When you’re a small business owner, it can be hard to balance all the different aspects of your business and measure important things like revenue, client satisfaction, net profit, and more. That’s why key performance indicators (KPIs) are an ideal solution for keeping track of those metrics.
What Are Key Performance Indicators?
Key performance indicators are metrics that help you measure how your business is doing in a quantitative way. They’re essential to monitoring your business’s health and growth.
What Is the Purpose of KPIs?
KPIs can help you:
· Understand where your business stands financially.
· Make better decisions about investing in equipment, expanding your team, and other long-term spending.
· Understand whether your marketing efforts are paying off so you can make better-informed decisions about where to spend advertising cash.
· Identify issues before they become major problems. For example, if sales are down significantly year over year, you can take action sooner rather than later to improve them.
Here are 4 key crucial indicators to help you keep tabs on your business;
This is a very simple metric that measures how many prospects actually become customers. You can measure conversion rate in a number of different ways, depending on the type of business you run.
For an e-commerce store, that might mean measuring how many people who visit your site make a purchase. For a B2B lead generation site, it could be how many people submit a form request to speak to one of your sales reps.
Conversion rate, or converting prospects into customers, is one of the most important parts of any funnel. Not only does it provide you with insights on how well your content is performing, but it also helps you understand what needs to be improved and what you’re doing really well.
By using conversion rate as a key metric for your funnel,you can easily see where adjustments need to be made in order to improve the quality of leads coming from the top and bottom of your marketing funnel.
Social Media engagement
Since social media is a key marketing channel for most businesses, it helps to know whether your efforts pay off. As such, you should look at the number of followers you have on each platform.
If your goal is to grow your follower numbers, then this is the ideal metric for you.
The ideal way to measure the success of your social media efforts is through the use of social media key performance indicators (KPIs).
If your business relies on social media to generate business, social media engagement is a great KPI to track. Measuring likes, comments and shares will help you see what type of posts contribute to boosting your business.
Like with website traffic, no complex calculations are needed here. Watching and monitoring trends over time will help you focus your efforts. Consequently, you’ll be able to concentrate on creating the right posts and content that drive business growth.
Monthly Recurring Revenue
If you have several different plans with varying prices and billing cycles, then calculating your monthly recurring revenue can get complicated. Fortunately, there are a number of tools that can help you anticipate future growth, and more effectively manage your cash flow.
What Is Monthly Recurring Revenue?
Monthly recurring revenue (MRR), also referred to as"recurring revenue," is the portion of your company's revenue that occurs each month from subscriptions or repeat purchases. This metric represents the "core" revenue that you can expect to receive each month from existing customers. It excludes all one-time purchases and any new subscriptions added during the month.
Your MRR is a measure of the average monthly revenue generated by your customers over the course of their lifetime with your company. This metric does not include any sales tax or service fees like shipping costs for tangible goods.
The sales revenue of a company provides an indication of the overall demand for its product or service. A business with increasing revenues is an indication that more customers are aware of and willing to purchase the company's products.
As a KPI, sales revenue can be used to assess various aspects of the company. Revenue can indicate whether the company is marketing effectively or whether they need to update their product or service. It can also provide insight into how pricing changes affect consumer demand.
The key takeaway from this should be that it is vital for all businesses to know what their KPIs are and how to track them so that they can effectively measure the success of their business and work towards different goals. There's no reason why your business should be any different. By having your KPI in place, you'll be better equipped to groom your business into the type of venture you've always wanted it to be.