Regardless of how large or small your business is, you desire some level of success – and success could mean anything depending on the metrics you’re measuring. As a business owner, you’ve probably pondered on “how to measure business success” at some point in your journey. Well, there’s no straight answer here. How you measure business success all boils down to your values.
What are your values, and how does that reflect on your day-to-day business activity? Speaking of values, that’s what helps you build your business culture. Values that align with your goals and purpose are what make everything tick. Yes, without good values, you’re probably wasting time – and that’s not a wise investment of your resources.
Establishing a solid value for your business, to a large extent, contributes to your business’s success.
But here comes the big question – what are success metrics for a business?
Business success can be tracked. To do that, you’d use success metrics. Speaking of success metrics, these are quantifiable measurements that show if your strategies are working. Yes, business success metrics pretty much help you to track your strategies. This way, you get to easily see if these strategies are working or not.
Some experts see success metrics as key performance indicators (KPIs). Regardless of the term used, it all means the same.
When it comes to success metrics, there is no one size fits all. The metrics used by a team to determine success may be different from the metrics used by another team which may have some other goals. The primary objective is to measure success at the end of the day.
By merely tracking the right metrics, team leaders could use it as a benchmark to identify how well the business is performing. To get a feel of how well your business is performing, you’ve got to consider any of these general business metrics.
Following should not be ignored if you have to measure the business success:
Return on investment (ROI): It measures the ratio between income and investment. If you’re looking for a reliable way of identifying whether a business is worth the investment or not, you’ve got to consider ROI. With the ROI, you’d know if the business is worth the money investment or not.
As a business metric, the ROI tracks how well your investment is performing. What will you get in return when you put in your money or resources? Well, the ROI provides answers to all these and more.
Sales Revenue: Sales revenue is calculated by adding up all the income from client purchases, minus the cost associated with returned or undeliverable products.
Net Profit Margin: Calculate your monthly revenue and subtract all the sales expenses.
Gross profit margin: You can get the gross profit margin by merely subtracting the cost of goods sold from your company’s net sales, divided by the total sales revenue.
The total number of customers: The metrics are pretty simple to track. More payment from customers translates to more money generated by the business.
Recurring revenue: Typically, SaaS companies use these metrics to track the total revenue generated by the current active subscribers within a period. It can either be measured monthly or yearly.
Business metrics doesn’t end here there are lot more, if it vary from nature of business as well. For example if you are into digital marketing business then you cannot ignore few metrics like impressions, clicks, click through rate, conversion, cost, wasted spend, ROAS and much more.
Now you’ve got the answer to the big question “What are success metrics for a business?” the next step is to tackle the big question – how to set success metrics?
Well, here’s how to set success metrics.
Here are easy ways of selecting top-line metrics for a company.
Don’t pick multiple metrics: If you opt for one “metric that matters”, you may end up with a unifying metric that will set the priorities across your organization.
Avoid non-actionable and vanity metrics: For instance, the number of likes your company gets across various social media platforms has nothing to do with customer success or business results.
If you choose multiple metrics, always choose the simplest measurable metric: For instance, if the number of advertisers correlates with your revenue, and you can easily measure and move the number of advertisers, then you’ve got to opt for the number of advertisers.
Choose the metrics that showcase your product usage: For instance, companies like Facebook and Instagram can focus on vital metrics like active users. If you’re keen on measuring the growth of the company, you could choose one of the various active users’ metrics like daily, weekly, or monthly active users – and all these metrics are correlated. Furthermore, you’ve got to choose metrics based on the expected product usage.
Be flexible and willing to change the metrics: Changing your metric when there is a need for it may lead to lots of inconveniences – but it’s far better than sticking to the wrong metrics. After all, the wrong metric will not reflect your business mission. Typically, you’ve got to put in the time and effort to ascertain that you’re using the right metrics from the get-go. But if there is a need to change it, you’ve got to get started with it right away.
Counter-metrics could be an option: If you notice a decrease in your counter-metrics, it could be a bad sign – maybe you’re doing something wrong. To fix it, you’ve got to set some solid goals that would prevent these counter-metrics from decreasing.
Choose simple metrics that connect to the drivers: Let’s say you want to increase the number of new user acquisitions. First, you’d have to send emails to your potential new customers. You’d probably drive a fraction of them to your good landing page. After that, a smaller group will sign up, and an even smaller group will probably become your active users. From the numbers generated, you can create an easy framework that addresses the problems of your active users. To increase the number of active users, you’d have to focus on the elements that will probably boost the number of new users’ activation.
As the business evolves, change the metric: Your business will evolve with time. And as it evolves, the top-line metric will have to change with it. For instance, before the advent of smartphones, people hardly use products like Facebook. Why? Because of lack of connectivity and access. However, with the increase of smartphones, everything changed – and the companies have to revise their metric from monthly active users (MAU) to daily active users (DAU).
These cases can also be found when businesses roll out new products. For instance, Amazon video will likely increase the overall visit to the Amazon platform. This will, in turn, lead to a change in the top-line metric of the company.
Now you’ve got a good grasp of how to set success metrics, here are some takeaways.
Next, you’ve got to understand how to measure business success.
To measure business success, you’ve got to keep the following things in mind.
If you want to measure your progress, you’ve got to come up with reports that track your business data. Yes, the process is somewhat lengthy, and you’ve got to keep a close eye on it – but the return on investment is worth it.
Business success doesn’t always boil down to finances. Although finances are a big piece of the puzzle, taking a close look at employee performance isn’t a bad idea. To measure employee performance, you’ve got to set up some employee performance reviews. This way, your employees will get regular doses of motivation.
Furthermore, you’ve got to eliminate any form of negativity when it comes to culture in your work environment. To do that, you’ve got to keep your employees happy – anything less will pretty much backfire.
The volume of eyeballs you drive to your website could be used to measure business success. It’s a metric that’s worth tracking – and since your website is arguably the first place your customers land, it’s worth investing enough time, energy, and resources. To get started, you should aim at improving the SEO of your website, boosting the user experience (UX), and pretty much aim at driving better leads to your website.
What separates good leaders from average leaders? Well, it’s smart goals – and that’s what separates great businesses from average ones also. But words are cheap. Getting your hands dirty and going to work shows that you work the talk, and mean what you say.
The thing is, having increased profit as your primary business goal is somewhat not helpful. Why? Because such metrics cannot be tracked.
Since business success is tied to your goals, you’ve got to look out for smaller, insightful goals. This way, you will likely make wise decisions in the long run.
What goals are you setting, and how do you measure these goals? Answers to these questions, to a large extent, will determine the quality of your results. Measurement should be a mix of both short-term and long-term goals measurements. If you want some big changes, you’ve got to have some patience – because big changes take time.
As a general rule of thumb, you’ve got to monitor your result changes over some months and years. Furthermore, at the early stage of your business, you’ve got to keep a close eye on proxies and focus on outcomes. Moving on, it’s a good idea to come up with secondary metrics from various angles. For instance, you can opt for metrics like social media follows and likes. And if you’re looking for some good measurement tools, then take a look at the Google Analytics platform.
But why are business success metrics important to track? Well, here’s what you need to know.
Keeping track of business success metrics is hard work. Since lots of work goes into it, why are business success metrics important to track? Well, here are some reasons you should track your success metrics.
Success metrics will help you monitor the new strategy or tactics you’d be using. This way, you get to know if these strategies are working or not. Let’s say you’ve got the team metrics before implementing a new strategy, those metrics could be used as the benchmark.
After implementing the new strategy, it would be best to compare the new metrics with the previous one to see where it stacks up.
One of the primary benefits of success metrics is that it helps you connect your teamwork to the goals of the company. If the work is properly aligned to your business goals, you’d get to see which task is important and the ones that are not. Furthermore, it helps you prioritize your work.
Good business decisions are data-driven. Without data, you’ll most likely not make smart decisions. One of the reliable ways of making a data-driven decision is by taking a close look at historical data and seeing what you can gain from it. Look at the metrics from a specific year? How different were they from the present year? If it’s good, what strategies did you apply to generate such results, and how can you tweak your present strategy to get the most out of it?
The conclusions you draw from your historical data will help you make more informed decisions moving forward.
Speaking of making informed decisions, historical data plays a vital role when it comes to PPC advertising. When you take a close look at a campaign that performed well in the past, you would look at the metrics combination to pinpoint easy ways you could tweak your present campaign. This way, you get to save time and resources. However, historical data will be of no good if you’re not using solid tools like PPC Signal. For instance, since cost per click is a vital metric in PPC, monitoring the metric will help you maximize your time and PPC budget.
Let’s say you’re measuring various metrics, a dip in one translates to a part of your strategy that’s lagging. This way, you get to adjust your strategy and correct the issue. With a PPC Signal, you get to easily monitor your campaign, and pretty much correct any anomaly that must have been observed. In the long run, it will help you save time and resources.
Still skeptical of the PPC Signal tool? Well, here’s how to use it.
If you want better returns on investment for your PPC campaign optimization, then you’ve got to consider using the PPC Signal tool. The PPC Signal tool monitors the changes in your digital marketing campaign data. Everything is done using artificial intelligence. This way, you get to generate worthy returns in no time.
The changes, as stated above, are categorized into.
Here’s what the PPC Signal dashboard looks like.
From this guide, you’d observe some vital success metrics like Cost per Conversion and much more. Â Here’s how to filter out and monitor these metrics from the dashboard
Once you select your desire metric, here, you’d see all related signals displayed on your screen. And if you’re not sure of what to look out for, you should consider looking out for an important signal like the Anomaly Detected as shown below.
If you want to explore the signal and figure out more things, you can do that by clicking on the Explore button. After clicking on the button, you’d see a screen similar to the one below.
Marketing metrics measure the success of your marketing campaigns and also track your Key Performance Indicators (KPIs). These are the vital elements of your campaign. Without these elements, your team cannot pinpoint if your marketing strategy is working or not.
You can measure marketing success using stats like sales revenue and growth, conversion rate, cost per lead, return on marketing spend, and lifetime value of a customer. You can opt for advanced tracking techniques to accelerate your marketing activities and provide more value.
The five key performance indicators include revenue per client, client retention rate, revenue growth, profit margin, and customer satisfaction.
Examples of business metrics include gross margin, net profit margin, and sales revenue.
By now, you’ve got a good grasp of how to measure business success. It all boils down to identifying the metrics that align with your business goals and tracking such metrics.
If you’re running a PPC campaign, then you’ve got to opt for some good tools like the PPC Signal tool. This way, you’d easily measure relevant metrics that would help you identify if your digital marketing strategy is working or not.
Finally, there is no fixed rule on how to measure business success. All you have to do is to identify and monitor the metrics that work for your business.
Here comes the big question…
What metrics will you be measuring in your business?
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