Entrepreneurs who understand exactly what's going on in their businesses can make better decisions than those who don't. One of the easiest ways to keep track of key metrics for your company is by creating business intelligence dashboards, which track metrics like revenues, expenses, website performance and customer satisfaction in real-time.
The process of creating a business intelligence dashboard for your company starts with choosing the right dashboard technology. Importantly, the right technology must automatically integrate with the software programs you are already using, so no manual data entry is required. For example, programs like QuickBooks, Google Analytics and Salesforce.com are widely used and include much of the data you need for your dashboard.
The price for setting up this kind of dashboard can vary from thousands of dollars to under $50 a month, depending on how complex a system you are looking for. Providers include big names like IBM to small companies like my business, Growthink.
Regardless of which provider you choose, it's important to know what metrics you're looking for, particularly if you want to get them on a budget. While you can develop a dashboard for every area of your organization, here are the three dashboards I find most valuable to virtually all businesses:
1. Net profit dashboard
Your net profit dashboard automatically calculates your monthly profits to-date, compares them to your profits for the previous month and year, and calculates your projected profits for the month.
Your net profit is the best indicator of whether you're having a strong month. You should be reviewing this figure daily. Sure, it's nice when your revenues are strong, but if you spent too much on advertising to generate those revenues, you must account for this, which you can do using a net profit dashboard.
2. Customer acquisition cost vs. revenue dashboard
A great indicator of your success is how much you are paying to acquire new customers compared to the revenue you initially generate from them.
Calculating this is fairly easy. Your cost per customer acquisition is derived by dividing your current marketing and advertising expenses by the number of new customers you've acquired. Likewise, your revenue per customer acquisition is calculated by dividing your revenues from new customers by the number of new customers.
In general, you want to see a wide and positive gap between revenues and costs. However, in some businesses, where you have significant customer lifetime value, it's okay to spend more on customer acquisition than the amount of initial revenues you generate. In either case, understanding and monitoring these numbers is critical.
3. Revenue per website visitor
This is a strong indicator of the performance of your website. Sure, it's great to get tons of visitors to your website. But if they don't end up purchasing your products or services, there's really little benefit to you.
Revenue per website visitor is calculated by dividing your revenues by the number of visitors to your website. You can do this on a daily, weekly or monthly basis. Look for trends. If, for example, the amount of revenue your company generates is decreasing per website visitor, it's time to test new ways to improve your website. Maybe you can update your layout, headlines or featured products and services.
It's important to measure and monitor the right information. Start with these three dashboards and you'll begin to see results.
The author is an Entrepreneur contributor. The opinions expressed are those of the writer.
Dave Lavinsky is the co-founder of Growthink, a Los Angeles-based consulting firm that helps entrepreneurs identify and pursue new opportunities, develop business plans, raise capital and build growth strategies. He also is the author of Start at The End (Wiley, 2012).