In order for businesses to succeed, it is important to track key performance indicators (KPIs). KPIs can be used to measure a company’s success and track progress. There are many different KPIs that businesses can track, depending on their industry and goals. Some common KPIs include revenue, profit, customer satisfaction, and employee satisfaction.
By tracking KPIs, businesses can identify areas where they need to make changes in order to improve their performance. In this blog we’re going to share with you 4 key KPIs you should track as a small business owner.
Tracking the wrong KPIs or incorrectly configuring them can spell doom for a growing business looking to get its marketing strategy back on track. There are many aspects to be aware of when running a business and, in particular, practicing a good digital marketing strategy.
In this blog you’ll learn:
- Which KPIs matter to a growing small business
- How to define and choose the right KPIs for your small business
- 4 KPIs you need to track as a small business owner
- Why customer satisfaction trumps many other KPIs
- When to look at Return on Investment and Return on Ad Spend
Defining and choosing the right KPIs for your business
There is no one-size-fits-all answer for what KPIs to track for your business, as the key performance indicators you choose will depend on your industry, business model, and individual goals. However, there are some general guidelines you can follow to help you determine which KPIs are right for you. When choosing KPIs, it is important to first identify what you want to achieve with your business.
Are you looking to grow revenue, reduce costs, or improve customer satisfaction? Once you know what your goals are, you can begin to identify the metrics that will help you measure progress towards those goals. Another important factor to consider when choosing KPIs is your business.
Your KPIs should be SMART:
- S – Specific: your KPIs should be specific enough to tell you the right information and help you fill in the dots to the story of the data you’re measuring
- M – Measurable: KPIs need to be measurable and not wishy-washy or subjective.
- A – Attainable: your team should be able to meet the goals or objectives and the goals should be attainable without the term “impossible” crossing your team’s mind.
- R – Relevant: KPIs should be relevant to your business’ unit and your business’ operations. Don’t choose a KPI like number of customers who downloaded your newest PDF if it doesn’t add business value or add a data point to the business’ strategy.
- T- Time-Boun: Ensure your KPIs are time-bound and have limits. Too short a time frame can cause you to jump to conclusions while too far a time frame can cause your team to make decisions based on too broad of a data set.
4 Key KPIs To Track As A Small Business Owner!
KPI #1: Net Promoter Score (NPS)/Customer Satisfaction
NPS is a customer loyalty metric that measures the likelihood of a customer to refer your company to others. It is calculated by subtracting the percentage of promoters from the percentage of detractors. A high NPS score indicates a high level of customer loyalty, and a low score indicates low customer loyalty. NPS is important to small businesses because it can help them measure customer satisfaction and loyalty.
A high NPS score means that customers are likely to refer your business to others, which can lead to more business and increased revenue. A low NPS score means that you need to work on improving customer satisfaction and loyalty, which can be costly and time-consuming.
Remember, your goal is to keep your customers satisfied.
At the conclusion of every customer’s experience, be sure to:
- Send a series of emails or direct the customer to a customer feedback survey to get their valuable opinion
- Get the customer’s NPS score and compare it to your small business’ closest competitors
- Examine feedback from the Customer Satisfaction Survey and interaction notes closely. How can you improve the customer experience?
KPI #2: Return on Ad Spend (ROAS)
The goal of any small business is to make a profit, and one of the most important metrics to track is return on ad spend (ROAS). This number tells you how much profit you’ve made from each dollar you’ve spent on ads. To calculate ROAS, divide your total profit from ads by your total ad spend. So, if you made $100 in profit from ads and you spent $500 on ads, your ROAS would be 20%. You may use ROAS when you are looking at Search Engine Marketing or Email marketing campaign results. You can use metrics like these and others to predict future growth rates.
Small businesses need to be vigilant in their spending and track their return on ad spend (ROAS) to ensure they are getting the most out of their marketing dollars. Without careful tracking, businesses can quickly find themselves in the red, unable to accurately measure the success of their marketing campaigns. ROAS is a simple calculation, but it is essential for small businesses to understand and track it in order to make informed decisions about where to allocate their marketing resources.
KPI #3: Customer Acquisition Cost (CAC)
Customer acquisition cost (CAC) is a metric used in business to calculate how much money must be spent to acquire a new customer. This calculation is important for firms to understand in order to make sound decisions about where to allocate marketing resources.
The formula for CAC is: CAC = marketing expenses/number of new customers acquired. There are a few different ways to reduce CAC, including increasing marketing efficiency, targeting the right customers, and improving the customer experience. Firms that can successfully manage their CAC will be in a better position to grow their business.
KPI #4: Customer Lifetime Value (CLTV)
Customer Lifetime Value (CLTV) is a metric that measures the profitability of a customer over the entire period of their relationship with a company. CLTV is used to help businesses determine how much they should invest in acquiring and retaining customers. CLTV can be calculated by multiplying the average purchase amount by the average number of purchases per customer and then dividing by the customer’s retention rate.
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Problem Solver’s Consultants Can Assist You In Selecting The Right KPIs For Your Small Business
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Hiring Problem Solver’s Consultants will help you:
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