Whether you’re analyzing your business’s data yourself, or engaging the services of a data analytics expert to assist with this, certain key metrics need to be considered. Some of the most critical metrics you should be monitoring include your business’s sales success and customer churn, as well as your marketing methods, financial factors, and daily operational data – just to name a few.
If you’re keen to give it a go, an MBA in Data Analytics can equip you with the necessary skills to perform these processes. If you’re too pressed for time, however, our guide to the top five data analytics metrics will give you a snapshot of what you should look into as a business owner.
Business Analysis Metric #1: Measuring your Sales, Revenue and Profit Margins
When it comes to measuring your business’ performance, one of the most important metrics to monitor is your profitability. This means reviewing your total sales and revenue, as well as analyzing your overall profit margins.
The most effective way to analyze your sales success is to look at your rate of conversion. Conversion is critical, as it can help identify where things are going right in the sales process, as well as areas that need improvement. You may be generating interest in your product through your marketing efforts, but if customers are not checking out and purchasing your wares, there may be something wrong.
In addition to this, observing how your revenue is tracking over time is an excellent way to monitor your business growth, and to assist with future financial projections. It can also help you to ascertain the continued viability of your business.
Business Analysis Metric #2: Analyzing, Evaluating, and Defining Your Client Base
As a business owner, you’ll understand how important your customer is to your success. Evaluating your client base, and getting to know your customers’ buying habits, is central to ensuring they continue to purchase from you. To do this, you need to have an understanding of how marketing concepts such as the consumer buying cycle can impact your sales conversion.
Conversely, it’s also just as important to be aware of when repeat clients do not return. Commonly referred to as ‘customer churn rate,’ this can indicate when you’re losing clients – giving you the opportunity to analyze why there is customer dropoff and then finding ways to incentivize customers to return. Incentives can include promotional discounts or gifts with purchases. We’ve all received the ‘we missed you’ eDM from retailers we’ve bought from in the past. Often, this will contain a discount code for use on a future purchase. This is an effective strategy that can draw clients back in, and have them return to your brand.
Business Analysis Metric #3: Observing Your Operational Data
What exactly do we mean by operational data? In business, this quite literally refers to the daily operation of your business, and how operational factors can impact it. Some of these factors can include:
- Store inventory levels
- Stock turnover ratio
- Employee productivity
- Cash flow management
Business Analysis Metric #4: Monitoring Your Marketing Methods
Analyzing what you’re doing well in your marketing campaigns, and what needs improvement, is also essential to business success. Your marketing efforts, after all, are what drive your brand awareness, engage your customers, and help generate new sales leads. As such, understanding how marketing strategies can impact your business is essential.
Business Analysis Metric #5: Understanding Your Finances
Understanding the finances of your business means, first and foremost, looking at your cash flow. What is your business spend, versus your revenue? Are you balancing your expenses when compared with the funds coming in? This knowledge is essential to ensuring that your profit margins remain high. If you’re spending too much to keep your business afloat, and not earning enough to not only cover your expenses but also make a profit, you will not succeed.
Of course, in the early stages of business ownership, you’ll need to outlay considerable costs to get afloat. Launching, establishing, and growing a business is expensive, and you may not break even for the first few years as a new business owner.
Despite this, if you stick with it, the benefits of being a business owner are massive. From becoming your own boss and being in total control of the outcomes of your ideas, and of course, the potential for uncapped earnings, owning a business can be exceptionally rewarding.