5 good reasons to make metrics your mantra
We live in the digital age. No action today is taken in the developed world without it being processed, categorized and filed away in a database of some kind. That’s a lot of information to store, and it’s growing exponentially year on year.
With all of this information at our fingertips, analytics is becoming a key staple for companies across the globe. It’s not enough just to store terabytes of data, you need to be able to put it to work for you – this is where metrics come into play.
Say, for example, your company has had 15,000 paying customers this year. That’s all well and good, but how old were those customers? Why did they choose to spend with you? How much disposable income do they have? Were these single purchases or will they be coming back?
Make metrics your mantra and you’ll have much more control over things like…
So your business is up year on year, congratulations! But wait, where has that money come from? Ensure you have the right metrics tied to your financial reports so you can keep a closer eye on things like average customer spend, price-to-earning ratio, revenue per employee, market share and price point within the marketplace.
Maybe you’re up year on year because you’ve increased your prices? All well and good but if at the same time you’re losing customers, you still have an issue on your hands – and one that needs addressing fast!
So you’ve identified that your customer base is shrinking, one of the reasons for this might be quality. Metrics that measure service and product performance are integral to customer retention. Perhaps the overall level of service delivery is varied in terms of quality? Maybe a product keeps failing?
In addition to this, quality extends also to your back end – manufacturing processes and internal systems. Maybe a piece of machinery regularly fails, driving up maintenance costs. Perhaps your CRM system constantly drops customer data it has supposedly saved? It’s important to collate, measure and review all of this information on a regular basis to address any issues that could be causing your business a small fortune in lost custom and man hours!
We’ve touched on customers already, but in reality we’ve just scratched the surface. Who are your customers? Where do they come from? What income bracket do they sit in? How do they like to be contacted? Do they have a family? The possibilities here are endless, and a good CRM system can be worth its initial investment ten times over provided the information is being used intelligently.
Customer data doesn’t end at sales and marketing opportunities of course – you should also track the rest of that customer’s journey. Are they still buying from you 12 months on? If not, why not? How is order processing? Do they find your service easy to use and your company easy to contact? Customer retention is just as important as customer acquisition, remember that a high customer churn can impede business growth so decide on your metrics here and begin crunching the numbers!
Did I mention we live in the digital age? It’s mentioned so often it has become clichê I know, but it’s important because not only does it mean customers want it now, it also means if they’re unhappy, everyone else hears about it!
That’s a good thing by the way, companies should be held to a higher standard. And poor service or businesses who fail to value their customers do, on occasion, need a hard reminder just who is keeping the lights on in their offices.
It does also mean though, that an isolated incident is isolated no more – as customers now regularly take to Twitter or Facebook to voice their displeasure and things can quickly get out of hand from there. Social media metrics, news alerts and other tools can all be employed to monitor company reputation and public perception, allowing businesses to act much faster in the face of a crisis.
#5 The future
So what do all of these metrics amount to? Well, first off you have a clear, broad picture of your business as a whole as it is now, but you can also begin to accurately forecast where your business will be tomorrow.
More accurate projected sales of existing products and services, more educated estimates of stock price, new products and future pipeline are all possible with the right tools and the right metrics. Of course no one can really predict the future, but you can ensure you have absolutely all of the information all of the time, ensuring at least that the deck is stacked in your favour more often than not, meaning that your forecasts should also (more often than not) be accurate too.