Business decisions can make or break your company. Instead of making random choices based on a hunch, use key performance indicators (KPIs) to make data-driven decisions. The results will more likely give the results you seek because they’ll be based on facts.
Looking at insights from past data and making a few predictions helps you gain a deep understanding of your firm’s strengths and weaknesses. Here are the KPIs to track and how they help with smarter decisions that drive business growth.
1. Sales Numbers
Global e-commerce sales are worth $6.3 trillion, with an expected increase to 8.1 trillion by 2026. You can gain a piece of the pie by paying attention to how many customers you have and how much they spend on an average order. Increase the spend amount or number of customers and you’ll bring in additional revenue.
2. Conversion Rates
Your conversion rates are a good indicator of how well your calls to action (CTAs) and design is working to close the sale. Making some minor adjustments can improve your conversions and help your business grow. Keeping track of the rates can also drive your decision about new offers and design changes.
3. Cost of Acquisition
When it comes to advertising, it’s easy to throw a lot of money at various campaigns and not see a lot of return on investment (ROI). When you make data-driven decisions, you look at the cost to acquire each new customer so you can decide if the advertising is effective.
Compare cost of acquisition to average sales to see when you break even based on the investment to attract a new client.
Figuring out where your revenue goes is equally important as knowing where it comes from. Some businesses bleed money a little bit here and there. Take the time to understand every expense and if it builds your brand or is a waste of money.
Make a list of the expenditures that have excellent returns based on the data. Make another list of the costs that might not offer anything in return. Nix a few of the items you’re spending money on that aren’t showing noticeable results.
Nonprofits may fall under regulatory requirements to track and explain expenditures. Follow some results-oriented management and accountability (ROMA) standards by using outcomes and reports to manage funding.
5. Net Promoter Score (NPS)
Customers who are happy with your product or services are much more likely to tell someone else about you. The net promoter score offers a strong KPI that can predict the likelihood of word-of-mouth recommendations.
Tracking NPS helps you predict how loyal customers are and if they’ll bring new business your way by telling others what you have to offer.
6. Marketing ROI
Marketing is only effective if it brings some value back to you. Put a monetary value on each advertising campaign and see what the ROI is. If you lose money consistently on promotions, you may want to rework your strategy.
Ideally, you’ll be able to measure the sales numbers on each person who responds to a campaign but also create some added customer loyalty and lifetime value.
7. Product Margins
Some industries have slimmer margins than others. Taking a look at the date behind what it costs to produce or buy a product and the going market value shows how much you can make and if selling the item is worth the effort.
Replace unprofitable products with ones with better margins to grow your revenue and keep more money in your company’s pocket.
8. Cost Per Click
How much do you pay for each click through to your website? How many clicks does it take to make a sale? Study the data and tweak ads to improve results. The lower cost-per-click (CPC) you achieve, the less you’ll spend on marketing.
You can improve your CPC rate by better targeting your audience and honing in on the people who buy or creating a better sales funnel once people land on your website.
9. Average Response Time (ART)
Today’s consumer is impatient and expects an almost immediate response from customer service agents. According to Statista, around 46% of consumers would wait three days for a response from a brand before becoming frustrated.
Make customer service a priority. How could you improve your response time and ramp up customer satisfaction? Would adding a chatbot and giving people instant answers to common questions help?
Data can show you where any bottlenecks occur in your customer service process. Fix them to speed up the process. Tap into new technology to ensure you offer the best possible ART. Tools such as AI-based chatbots and customer relationship management tools can help you improve.
10. Customer Retention Rate
What do your churn rates look like? If you lose customers frequently, it’s challenging to grow revenue. You’ll spend all your time replacing lost clients rather than scaling up. While the customer retention rate is a good KPI, it is only part of the story.
To fully understand why customers leave, you need exit interview data and a scan of customer service calls. Try to piece together the reasons people leave and make the changes needed to ensure they stay.
Improve Your Business With Data-Driven Decisions
When you take emotion out of the equation and make data-driven decisions, you’ll find more success as a small business owner. Set goals and then look at the KPIs most likely to help you achieve them. Pay attention to details big and small so you can make the tweaks needed to rise above the competition and grow your brand.Eleanor Hecks is editor-in-chief at Designerly Magazine. She was the creative director at a digital marketing agency before becoming a full-time freelance designer. Eleanor lives in Philly with her husband and pup, Bear.