.
How can you measure lead-converting KPIs? You’ll need to assess your product AND the sales team if leads do not convert into sales.
You may ask your sales team to track their success over time or use the lack of conversion as a chance to start a new sales strategy. Understanding your sales metrics makes sense if you want new clients for your company.
And when you see total sales revenue up, you can also rest assured that sales revenue is sky-high!
Customer Lifetime Value (CLV)
How much is a customer worth throughout your entire relationship? If customer lifetime value is high, you may want to invest in measures to keep your current customers close!
When CLV is high, your net profit margin and sales revenue may closely connect to your customer retention rate. Customer lifetime value data can help you see which business processes need a bigger budget for continued growth!
With a large customer base that repeatedly creates revenue for your business, it’s crucial to look at the business metrics that will keep them coming back for more!
You may also choose to spend more on customer acquisition costs, knowing that once you convert them into a client, they are likely to keep coming back.
Financial Business Metrics Matter: Net Profit Margin
The metrics you track vary depending on your role in the business. If your company has department directors, they will study their area for business metrics. For example, the marketing director might write monthly reports to let you know their business metrics. The same would go for manufacturing or sales departments.
However, as an owner of an LLC with department heads who report to you, you might track in-depth metrics that show the overall growth of the company and track financial metrics, such as the key performance indicators (KPI) listed here:
- Product performance metrics
- Depreciation and amortization
- Earnings before interest
- Operating expenses and profits
- Net and gross profit margin
- Monthly recurring revenue
- Net and total sales revenue
Which Business Metrics Matter?
Your key metrics will show how your business processes create a net profit margin when you’re doing well. However, the same key metrics can also show why your company’s performance is down.
The business processes that create customer acquisition and retention are crucial to your growth. Bringing new clients in and keeping them happy always matters!
Your cash flow and monthly recurring revenue metrics increase with more clients and show you what you are doing that is working. As a business owner, knowing what is working leads you down a growth path!
Bottom Line
Business metrics help you identify what data is most relevant for your business. Business performance metrics can give you the guidance you need to improve several aspects of your business, including financial performance, customer satisfaction, and employee morale.
Understanding which business metrics matter most for your small business in North Carolina can help your growth trajectory explode!
We Can Help
If you’re unsure which business metrics are most important for your business or need help getting started, talk with our experienced business attorneys at Hopler, Wilms, and Hanna. We can help you identify the business metrics that are most relevant for you and provide guidance on how to use them to improve your business growth. Contact us today and find out how your business can thrive in North Carolina!