Measuring the key metrics for your candlemaking business creates a snapshot of performance: are improvements needed in certain areas or is it time to celebrate? The following metrics will reveal how your business is performing in overall sales, profit generation, marketing strategies, customer acquisition and retention. These are the metrics that matter.
1. Sales Revenue
To find your key metrics, you’ll want to plan how to start a candle business. With this in place, it’s time to measure the initial sales revenue to indicate how your candlemaking business is performing. Add the income from sales, then subtract costs from returned or defective products. The final number is the sales revenue; a wide lens perspective of your business.
2. Net Profit Margin
Bringing that wide lens into focus, the net profit margin reveals how much of the sales revenue is actual profit. This is crucial information that will inform changes, such as lowering the cost of production or increasing the price of the products. Determine net profit by subtracting the monthly costs of all sale expenses from the monthly sales revenue.
3. Customer Acquisition Cost
Another metric that matters is the cost of acquiring customers. Measure this metric by adding all marketing costs for one month, then dividing the total by the number of new clients in that same month. If the results indicate a high cost per customer, either realign marketing costs or increase marketing strategies to acquire additional customers.
4. Customer Retention Rate
The purchase of candles is an emotionally-connected one. The style, the scent, the story behind the candles; whatever the motive to purchase, the goal is to acquire customers and keep them coming back. Measure the retention rate by calculating the total number of clients within a month. Subtract the number of customers who purchased candles again. The metric will indicate how many customers are returning. If needed, improve brand marketing, survey return customers, and capitalize on the unique aspects of your candlemaking story.
5. Employee Satisfaction
While this metric requires an anonymous survey, it is a metric that matters. Satisfied employees produce outstanding products, interact well with customers, and positively reflect your business. Ask employees to fill out surveys, then make changes needed to improve their satisfaction and your business.
Candlemaking is an artisan craft, measurable by metrics that matter. Use these to improve marketing strategies, build a healthy profit margin, and manage a team of satisfied staff members.