Your business is a complex machine.
Even if you are a small ecommerce company where there’s just you and maybe one other, there is much going on in your business and each of these activities tells you a lot about the potential health of your venture.
Many new entrepreneurs don’t monitor these vital statistics. This can be a mistake. Sometimes what happens is that there is a concern going on in the background that is threatening your business’ stability. Then out of nowhere, because you lack the tools to monitor the situation, you find yourself in trouble and scrabbling to get out of it.
Therefore, you should always be monitoring the vital statistics of your business. But what are the five biggest advantages to this?
Here are our thoughts:
1. Being Proactive
No matter what you do in life, being proactive to problems or scenarios is going to be more effective than being reactive.
For instance, when you know there is going to be some bad publicity about your brand or a product you sell, then you can proactively combat it to minimize damage to your brand. However, being reactive is often criticised in the media and by consumers.
By monitoring the vital statistics in your business you can see when there are issues hidden beneath the surface and take steps to reduce the negative impact they have on your business.
2. Take Advantage Of Situations
The vital statistics of your business, often known as Key Performance Indicators (KPIs), can earn you a lot of revenue.
For instance, you might realize that customers who buy two specific products together have a more positive experience than those that only buy one product. Therefore, you can take steps to encourage more people to buy the second product along with the first via a shopping cart upsell or follow up sequence.
This will increase your revenue and help to generate a more positive experience for your customers, encouraging them to come back to your business.
Another example would be when you notice a sudden interest in certain products. You can help increase revenue by advertising those products or creating deals to entice customers to complete their transactions.
3. Reduce Costs
Sometimes the vital statistics can tell you so much about your back office processes that you can spot where processes are being inefficient.
The more information you can gleam from the vital statistics, the more ways you can find to save money.
- Reduce the amount of stock you have of certain products.
- Reduce the time it takes to fulfill an order.
- Reduce shipping costs by making courier assignments more efficient.
4. Spot Key Workers
Another key part of running a business is to know who your productive workers are.
This can help you determine shift patterns, working hours and who to depend on when you have a sudden rush with orders.
You don’t want to be left stranded with an employee that will perform badly under pressure.
At the same time, it can pay to recognize your star employees. One of the main reasons why employees leave is because they aren’t given enough respect for their work, but by demonstrating your appreciation you can keep them around for a lot longer.
5. Resource Planning
The biggest businesses in the world all have one thing in common – they know how to allocate their resources to make them effective but not cost a lot. You need to do the same.
The only way you can do this is if you know when busy periods are likely to occur and when it is going to be slow.
Then you can allocate resources appropriately.
Monitoring your business’ vital statistics (KPIs) is one of the most important activities that you should be doing.
It helps you spot your strengths and weaknesses, as well as determine ways to allocate resources properly, make more money and save on costs.
- Do you monitor your business’ vital statistics?
- What can you learn from them?
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