by Lorraine Ball
Good marketing is all about the numbers. The question is which numbers. Most successful small business owners check their financial statements regularly, monitoring sales, expenses, receivables, accounts payable, overhead and bottom-line profit. A monthly review of these numbers provides a quick snapshot of where you are at any point in time and how that compares to past performance.
The financials are only part of the story. They can help you predict next month’s cash flow but won’t provide insight into future sales. In a way, the picture these numbers paint is like driving a car by looking in the rear-view mirror. It is easy to see where you have been and how you got there, but there is no clear path to your destination on the road ahead.
Predict the future, by establishing KPIs (key performance indicators) which measure the activities preceding a sale. These will vary based on your business and your customer’s buying process. To pick the right numbers outline the steps a prospective customer goes through on the way to making their purchase.
For example do they open a newsletter, click on an ad, complete a contact form? Each of these steps can be measured. Picking the right metric makes it easier to anticipate when sales will slow down or pick up and adjust marketing efforts accordingly.
Sales is the ultimate metric, but what do they do before they buy?
By studying behavior patterns and changes in KPIs over time you can establish targets for each metric. If any metrics falls below the target it is easy to make small adjustments to get back on track.
KPIs might include web traffic, search position, conversion form submissions, email open rate, engagement on social media.
Select metrics which make sense for your business, that you can impact and track.
Tie KPI’s to specific objectives
KPIs are a unique subset of all the metrics in your business. These metrics are directly tied to an end result. What types of things should you consider to be KPI’s?
For each business it’s different depending on what you are trying to accomplish including but not limited to: increased sales, reduced turnover, improved efficiency, and reduced errors.
Specific, Measurable and Action oriented
If you have trouble collecting the data, it is unlikely you will do it on a regular basis. In addition, if your KPIs are vague, it is easy to convince yourself you are doing “fine”.
Remember, you are not tracking these numbers for the sake of tracking numbers you are heading toward a specific goal. Each metric should have a specific set of actions you will take to improve performance. You will not reach a goal if you don’t know how to get there.
Limit the number of KPIs
It is easy to get overloaded and track too many key performance indicators at once. The right number is between five and seven. More than that and you will be spending your time collecting data instead of taking real steps to improve your business. Over time you may discover a particular metric doesn’t give you a good indication of future performance, so swap it out.
Consistency is the key to success
You are not going to unlock the keys to your future after one month of collecting data. However, over time, you will find patterns which begin to paint a picture of your future.
Digital marketing strategist, Lorraine Ball has spent 30 years working with small business owners. She has collected the best of her training, tools and resources in the Digital Toolbox (www.digitaltoolbox.club) She is also the host of More Than a Few Words, a marketing podcast, available wherever you listen to podcasts.