Tips for Accurately Measuring Business Success
Running a small business is a difficult undertaking.
However, with the right tools and data, you can make it a little easier for yourself. Even the smallest operations can benefit from using data and effectively measuring their own success.
It is one of the most reliable ways to ensure that the decisions you are making are the right ones.
Identify Your Measurement Goals
Before you start collecting any business metrics, it is valuable to determine what your goals are.
Figuring out what you want to achieve by measuring. Perhaps your goal is to increase your revenue or to improve customer satisfaction. Knowing these intentions will help you measure more effectively.
There is an almost infinite number of possible metrics and combinations of metrics that you could track. So, you need to be thoughtful about what you look at. Starting with goals is the best way to achieve this.
Explore Your Metrics Options
Check out some of the sources you can use to get data.
For example, you could use your customer relationship management tool to keep track of sales performance data. You can use your website analytics to get information about your digital marketing performance. Additionally, you can always gather information from your financial records.
With your goals in mind, you can begin to pick out the data sources and metrics that will be most helpful. For example, you may decide that your cost per customer acquisition, sales conversion rate and gross margin are the most important for evaluating your current performance.
Create a Scorecard
Developing a metrics scorecard is a good way to make your measurement efforts more useful.
Rather than having a diverse set of metrics that you try to keep track of, you pick a few that are most representative of your current measurement goals.
You can combine these into a report or dashboard to make tracking them easy. Ideally, you should also be able to manipulate your data so you can examine performance over time and other similar analyses.
Good data organization can help you get better insights.
Analyze Your Data
Now that you have planned your data collection and gotten several data points, you can begin to analyze it.
The process for this will depend significantly based on what your goals are and which metrics you chose to track.
However, you can expect to need to map your performance against time. It may be smart to track key events such as product launches or new marketing campaigns against your data as well.
If you need abnormalities or trends, you can begin to assign possible explanations.
Plan Possible Changes
Once you have analyzed your data, you may begin to see some possible strategic changes that could help your business.
You may realize that one of your marketing campaigns is not returning sufficient value and decide to drop it. Alternatively, you may find that a certain product category is especially successful and plan an extension of it.
Examine these possible changes and determine which ones you can enact, and which ones will require more data. Now that you have a usable system for gathering and analyzing your data, you have the system you need to make well-informed choices.
Don’t look at your performance measurements once and leave them be.
Instead, you should be continuously measuring and evaluating your performance.
You could use some simple A/B or small-scale tests to determine whether your planned changes are good ones or not. For example, if you think your marketing messaging needs an update, run a couple of versions of your ads and compare them against your baseline data.
This is one of the best ways to turn your metrics into actionable and useful insights.
Discover more about how to measure the success of your business. With the right tools and a good process, you can make informed choices about how you change your strategy for the better.