What numbers should you track in your business?
This is when I wish I had my dad’s engineering mind so I could more eloquently talk about a flywheel. You know, a spinning disc of heavy steel, something about momentum and storing rotational energy. Listen this is about numbers, not physics, but I want you to think about your business as a flywheel for a little bit.
At first, it takes some energy to get it spinning but then you can use leverage and figure out where the levers are so it becomes easier and easier. As your business grows, it requires more and more energy but with a handle on the levers, you’ll be able to keep up the momentum effortlessly.
The levers I’m talking about in the flywheel that is your business are the numbers.
Every business is different, and depending on your goals which are unique to you, deciding on which numbers to track is important. There will be levers or numbers to track for marketing, sales, operations, and finance. Being able to measure where your business is, what the course trajectory is, and being able to anticipate that means you’re planning and being effective rather than spending your time dodging bullets. Let me ask you a couple of questions.
Do you know what it costs to acquire a client?
Are you regularly reviewing your scorecard?
Do you know your average order value?
I ask these questions and many more like them, the answer to most of these questions is no. Just like our best intentions on New Year's day to drop a few pounds or start saving money, we don’t stay on top of the numbers. I get that it doesn’t sound fun, numbers are needy and I hear a lot of people say “I don’t like numbers”.
If you want to grow your business, you need to get some religion about your numbers.
To be able to fly a plane, you must be able to read all the instruments… even in foggy conditions
There are three components to tracking your numbers
1. Reading and telling a story from the numbers
It’s time to first take stock of the metrics you currently have access to. Who in your team has access to or generates the reports, and is there a crystal clear objective for what’s being collected. Once you have taken stock of what you have now, it’s extremely important to know what numbers to measure in your business for marketing, sales, operations, and finance.
Focus on key performance indicators, 'key' being the operative word. You don’t want to waste time tracking useless data. How do you choose which numbers to track? Start with your goals and what progress you need to make towards those goals, and that will inform the KPIs you want to look at. It’s also important to start tracking what you want to improve!
2. Measure and manage
You need to have a process in place for capturing and evaluating your numbers and have it diarised when it’s going to happen. It doesn’t need to be fancy, a simple Google sheet to track the numbers to start with is fine. As you get more into it, then you can develop your scorecard or your dashboard for tracking the numbers and the KPIs in your business.
The important thing is to start measuring so that you can start making strategic decisions based on results, not reasons or whims! You are not a weather vain.
3. Taking action
By taking stock, choosing the numbers to track, and getting started with the regular review of your numbers, you will get into action. The more historic data you have to call upon, you can start to take action and even anticipate so you can successfully manage the growth of your business.
When I start working with one-to-one coaching clients, we always start with the numbers, and as we get into it opportunities start to present themselves.
Here are a few examples of how numbers have helped to make strategic decisions
With one client, we noticed a drop in organic traffic to their website, and that directly correlated with a drop in enquiries. We took evasive action, stepped up the email marketing, ran a trial PPC campaign, and corrected avoiding a devastating drop in revenue.
Another client hadn’t looked at the cost of leads for a little while and costs had started ramping up towards £100+ which wasn’t sustainable. We reviewed the sources of lead generation, switched to a new campaign (after validating it organically), and now we have a cost per lead stabilised at around £4.
I’m a big fan of growing your email list and email marketing. A client had been actively sending out campaigns but not taking note of the open rates and click-through rates. We implemented some A|B testing, increased the open rates by 15%, and one enquiry, as a result, ended up in a £100,000 project.
What about another client who hadn’t calculated their attrition rate and realised they needed to grow their new client base by 33% per month to break even. We took swift action to strategise ways of improving client loyalty and plug the profit leak asap.
In my own business, I’ve been running an ad to a micro offer, if I only looked at the ad performance, I’d think the campaign was a huge success and it has been a successful ad. However, something is dismal on the landing page as it’s not converting. Either the landing page is broken, the messaging is wrong, or the market doesn’t want this particular offer.
The list goes on. I share these results with you to reiterate the importance of tracking numbers not only to measure performance but to find opportunities. If you constantly make incremental improvements to impact areas in your business, what would the impact be on sales, revenue, and profit?
The numbers to track
There are dozens of metrics you could track. Size of your email list, open rates, engagement on your ads, bounce rate, page views, web visitors, inbound enquiries, cost per lead, cost of client acquisition, sales velocity, the revenue per source. It goes on and on, and it can be overwhelming. If you’re completely unsure of where to start, I’ve got a little cheat sheet with the 5 most important KPIs to start tracking now! If you send me an email stating “numbers” to firstname.lastname@example.org, I will share this very simple dashboard template with you that I only give to my Growth Code clients!
The universe rewards action, put the time in your diary now to start looking at the numbers. If I told you that in 15 minutes you could make £100,000 in your business you’d do it, so what are you waiting for?
If this is an impact area in your business that you need help with, my business coaching experience would be ideal for you to dip your toe in the water, see if coaching is for you while we work on some specific numbers in your business.