What is that one thing you should do every day to ensure your success? The short answer is “show up”. However if you show up, but don’t track the results you get by showing up then how do you know if it was really a success? There are a multitude of things to be done daily that will ultimately translate to success and every business owner has his/her own definition of success and what to measure to achieve it.
As a business owner, it is necessary to measure and track revenue, operating expenses, gross profit, operating income and net earnings. In order to build a profitable, sustainable business, you need to go farther and develop performance benchmarks and metrics to measure and track your progress. Just “feeling good” about how the business is doing and the prospects for a bright future are not enough.
“If you can’t measure it, you can’t manage it.” ~ Peter Drucker
How Do You Measure Success?
For sales, as an example, you need to develop performance metrics to track activity and results.
- # of Dials (Connections).
- # of First Calls (talked to the decision-maker).
- # of Sales Calls.
- # of New Proposals.
- # Closed Sales.
- # of New Customers Added.
- Revenue from New Sales.
- Sales Conversion Rates.
- Sales Goals vs. Actual Results.
Other critical sales related metrics to track and evaluate.
- Average sales transaction size.
- Average return on sales.
- Cost of acquiring a new customer.
- Average frequency of purchase.
- Average customer life-cycle.
- Lifetime value (LTV) of a customer.
- ROI on customer acquisition.
Establishing similar metrics for all functional areas of the business is important to broadly measure success and identify any performance gaps.
“You can’t improve what you don’t measure.”
Now, another very important consideration is to select the right benchmarks for comparison to determine how you’re doing against the established performance “standards”.
Measurement Standards to Consider
- Competitive ranking.
- Historical performance.
- Business plan objectives.
While it’s incumbent upon every business owner to measure and track performance, unless you have the right benchmarks in place for comparative purposes, you’re just collecting data.
There are many qualitative and quantitative factors that ultimately go into determining how to define success. The more factors that can be measured and benchmarked to mark your overall progress, the better the odds of long-term success.
Please share below what metrics you use to measure success. Are you going to change anything after reading this post? Let’s discuss.