Look, we all want our businesses to grow, right? But “growth” can feel like this fuzzy, abstract thing. How do you know if your business is moving forward, standing still, or sliding backward? That’s where numbers come in. They’re like your business’s vital signs – they tell you what’s working, what’s not, and where you need to focus your energy.
Let’s ditch the jargon and discuss the 10 key numbers you should watch and what to do when they go up or down.
1. Revenue Growth Rate:
Revenue growth is all about how much your sales are changing. It’s a super important way to see how well your business is doing, and you can check it every month, quarter, or year.
When sales go up, that’s a great sign! It means things are clicking. Think about what’s working—maybe that new product is a hit, or your marketing nailed it—and do more of that.
If sales are down, it’s time to figure out why. Are customers leaving? Is the market changing? Maybe prices need tweaking? Dig in, find, and fix the issues to get things rolling again.
2. Customer Acquisition Cost:
Getting a new customer? That’s your Customer Acquisition Cost (CAC). It’s what you spend on sales and marketing divided by how many new folks you snagged. If CAC is bigger than those new customers bring in, you’re losing money.
Spiking CAC means you’re spending more per customer. It’s time to check where your money is going: ads, sales, marketing. See where you can cut waste and try cheaper ways to get customers.
Dropping CAC? Awesome, you’re getting customers on the cheap! Figure out what’s clicking and double down on that stuff.
3. Customer Lifetime Value:
A customer is expected to spend the total amount of money with your business throughout their relationship. Alright, so we’ve got two key metrics to monitor: Customer Lifetime Value and Repeat Purchase Rate.
For CLV, consider it your maximum spend on grabbing a new customer. Know this number, and you’ll know how much you can invest.
As for RPR, a rising number? That’s a win. Happy customers mean repeat business. Keep doing what you’re doing! A falling RPR, though? That’s a red flag. Time to dig into why folks aren’t sticking around. Are they unsatisfied, or are we not delivering the goods?
4. Customer Retention Rate:
Keeping customers around, or customer retention rate, is about figuring out what percentage of your customers stick with you over a certain period. Getting new customers costs much more than keeping the ones you have, so retention is key for business growth and making money.
If your customer retention rate is increasing, that’s a good sign! It means you’re doing something right, and customers are happy. But if it’s going down, you’re losing customers, which we call churn. When that happens, you need to find out why. Are they finding better deals elsewhere? Are we not meeting their needs?
5. Website Traffic and Conversion Rate:
Okay, so this is all about figuring out how many people visit your site and how many of them actually do what you want them to do—like buy something or sign up for stuff. Basically, it’s seeing how well your website is working to attract customers and get them to take action.
If this number keeps going up, that’s awesome! Your site is becoming more popular, and people seem to like it.
If it’s going down, that’s not good. It might mean not enough people are visiting or they’re not finding what they want. You should look at your site and ensure it’s easy to use and has good content.
6. Sales Conversion Rate:
Your conversion rate is the number of people who actually buy something after interacting with you. It basically shows how well you or your sales team are closing sales.
If your rate is going up, that’s great—you’re making more sales, so keep it up! But if it’s dropping, that’s a sign you’re losing business. It could be that your salespeople need some training or that your products aren’t quite hitting the mark with customers.
7. Gross Profit Margin:
Essentially, the profit margin tells you what’s left after covering the cost of what you sell. It reflects how much you’re earning on your main offerings. A rising margin means you’re making more profit per sale, which is great news. But if it’s dipping, your expenses might be too high. It’s time to see if you can get better supplier deals or streamline your operations.
8. Net Profit Margin:
Essentially, the profit margin is what’s left of your earnings after you’ve paid for everything – rent, staff, taxes, you name it. Net income is your final profit after all those expenses. When this number goes up, you’re doing well. When it goes down, you’re spending too much. It’s time to consider your costs and see where you can save money.
9. Inventory Turnover Ratio:
Inventory turnover tells you how fast you’re selling and restocking your stuff. A high turnover means products are flying off the shelves, which is great! But a low turnover? That suggests you might be overbuying or struggling to sell.
10. Return on Investment:
Essentially, ROI shows how much profit you get from your investment. Tracking ROI on things like marketing or new gear helps you spend your money wisely. If your ROI is going up, you’re making good money. If it’s going down, you’re losing money and need to rethink your approach.
What to Do Next:
Make time regularly—weekly or monthly works—to check out these numbers and figure out why they bounce around. Then, use what you learn to make changes where needed.
Concluding Thoughts:
Numbers don’t lie. Tracking these key metrics gives you a clearer picture of your business’s health. You’ll be able to make smart decisions and keep your company growing strong.
Want to get a better handle on your business numbers? Let’s discuss how I can help you understand your data and grow your business. To schedule a consultation, call us today.
