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  • Writer's pictureMarc Primo

3 Metrics Your Business Needs to Track

Updated: Apr 3, 2020

The following is an article “3 Metrics Your Business Needs to Track”

by Marc Primo.

Keeping track of KPIs (Key Performance Indicators) is a huge part of a business, but we need to be careful not to overdo it. If you track and stress over dozens or hundreds of metrics, you will fall prey to '' Analysis Paralysis''. Basically, it's when taking action becomes impossible, due to information overload.

This article will focus on three main metrics we believe to be crucial for any small business to stay afloat. Of course, there are hundreds of other things to consider, but if you are at least on top of these, chances are you will survive long enough to learn about the rest.

1) COGS (Cost of Goods Sold)

Sales or revenue is an obvious one. Keeping up to date with your revenue on a daily basis is a must for any size business. The right instinct is to want to increase sales at all cost but this is not enough. More sales do not necessarily mean more profit. Knowing exactly how much each item sold costs you is what will help you make better decisions.

COGS (Cost of Goods Sold) is the total expense required to make a sale. This includes the cost of the goods plus sales and marketing expenses.

Keeping an eye on the costs behind sales is what can allow a business owner to cut expenses and increase profit.

It does not matter how much you can sell if at the end of the day the profit margin is not enough.

2) Client Retention

It costs a lot more to gain new customers than to retain an existing one. Get this fact through your head quick. Especially if your sales process requires customer service every single one of your employees needs to keep this in mind when dealing with existing customers. Return business is king and should be treated as such.

An increase in client retention becomes an increase in profits. Sure, you want your client base to grow but it means nothing if you don't retain them.

Make time to create long-lasting relationships with loyal customers. Give special treatment and rewards to returning clients and you will see an enduring growth in profits.

3) Operational efficiency

Operational efficiency is the capacity of a business to deliver products or services to its customers in the most cost-effective way without sacrificing the quality of its products, service, and support.

This metric represents the ratio between the output of your business efforts and the input required to achieve those results. Units of output / Units of input

This bit of math can be very useful and the creative business can use it in nearly every scenario. Take any output like sales and divide it by the input of the sales team budget, this will give you an idea of how efficient your sales team is.

These are very basic metrics as true as that may be many fail to keep them in mind. Taking into account such numbers can be the difference between long-term growth and short-lived great ideas.

Of course, there is much more to measure and the more you grow, the more you will want to add to your tracking habits.


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