The 5 Most Important Business Metrics Every Owner Should Track
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How would you determine if your business is on the right track? For many, it is asking performance-related questions. Such as, what is the websites’ performance?
How much revenue do we generate from the sales or services? The answers to all these questions lie in the three magical words, “Key Business Metrics.”
Your company’s success lies in the Key Performance Indicators, or Key Business Metrics. KPIs provide you with a way of tracking the sales, profits, and services that you are providing.
It enables you to create incentives for your business to flourish further. You can make your business profitable even when you have a downturn in sales. But tracking irrelevant metrics can make you stressed out about your business.
This article covers the 5 important business metrics that you must follow to boost your business.
Put your business metrics game on track with these five key metrics:
Before a deep analysis of your website, the first business metric you should track is the total traffic to your site.
What is total traffic? It is the number of visitors who view your website in a specific amount of time. It is a significant indicator that shows how your website is achieving its goals.
You can track the traffic to your website in many ways. First of all, you can get your traffic statistics from your web hosting provider.
In other cases, you can track the data with the WordPress plugin. One of the best tools is Google Analytics. All these tools can help you keep track of your site traffic.
If you have a high number of visitors, then your website is doing well. You can further analyze your visitor traffic and their demographics. This can help you to understand your customers’ behaviors better. Return visitor traffic is the number of audiences that visit your website many times.
If your website is less established or doesn’t have returning visitors. You can do several things to attract people to your website. If you’re wondering how to achieve this.
Start by making sure to add valuable and high-quality content relevant to your site. You can achieve this goal by adding videos, infographics, and statistics.
Another way is backlinking. Provide your links on the other websites that have similar visitors. Or you can run paid ad campaign using Google Ads or Facebook. Targetting a better audience through these ad campaigns.
Website Traffic 101
Check out our Top 5 Google Analytics Metrics to follow. Or watch the video below explaining Page Views.
Bounce rate is the percentage of visitors who visit a single page on your website. That then leave your site without viewing another page.
It can happen due to many reasons. The person might realize that content on your website is not what they are looking for.
It could also be down to the poor structuring of your site. Your landing pages could confuse people. Your content may need isn’t engaging people. Your navigation is confusing and you have too many pop-ups.
Whatever it is, it affects how people navigate your website.
A high bounce rate can cause a significant drop in traffic by affecting the SEO rankings of your website.
You can use Google Analytics to track exactly which pages of your website have a high bounce rate.
If it is more than 80%, your site’s performance is poor.
A bounce rate of 60%-80% defines an average performance.
In contrast, a 30% — 50% bounce rate is the best gauge for your content.
Not sure how to improve your bounce rate?
Here is a 5 step process to help you improve your bounce rate. By adopting the following approach, you can cut your bounce rate numbers:
Step 1: Find the Cause of Poor Bounce Rate
Step 2: Establish Well-Organized Content and Structured Visual Information
Step 3: Predict the Optimal Entry Point through Improved Landing Pages
Step 4: Create SEO and Link Building Strategies
Step 5: Engage the Audience by Allowing Comments, Discussions, and User-generated Content.
If anything, these steps ensure a longer stay if visitors are on your website.
The longer they stay, the more prone they are to come back.
With a great digital marketing strategy. You can reduce the bounce rates and increase the conversion rates within the same budget.
Have you ever wondered how some websites can turn a profit without spending a single penny? Well, you should keep track of the most crucial business metric, that is, conversion rate.
The conversion rate is the percentage of website visitors who then become customers.
We can say it is a call-to-action that a customer completes. A ‘CTA’ can be filling out a form, buying something from the site, or following social media platforms.
One of the best ways to increase revenue, and decrease costs. Is to track Conversion Rate Optimization (CRO).
CRO is a website metric that helps your optimize and track your website. Allowing you to see how things are performing. You can track this metric with tools like Google Analytics.
Otherwise, you can calculate it by dividing the total conversions by total visitors.
A less than 30% conversion rate indicates that the website business is on the verge of collapse.
High conversion rates mean that website is well established and performing well.
But if it is not, don’t worry. Here are 3 steps to implementing a CRO strategy to help you improve your conversion rate.
Step 1: A/B testing compares two versions of the same page. It helps you understand which elements or a page could be impacting the conversion rate of that page.
Step 2: Keep in mind the buyer’s persona. Focus less on describing the website’s functionality. Instead, compel the customers by listing the benefits they would get.
Step 3: Use psychological techniques and a simple fluent language. This approach increases audience engagement.
Average Order Value (AOV)
Average Order Value tracks the amount spent each time a customer places an order on your website.
It helps to determine the purchasing habits of customers of a specific website. It is a critical indicator in online business metrics.
To calculate your Average Order Value. Dividing the total revenue by the number of orders placed.
But why does it matter?
The AOV helps you to check your marketing and pricing strategies and how well they are working.
Improving your AOV means each customer is spending more with you, each time they visit the site.
Instead of spending a considerable amount of money on generating traffic. Increase your average order value and your revenue will improve.
Here are some simple steps that you can follow to improve your average order value:
Step 1: Provide your customers with valuable product recommendations.
Step 2: Bundle similar products altogether and increase sales through cross-selling.
Step 3: Offer similar products that customers might want, on the checkout using an upsell.
Step 4: Present volume discounts and coupons on bulk items.
Step 5: Add a return policy; it is an excellent approach to increase your Average Order Value.
Sales revenue is the total revenue generated from customer purchases over time.
This metric helps you track your financial performance over a more extended period.
A higher number reflects a better performance and vice versa.
It is the sum of your total earning from your customers. Without the cost associated with undelivered and returned items.
This metric allows you to track the number of people who are buying your products or services.
It also gives you an insight into performance compared to your competitor’s performance. A high sales revenue ensures that your efforts are paying off.
But while measuring your sales revenue, keep other metrics in mind.
These include return-on-investment. Asset turnover ratio. Competitor’s actions, previous marketing campaigns, or recent changes in the market.
Keep in mind, sales also vary depending upon seasons, trends, events, and moods of the consumers.
It is evident that to increase the revenue, you have to increase the sales.
You can do this by expanding your marketing activities. Invest more sales resources, hire virtual assistants and salespersons and improve your AOV.
A great way to track if your business is doing well. Is to compare your sales revenue compare to your Customer Acquisition Costs
You want a high sales revenue number and low Customer Acquisition Costs.
Wait a minute! What is the Customer Acquisition Cost? Here lies the answer:
Customer Acquisition Cost
How many resources and hours have you spent to keep your business operational?
Customer Acquisition Cost is the number of expenses that you pay to attract the leads for your sales.
An example of a Customer Acquisition Cost is spending on running ad campaigns.
You can calculate your customer acquisition costs. Divide the amount spent on marketing by the number of customers you have acquired.
For example, you spend $1000 on marketing and reach 50 customers. Your Customer Acquisition Cost would be $20.
What does it mean?
It means you have to generate a sales revenue of more than $1000 from these 50 customers.
In other words, each one of these customers needs to place orders of more than $20 for you to generate profit. Failing to do so would be a significant loss to your business.
Customer Acquisition Cost and Customer Lifetime Cost are always measured together. If the Lifetime Cost is $500, acquiring them for $20 is not a bad deal.
Customer acquisition costs must show that your marketing comping is paying off.
If it is not, then you will need to review your marketing strategies. As well as how you’re interacting with your customers.
Bonus Business Metric
The most critical business metric to track is Leads Generation.
Lead Generation involves building a customer’s interest in your products or services. Once you have got a lead, you can convert them into potential buyers and boost the conversion rates.
You can generate leads in many ways. If someone fills a form you provide or adds contact details. That’s inbound lead generation.
Online marketers drive the leads and increase their conversion rates. Things like SEO, ad campaigns, social media advertisement, and landing pages. Are all examples of lead generation
No leads mean no business. But why?
It is because there are no sales without leads, there is no revenue.
Lead generation gives you an insight into the behavior of your potential customers. Allowing you to track proper business metrics to turn your lead into a customer.
You can use the following strategies to upturn lead generation in your business:
Step 1: Upgrade your homepage and allow discussions.
Step 2: Link a webinar in your content.
Step 3: Invest in social media.
Step 4: Use the right tools for the generation of leads. Such as high-quality copywriting techniques.
Step 5: Provide the customers with exciting offers.
Step 6: Keep in contact with your customers and message them on a consistent basis.
If you’re a business owner or entrepreneur, it’s important to know how your company is doing-from the bottom line to customer satisfaction.
While there are many business metrics that matter when determining success, we’ve compiled a list of five crucial ones every business should track in order to stay on top of your finances and provide quality service for customers.
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