As industries across the world continue experiencing rapid digital transformations, business owners need to ensure that they have as much information at their disposal as possible, both to guide their own development as well as improve on their products and services.
Understanding how your business is performing, the impact your marketing efforts are having, the health of the market as a whole, what your competitors are doing, and all other relevant variables, is vital to your company’s performance moving forward.
Nowadays, business owners are urged to invest in data collection in any capacity so that they can perform in-depth data analytics. In doing so, they will ensure that their company has the strongest chance of gaining a substantial share of its market niche.
As the marketplace becomes increasingly more competitive, however, it has naturally become more challenging for modern businesses to stand out from the crowd. But the old adage “knowledge is power” rings especially true here, because the more that you understand about your own business, your competitors and the market as a whole, the better a position you will be in to make the right decisions for the direction of your organisation.
Modern business owners will also be glad to hear that gathering information nowadays is easier than ever as there are countless digital tools, cloud-based platforms, and other solutions that you can use to ensure you have access to all the data you need to map out your business’ growth strategy.
Let’s take a look at just some of the metrics that you should be watching as an SME business owner in our current economic landscape.
Customer Retention Rate
One of the most important metrics that every business owner should pay close attention to is their customer retention rate. When you are analysing the performance of your business, it’s important to pay attention to not only the trends in customers that you have served, but also the percentage of those customers that are bringing in return business.
Holding onto customers is growing increasingly difficult as there are more and more options for consumers than ever before. That’s precisely why customer retention is such a valuable asset. Maintaining a high customer retention rate will let you know that the processes you’re using are absolutely working, as your customers are not seeking alternatives to your offerings.
Lead Drop-Off Rate
As most experienced business owners will know, you cannot expect every single lead in the pipeline to convert into a sale. However, if your lead drop-off rate is high, this means that there may be issues with your lead nurturing strategies that need attention.
Understanding where in the sales funnel customers dropped off will help you to make important changes to convert these potential clients in future client interactions. Armed with this information, you can identify where your customers are growing disengaged and start testing new strategies focusing on these areas to improve drop-off levels in the future.
Customer Acquisition Cost
Another key data point that small to medium-sized enterprise owners and management should pay close attention to is your customer acquisition cost. As the name suggests, this is how much money it is currently costing you to acquire a new customer.
The ideal scenario is to have a low customer acquisition cost so that you can maintain a high return on your investment. If you are spending more money attracting new customers to your business than the revenue they are generating within your business, it might be time to reevaluate your current acquisition processes and strategies.
Of course, evaluating and reducing your customer acquisition costs should be considered an ongoing process, as these financial figures are subject to change depending on the state of your market and any developments in your business.
For this reason, SME business owners are encouraged to invest in in-house data analytics professionals in order to ensure that they stay up-to-date with both their CAC as well as all of the other highly valuable metrics we’ll be exploring today.
Understanding Cash Flow
For any SME to be successful, it’s essential that they have a clear understanding of how much money is coming into the business and how much is going out. Regardless of how your business might appear to be doing or how high demand is for your offerings, if you don’t have enough cash flow in the business, you may leave your organisation in danger of overextending with regards to your investments, leading to financial strain or potentially even premature bankruptcy.
With an accurate cash flow forecast, however, you can plan for the future with a lot more confidence. Keeping one eye on your cash flow data while simultaneously looking ahead and forecasting profits, you will have every chance of keeping your business afloat and remaining competitive in your industry as a result.
Monitoring Your Revenue
While there are many reasons that people get into business, the primary reason is naturally to create revenue. When you start a small business or an SME, you are doing so with the sole purpose of making money.
Even if you have loftier ambitions that you want to achieve through the success of your company, you will not be able to achieve them if you do not generate enough revenue and grow your business.
It’s important to note here that there are many business owners out there who may tell you that revenue is ultimately the only metric that matters for SMEs and that everything else is simply vanity. But for each of these singular-minded business owners, there’s a data analytics specialist who will tell you otherwise. A thriving business relies on a holistic approach to their own growth and development.
This means that each and every single one of these metrics is valuable both on their own, as well as with regards to their relationship with one another. Bolstering your CAC will naturally result in a higher ROI, which will in turn, help boost your revenue.
Utilise Data Analytics To Ensure Your Company Performs At Its Best
There are so many different data points that you can analyse nowadays as a business owner. Tracking and monitoring all of this data can be challenging and it is easy to become overwhelmed with all of the information in front of you.
However, with the right data analytics strategy in place and by focusing on some key areas, such as those outlined above, you can be confident that your company will be able to perform at its peak and stand tall against all of its competitors.