The straightforward way to measure the success of your business is to check profit and loss. As times change, there are other variables that need to be taken into account as well.
Business metrics that give you a deeper insight regarding the health of your business need to be taken more seriously.
Customer Acquisition Cost (CAC)
How much are you spending on acquiring new customers? You need to add up the cost of marketing and sales and then divide it by the number of customers over a particular period of time.
If you find that you’re spending too much, you need to try and lower the cost so that more customers can be got onboard. It won’t be easy, but this is one metric that gives you a real idea of where your business is headed.
Lifetime Value of a Customer (LVC)
How much does the average customer spend on your products and services? This becomes a little difficult to determine in the startup phase, but as time passes by, LVC can be easier to find out.
You need to ensure that the lifetime value of a customer is always high. This way you can afford to spend more on acquiring new ones.
Churn Rate
This is an important metric that tells you whether your business is on the right track or not. Over a period of time, you will lose a few customers, here and there. That’s a fact you need to deal with in the right manner.
The churn rate tells you how many customers are leaving you for something different. This could be happening because of a number of factors: drop in production quality, better competition, weak customer support, etc.
Make sure you keep a close eye on the churn rate so that your business does not leak customers.
Measuring social media ROI
All businesses use social networking sites to stay in touch with their customers. This means a lot of funds are poured into the art of staying relevant online. How do you measure the ROI with regard to social media?
A Klout score of your Facebook page is a great primary indicator. After that, you can dig deeper with a Share of Voice report. If that’s not enough, the Daily Story Feedback tab on Facebook Insights can give you a holistic view of how people are reacting to your posts.
Overall, success metrics are even more important in today’s ever changing business environment. You should know what makes your business click.
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