How much money and opportunity are you losing by not measuring your metrics? That’s the question you should be asking yourself if you’re a small business owner.
A massive new industry has arisen around data gathering, tracking and measurement. New tools have been developed aimed at making analytics for small business owners a snap.
But how and what should you be measuring for your small business? Let’s dive in.
1. FINANCIAL METRICS
Yes, money. No other metric category is as understood and yet misunderstood simultaneously. The traditional accounting world isn’t much help here, and many of the tracking tools built for this world only tend to confuse.
These are the financial metrics I find necessary for small businesses to track:
Sales – You certainly need to know if sales are up or down. Sales projections are also extremely helpful, a lot like goal setting, as a driver of growth.
Profit – Too many business owners view profit as enough money to pay themselves, which of course, is a job. If you ever want to sell your business, you need to think about how to show 15% profit after you pay yourself.
Expense – This, of course, is a big piece of the profit number, but it’s also a place to look for waste. Many businesses can afford to pay someone to work on this number exclusively and come out ahead.
Cash Flow – Unless you’re able to keep track of balances and expenses in your own head (and who can do that, right?) get a weekly cash flow report. This is a list of numbers that will help you know where you’re at money-wise every, single, consistent week.
Productivity – Profit per labor dollar is a critical measurement if you can find it. It’s very similar to the measurement of CPA (Cost per Acquisition). If you can get very good at these two KPIs, you’ll always know what you can spend of your marketing and labor dollars. (We will cover this more in-depth in part two of this blog.)
2. CONVERSION RATES METRICS
Website development and building an online presence requires time, energy and expenses as well. Conversion rates give you a true picture of your effectiveness. The higher the conversion rate, the better it is for your business.
Whether it’s your blog, contact page, or any other landing page, you want to know how many people came to your site. This is the biggest indicator of web traffic, and the number of people who are checking you out.
A 50% order rate might be awesome, but if you’re only getting eight visitors a month, you’ll be out of business before you can finish reading this blog.
Everything that follows will tell you how to do this: bigger social networks, bigger email subscription list, faster load times, and search engine optimization.
If you can juggle all these plates, this number will grow. Let a couple plates fall, and your traffic will do the same thing.
Time On Site (TOS) Metrics
This metric refers to how long people spend on your site per visit, as well as per page.
A well-written, engaging blog post can keep people reading for a few minutes, but a poorly-written one, or a page that doesn’t give much value can make your visitor leave after just a few seconds.
This is one of the signals Google uses to measure how good a site is. Since the search engine can’t understand how well or poorly something has been written, they look to TOS as an indicator of whether or not it’s good.
The more time people spend on your site, the better it is.
Hint: Start writing good stuff. Give your audience bucketfuls of value so that they begin to look to your site as an authority on whatever content you’re providing.
Do A/B testing on your different types of content, and reproduce whatever content people spend the most time reading.
Another idea is to add short videos to a page. Even if your visitor only watches 45 seconds of a two minute video, this still improves your TOS.
The key here is the same with all of the metrics your business watches: Keep testing and measuring your results so you know how to improve.
Exit Pages Metrics
These are the pages where people leave your website, and most of them will leave on the same page they landed on in the first place.
If you find that most people all exit on the same page, such as hitting your front page and leaving again, you need a websitemakeover.
If you have a 3-page subscription or ordering process, and people leave on the first or second page of that process, it’s probably too complicated, and requires a makeover as well.
Keep it simple and people will be more likely to complete it.
Hint: Have the copy rewritten strategically to convert, change the graphics, and make the process as easy as possible to read and navigate. Reduce as many steps possible to make a purchase or subscribe.
Need more tips on metrics a small business should track? Watch out for part 2. 10twelve can provide your company guidance if needed. Reach out to us.