Business Indicators: Measurement for Business Performance
Business performance is the key indicator of the health and future of your business. Which tools are you employing to gain an accurate picture of your business performance? Business indicators are those vital components that you measure on a daily, weekly, and monthly basis. Seek quantifiable items to give you a clear picture of where your business stands, as well as guide your future decisions.
Five questions for you:
1. Do you measure your business performance indicators consistently? Which system do you use for keeping track of them? Traditionally, businesses have used the SWOT analysis to list strengths, weaknesses, opportunities, and threats (SWOT). It is a simple concept that is easy to apply. The questions and suggestions included in this blog will help illuminate details in your analysis.
2. How many indicators do you utilize to measure business performance, and how often? Do you use Google Analytics? Most social media platforms, (YouTube, FaceBook, Hootsuite) have tools to help you gain an accurate picture of your online marketing efforts. Social Media Examiner shares some of the better ones here.
3. Which indicators do you measure?
4. Do you know what causes growth in your business?
5. Do you know what stops growth in your business?
Improve your business performance with these ten key business indicators
Day to day activity is the true generator of business performance. It is critical to create a plan for working in your highest income producing activities. At Pici & Pici, we specialize in helping clients employ a priority management system to regulate action steps necessary to reach business and sales goals. The following are the heartbeat and the pulse of your business.
1. Lead generation methods
How many different ways do you generate leads? These could include LinkedIn, other social media, networking groups, professional memberships, etc. Lead generation describes the marketing process of stimulating and capturing interest in a product or service for the purpose of developing sales pipeline.
2. Sources of leads
How much business are you attracting through your lead generation strategies? Where are your leads coming from? Are pay-per-click, podcasts, webinars, trade shows or other in-person events working for you? Do your networking memberships gain paying clients or are you just seeing the same tired faces week after week? Do you need to gain more social media savvy?
Remember, the definition of a crazy person is to keep doing the same things over and over again but expect a different result. Is it time to revamp your lead generation strategy?
3. Sources of best clients
Who are your highest income producing clients? What are you doing to attract more of them? Which of your current clients provide quality referrals? Do you need to ask for referrals more frequently?
4. Cost per client
What is the average cost of obtaining new clients? Pay-per-click advertising is easy to analyze. Other marketing efforts such as newspaper advertising and networking memberships require more careful examination. Remember to include your time as well as gas, etc when you are calculating any lead generation strategy that requires travel.
5. Phone calls
How many phone calls do you make daily? I recently coached a man who told me he’d lost his momentum – his mojo. I had him hold up his index finger, telling him, “That’s where your mojo lies!” We recommend a minimum of 10 calls per day which only takes about 45 minutes. This results in 50 calls per week or 200 per month. If you speak to 200 qualified prospects per month you will generate consistent income.
6. Phone call to appointment ratio
How effective are you at getting face to face appointments? Are you assessing your business performance for conversions to appointments? For example, out of 35 phone calls, 20 people pick up the phone, and you get 10 appointments. That’s a 50% conversion ratio. Your success and the success of your business is based on the number of appointments that result in closed deals.
7. Direct meetings per month
This is the number one indicator of business growth, so it’s important to keep track of how many you’re doing. We have found that the ‘magic number’ for sole proprietors is 20. If you will do 20 sales presentations per month your business will gain consistency and growth. To keep myself on track I record each appointment on a whiteboard. My office is covered in whiteboards, but the most important one charts my meetings per month. I know exactly what my numbers are.
8. Closing ratio
How many meetings are generating business? How many deals will you close if you do 10 meetings? You want about an 80% closing ratio. If you are not closing at least 50% you need to improve either your sales and presentation skills or the quality of the prospects you are meeting.
9. Active proposals
How many proposals do you have out right now? How many do you put out per month? We know that when we go to proposal, about 90% of those people will end up doing business with us.
10. Profit per client
Net income is the amount of money you make minus the expenses incurred in making it. Ignore your gross income. When you get paid for business, how much do you keep? What is your profit margin? I have a profit and loss sheet where I log every single expense. Once you master sales skills and you know your product, you should be making a good income in sales. If not, consider a better target market that will pay you what you’re worth. Essentially, change what you’re doing or change who you’re doing it with. Sometimes it’s not about working harder. It’s about working smarter in the right places.
Be honest with yourself. Some of these questions may be painful, but if you want to take it to the next level, it’s important to carefully analyze where you stand. Focus on the prize and then pay the price.