Are You Tracking These 7 Key Business Metrics?
Business metrics represent the backbone of your business. Without them, you don’t know how much money you’re making, what kind of audience retention your content’s generating, or whether you’re going to get a call from the bank this month.
But—Some business metrics are more essential to your operations than others.
If you’re not keeping an eye on the following metrics, you may be missing some key analytical information.
First and foremost among the metrics comes revenue. You’ll want to keep an eye on this business metric for more than one reason. It does more, after all, than tell you how much money you take in monthly.
Your month-to-month revenue is an indicator of consumer interest in your product. It lets you know how successful your recent marketing campaign has been or if one of your competitors has won over a portion of your audience.
2. Gross Margin
Revenue and gross margin go hand-in-hand. While your revenue is how much money you take in monthly, your gross revenue represents the amount of money you have when you subtract your cost of goods from your revenue.
To make things simpler, use this equation to determine your gross margin:
Gross Margin = Net Sales – Cost of Goods
Your gross margin reflects the amount of money you have to spend on marketing expansions or improved production. This is your workable fund, and you’ll need to keep an eye on it if you want to stay in the black.
3. Fixed Costs
Your cost of goods can be filed under your business’ fixed costs. Fixed costs include:
- Rental fees
- Website hosting
- Utility bills
- Equipment maintenance
- Employee benefits
When you monitor your business’ fixed costs and interweave them with your cost of goods, you can make more astute revenue goals to maintain a healthy economic ecosystem.
4. Customer Acquisition Cost
Speaking of marketing campaigns, you should be readily assessing how much money it costs your company to onboard new consumers. You may otherwise be spending a significant percentage of your gross margin on marketing campaigns that cost more than their worth.
5. Your Break-Even Point
To balance your revenue to your costs, you’ll need a clear, monthly idea of where your break-even point rests. This point represents the absolute minimum amount of money you should make to keep your business in the black.
6. Retention Rate
If you’re consistently falling short of your break-even point, you’ll need to reassess your product marketing and consumer outreach. Start by assessing your consumer retention rate.
Break down your consumers into engagement segments, and you can assess your retention with the following formula:
[CE (customers during a period of time) – CN (new consumers on-boarded at that same time)]/ CS (base number of consumers engaging with your platform)
Multiply that final number by 100 for your retention rate. Retention reflects consumer interest in your product. Assess this number whether you’re in the black or out of it to better understand the market’s feelings about your platform and services.
7. Platform Traffic
Similarly, you can use the tools provided to you in Google Analytics to stay on top of your platform traffic. Traffic is indicative of reputation. You’ll be able to follow your traffic to identify which social media platforms your business uses effectively and which could benefit from improved engagement.
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