What are the key metrics you are using to monitor and manage your business? Critical metrics certainly include revenue growth, same store sales and customer growth. However, I would like to propose 5 additional metrics that you may not be tracking…but should be. These metrics help create a disciplined approach to managing the marketing funnel. Managing the process from pulling in new prospects through building loyal advocates is critical to any business – B2B or B2C, Retail, Brand or Resort.
The metrics below as shown in the funnel above help follow a customer through the full life cycle.
- Our first metrics is Count of Prospects – How many prospects do you have to market to. This metric is critical to understanding future sales opportunity. Prospects are individuals who are known to your business but have not yet made a purchase. Count of Prospects should be calculated on a daily or monthly basis to understand how your pool of prospects is growing.
- Key Metric #2 is related and defines the success of your prospect marketing program – Prospect to Customer Conversion Count. This metric tracks how many prospects get turned into customers on a daily or monthly basis. Success will look like a growing rate of conversions from Prospects to Customers.
- Once we have converted prospects to customers, we need to ensure that these customers are happy and come back to buy again. The easiest way to measure success here is through a metric such as Customer Retention Rate. Typically, this is calculated as the Percent of Customers who have re-purchased over the past 12 months divided by the number that have not. Prospects should be excluded. A benchmark for what your retention rate should be is specific to your industry. However, the best mark of success would be a steadily growing customer retention rate over the course of time measured on a monthly basis.
- Number of Days Between Purchases – How long does it takes for a customer to make a repeat purchase is critical to under for several reasons. First, if you understand this timing, you can better market to your customers and help drive success to your business rather than the competitor. Second, this metric can be elastic and driving this down can have the same effect that lowering inventory turns has to a manufacturing company…increase profits and lower costs.
- Finally…we now understand our customer base, understand how many are making repeat purchases and how long this takes. But are they happy with your service? We would suggest monitoring a Net Promoter Score over time. It is probably best to calculate this on a monthly basis. Net Promoter Score measures the answers to this question: How likely is it that you would recommend [our company] to a friend or colleague? Here is a link to the NPS entry on Wikipedia to better understand how this metric is calculated.
Measuring these 5 key metrics can help you to better understand and manage the success of your business. Are you using any of these metrics or are we missing a few that you feel are critical to your business? Let us know by taking the survey below!