Success can be very subjective unless you put metrics to it. On a personal level, people might define their own success as having a fancy car and a lot of money. Others may define it as having a lot of friends and good health. The same could be said for businesses. A business may define its success as having a lot of revenue or having people who love to work there. However, what if the revenue does not cover the expenses? Or if the employees don’t actually have the skills you need? For all of these reasons, it is imperative to have metrics for measuring business success.
Below are the 9 essential metrics for measuring business success so you can track and analyze how your business is performing with actual data.
Metrics for Measuring Business Success
#1 Sales Revenue
Using your sales revenue as a metric for success is a great way to simply determine how sales are doing. Comparing it to previous numbers and determining which marketing campaigns are in place when revenue increases and which are in place when it decreases can tell you a great deal.
#2 Customer Acquisition Cost
Another metric for measuring business success is the cost you put into acquiring new customers vs. the value they will provide you for the lifetime of their patronage (Customer Lifetime Value). Using this as a metric will help you measure whether your business is on track for success.
#3 Customer Retention
Another metric is the number of customers you retain in a given period. OutboundEngine found that retaining customers is five times less expensive than acquiring new ones. Focusing on increasing this number will save considerable money in the long run.
#4 Tracking Gross Margins
Determining your gross margins will help you determine how productive your organization is. By calculating your sales revenue, minus the cost of sales, and divide it by the sales revenue, you’ll get your gross margin.
#5 Fixed Costs
Adding your company’s fixed costs as a metric will help you determine what you can spend on variable costs. Fixed costs can include anything from your office rental space costs, utilities, website, hosting, etc.
#6 Customer Lifetime Value
Using your customer lifetime value as a metric to measure business success allows you to predict the revenue you will gain from the customers that stay with you for the long haul. Using a formula that calculates this number, you can better determine which customers you should spend most of your advertising dollars on.
#7 Break-Even Point
Determining the point at which you start earning profit after all the costs that go into running your business will give you your break-even point and will be a good metric to include to measure your business success.
#8 Productivity Measure
Using certain tools, you can track and measure your team’s productivity to help determine the overall success of your business. Tracking how many hours your employees work on which tasks will help you figure out where you are most productive and where you need more support.
#9 Net Promoter Score
A net promoter score will show you the likelihood your product will be recommended by your customers based on the quality of the product and the level of customer satisfaction. Your net promoter score, according to netpromoter.com, can effectively help you predict your business growth.
Once you have all of your metrics to measure business success in place, you’ll be well on your way to achieving your goals and succeeding at your business ventures. Using an enhanced customer relationship management solution such as Agile CRM will help you with all of your sales and marketing needs ultimately helping your business succeed. Agile CRM is an all-in-one CRM with automation capabilities to aid in all of your sales and marketing.
On top of the metrics outlined above, Forbes states that you should also assess your own happiness and whether or not your own expectations are met in order to determine if you’ve achieved success. Personal success is very important, however, while that is an excellent idea, it still doesn’t replace the need for all of the other metrics for measuring business success on a grander level. As subjective as success can be, using actual metrics will help you use data to determine your actual progress.