Every business deserves a check-up on a regular basis, as each is impacted by income, gain, and profit, along with expenses, loss and needed improvements. These metrics are designed to outline the relevant information needed to determine where your business stands. Use this in conjunction with your business plan template for comprehensive guidance.
1. Gross Margin
Calculating the gross margin of your business is an impactful way to begin checking the health of your business. This metric measures how much of each sales dollar of revenue remains after accounting for the cost of goods.
2. Net Profit Margin
Bringing the microscope into your business further, this metric is achieved by subtracting the monthly sales expenses of your goods or services from the monthly revenue. The results are your net profits, which are a strong indicator of the health of your business. If your net profit is high, you are on the right track; if not, consider increasing revenue or lowering costs.
3. Lead Conversion Rate
How many potential customers became your active customers? To track this metric, you’ll study how your business succeeded in making substantive offers that resulted in sales. Leads are converted to sales by offering: high-quality products and excellent sales programs.
4. Cost of Customer Acquisition (CAC)
To measure this metric, you’ll divide the costs of marketing efforts during a specific month against the number of new customers your company acquired. This metric will inform and direct marketing efforts, as well as the marketing budget.
5. Employee Satisfaction
This in-house metric demonstrates the satisfaction of your staff. This is a crucial metric because sales are affected by the demeanor of the staff. A loyal and energetic staff will encourage sales, resulting in customer retention. This metric can be achieved by running anonymous polls or surveys among staff.
6. Customer Retention Rate
Knowing the number of customers who are returning regularly to purchase goods or services is a key performance indicator. Are your marketing efforts working? Are your employees satisfied? How does your profitability look? All of these questions are answered by the number of customers who return again and again.
Each of these metrics will reveal areas of growth or those that need improvement. Much like a physical exercise routine, examine these metrics on a regular basis to determine the health of your business.