The Numbers that Really Matter for Your Business
Creating benchmarks that work to grow your business and improve profitability along the way requires an intimate knowledge of your company, customers, and team members. Your competitors’ metrics choice rarely matters except to provide fodder for bragging rights. If they have 10,000 Facebook followers and your company has 100,000, it may look good to your CEO but it doesn’t mean that you are ten times better. You may be much worse because their 10,000 may consist of loyal customers while your 100,000 are people who liked you when you said something funny or shared a viral video.
The same is true with customers. If your competitors have 200,000 people in their active customer file to your 100,000, you may still be light years ahead of them. Their file may have 150,000 hit & run customers to your 10,000. There is simply no way to compare metrics from different companies and deliver realistic results.
Competitors’ service levels don’t matter either. If your customers expect to receive their order in five days and receive it in four, you’ve exceeded their expectations even if your competitors are delivering orders in three.
Everything is relative and must be treated as such. Defining the numbers that really matter for your business is a project that starts with sales and profitability. It then drills down to the cause and effect items that ultimately make or break businesses. The process of identifying and analyzing the data for the benchmarks is as important as the final results because you discover things along the way.
When looking at data, invariably you’ll notice things that aren’t showing up on reports. Things like items being ordered together, oddities in shipping times, and abnormal service requests. The process is so beneficial at providing insight to unexpected events and effects reviewing the raw data on a regular basis is a best practice.
There are numbers that matter for every business. They are your starting point for defining benchmarks. They include:
- Sales Dollars
- Average order/transaction (This helps you compare channels and campaigns.)
- Customer Acquisition, Retention, and Attrition
- Service Levels
When these numbers are established as benchmarks, start drilling down into your data for more information to help you grow your business. You may just find a gold mine.