Quick tips: Using metrics to track your business's growth
Learn what you need to watch to measure your business growth.
1. Sales revenue
This is the bedrock of your business metrics. Sales revenue, or the income generated by customer purchases of goods and services, is a chief priority for every business owner. When you launch your business, growth will likely be slow, but the pace should accelerate as you grow.
2. Units sold per customer
Counting the number of products or service units sold per customer helps you quantify the size of your customer base, which in growing companies typically increases alongside sales revenue.
3. Customer acquisition cost
Divide what you spend on sales and marketing by the number of customers you acquire during a given timeframe. This provides your customer acquisition cost.
4. Lifetime value
Growth requires not only acquiring new customers but also retaining existing ones. For your business to grow, a customer's lifetime value should be at least two to three times your customer acquisition cost.
5. Conversion rate
Track the effectiveness of your website by monitoring the conversion rate. This is the number of visitors who purchased your product or otherwise met one of your goals (for example, signing up for your e-newsletter), divided by the total number of visitors. For example, if your website is visited 100 times and 10 of those visits convert into a sale, you have a 10% conversion rate.
By tracking metrics beyond sales and revenue, you can get a more complete picture of your business. This will help you evolve your business strategy and set the course for long-term success.
Learn more about key small business metrics.