Success Must be Measured
There's an old saying in business that you can only improve that which you measure. It makes sense that if you set a goal to improve your performance or grow your revenue, you must keep track of how you're doing to know if you're moving toward that goal.
There are certain marketing elements every startup entrepreneur should track to grow and become more profitable. The key indicators are leads generated, leads converted, average dollar per transaction and average number of transactions per customer.
When you're just starting, the notion of tracking may feel like overkill. But focus and improvement spring from the habit of constant measurement. Start now to create your baseline. You'll find it much easier to focus your strategies and actions on the right areas of your business--the areas where you can get the most bang for your marketing buck.
Here's a little more detail on the four key metrics and how they can make a difference:
- Leads generated: Almost everyone gives this one some thought. You must make the phone ring if you're going to do business, right? What I find, though, is that few businesses keep track of how many leads are generated or where the leads come from. By getting really fanatical about this metric, you can determine the best ways to spend your precious marketing dollars.
- Leads converted: You must know exactly what percentage of your generated leads actually become customers. Yet lead conversion, or the process by which a lead becomes a customer, often gets so little focus. Understanding your lead conversion numbers can help you refine your ideal customer and core message. Your goal here is to aim for 100 percent conversion.
- Average dollar per transaction: When businesses are just getting started, this number is always too low. Use this measurement to put upward pressure on your own pricing. With each new customer, raise your prices. A hard number like this, brought down to the individual customer's level, is much easier to understand in dollars and cents than all the gross revenue charts on the planet.
- Average transactions per customer: Again, the focus here is to do more with your existing customers. This metric keeps the attention on rounding out your services, adding more value, more products and more partnerships to the mix.
By boiling all your marketing efforts down to these four easily tracked numbers, you can set your sights on big-picture goals such as income and revenue, knowing that your activity is focused on the micro metrics that make growth inevitable.John Jantsch is a veteran marketing coach, award-winning blogger and author of Duct Tape Marketing: The World's Most Practical Small Business Marketing Guide. Find out more at ducttapemarketing.com.