Parameters like profitability and growth give a tangible measure of success, but there is much more to success than mere data and numbers.
We have listed out 7 conventional metrics with some that are intangible so that you can get a more holistic approach to measuring the success of your business.
7 Effective Ways To Measure The Success Of Your Business
1. Financial statements
All businesses must have these 3 documents:
- Income statement
- Cash flow statement
- Balance sheet
It’s important to keep your income and expenses on the same balance sheet to make sure you’re staying in the green.
A good way to track everything automatically is with FreshBooks, which will come in handy when you have to pay your taxes.
Here are 5 tax deductions every entrepreneur needs to know about and a list below of 34 tax deductions bloggers need to know about!
Pin the image below to remember everything for tax season!
2. Sales indicators
Sales indicators such as volume and frequency of sales can give you a clear indication of the overall success of the business.
You can go more granular with the data by breaking down the sales into those generated by new or repeat customers on your email list and also get other important figures like profit per sale, products/services/categories yielding maximum sales, and more.
Keeping track of these numbers can give you a fair idea where you are headed and whether you are poised to experience growth in the future.
3. Number of customers
Without any doubt, a growing number of customers is another sure sign of success. This is a quantitative metric that includes new, repeat and referral buyers.
Businesses thrive with the growth in the number of buyers because new and repeat customers who are happy with your offerings are bound to bring in more through referrals.
You can smarten up your selling strategy by giving referral incentives to those who help in driving more customers for your products or services. For example, LadyBossBlogger offers 40% of the sale for all their affiliate partners.
Also make sure your customers are in your email list to keep track of everything from how much they have purchased from you, what they click on, and what their interests are for future promotions.
Grow your email list with the following free webinars:
- Get Your First 1,000 Subscribers – Beginner
- Earn Your First Dollar – Beginner/Intermediate
- Email Copy-writing Tips – Beginner/Intermediate
- Make More Sales With Funnels – Expert
Example below of LadyBossBlogger’s email growth from 0-14K in 1 year. She talks about how she does it in her course Start And Monetize Email List and how you can use the same strategies to grow your business!
4. Level of customer satisfaction
Customer satisfaction is hard to measure but it plays a vital role when it comes to measuring your organization’s success. There are some helpful tools available to get a figure that indicates customer loyalty.
For example, you can use net promoter score to categorize customer loyalty. A high score is a clear sign that you are matching up to their expectations and will definitely be able to capitalize on their loyalty to achieve your targeted growth.
Another great way is for customers to write reviews. Check out 170+ five-star reviews on LadyBossBlogger’s facebook account.
Example below of another happy customer who purchased LadyBossBlogger’s Start A Money Making Blog course and wrote about it on Facebook.
5. Employee satisfaction
Business success is not just about happy customers but about happy employees as well. When your workforce is happy with the environment and culture within the organization, they feel motivated and their output and efficiency increases automatically.
Therefore, it becomes crucial to evaluate the measure of employee satisfaction too. Like customer loyalty, employee satisfaction is also a qualitative metric and getting an accurate measurement is difficult.
You can use tools such as surveys to gather data from the employees and come up with a numeric value of satisfaction.
6. Marketing effectiveness
A robust marketing strategy is the backbone of any business because it gets you to achieve the targeted sales needed to sustain and grow.
Ideally, a measure of the Return on Investment (ROI) of your marketing initiative gives you a fair idea about the direction your business is moving in for the assessment of growth and success.
Other Key Performance Indicators (KPIs) that can be used to measure the effectiveness of your marketing strategy include cost per lead, cost per sale, conversion rate and customer lifetime value.
Optimal values of these KPIs are a clear indication of business success.
Example below of when your customers start marketing FOR YOU (this is the best kind of marketing)!
7. Measurement against benchmarks
Every entrepreneur has expectations of their business, but the ones that succeed implement measurable and time-bound benchmarks that can be used for evaluating the actual performance for specific time periods.
For example, you may set up the target of a certain percentage increase in revenues on a quarterly and annual basis. If you are able to match these benchmarks, it is a clear sign that your business is traversing the growth route.
Considering these metrics, it becomes clear that the success of a business is not only based on quantitative measures such as high profits and revenues.
Qualitative factors such as customer loyalty and employee satisfaction are equally important to assess your success in the long run.
According to these 7 tips, how successful is your business and what do you need to work on?