Every business should be tracking important metrics but there is not a one-size-fits-all approach to follow. The business metrics you should track depends completely on the strategic goals for your business.
If your goal is to make sales, you’re likely going to want to track metrics like hits to the landing page, acquisition source (i.e., where the person came from to get to your site), number of purchases, and conversions rate. If your goal is to get email addresses, you’d replace the ‘number of purchases’ with number of opt-ins.
These metrics are often referred to as Key Performance Indicators (KPIs) and there are a variety of methods to determine what business metrics specifically you should track. We suggest mapping out user experience to determine where to start. Using the example above: User lands on-site (number of page views) > User makes a purchase (number of purchases) > User sees an order confirmation page (the number of purchases divided by the number of pageviews = conversion rate).
Each step of the experience or action you want the user to take, it’s imperative that you keep track of so that when you experience success, you know exactly why.
There are extensive lists of KPI examples out there. While we can’t give a single list that would be applicable to every business, for the most part, most businesses should track the following types of data:
Marketing and Sales Metrics
Marketing and sales data is important for you to know to better understand how the actions you are taking are leading to your desired outcomes. These metrics include email metrics, social media stats, web page or landing page traffic or engagement, and so forth. You might want to look at things such as open rates, traffic stats, conversion rates, and traffic sources so you can make good choices about where to spend your time to get more bang for your buck.
Some examples include:
- Sales revenue
- Cost per acquisition
- Sales or landing page conversion rates
- Website traffic by source
- Total email subscribers
- Email subscriber growth rate
- Average email open rate
- Average email click rate
- Social media metrics (specific to the channels you are on)
- Average order value
Financial Business Metrics
When it comes to financial metrics, this is where you hear so many thought leaders stressing the importance of ‘knowing your numbers’ and saying things like ‘the path is in the math’. There are a lot of things you need to track to ensure that you have and maintain a healthy business.
This will also help you catch issues before they become problems. You should track and monitor cash flow, net income, profit and loss, sales, net profit margin, and gross profit, to name a few. Each of these numbers can help you make good choices about how to move forward on any type of decision that has to do with money, whether you are spending it or making it. Some examples include:
- Gross income (top line)
- Net income (bottom line)
- Profit margin
- Failed payments
- Failed payment recovery
- Abandoned cart
- Abandoned cart recovery
- Gross sales by product/service
- Current accounts payable
- Accounts payable turnover
Understanding everything you can about your customers is imperative for your business’s success. You need to know who they are, where they come from, what they want, what their problems are, and how much money they will spend on solutions to those problems. Understanding their intent upon acquisition (i.e., how/why they found you) will help you understand how to reach more of them and sell.
It’s important for small businesses especially to know how much it costs to acquire a customer and how much a customer can spend over their lifetime as your customer. Some examples include:
- Customer turnover/retention rate
- Customer lifetime value
- Net promoter score
- General customer demographics
When you track the numbers in these three areas of your business, you’ll be able to combine the numbers in different ways to discover aspects of your business you may not have considered before. This is often referred to as business intelligence.
For example, by collecting marketing data, you can determine whether you need to do something to improve open rates or if you need to focus on improving your sales page to improve conversion rates. When you collect customer stats, you can look at the data and learn ways that you’re deficient in providing for your customers which will help you increase the customer’s lifetime value. When you collect financial stats, you gain insights into what makes your income flow and what is costing you money.
All this information, when combined, will give you a competitive advantage because you’ll be able to use this information to make improvements in your business. Doing so can improve both how you manage your time, and generate more income because you’ll be making business decisions based on facts, not assumptions.