The objective of any business is to afford its community a product and create extra money for the services provided. Ideally, this always goes as planned, but at times when it doesn’t, having an extra eye on the data analytics of your small business may make a significant difference. Metrics can include your best-selling products, most operable times of the year, day or week, and even how often you can have repeat customers. These data analytics for your small business can be measured in nearly every facet. By having all these distinct measurements available you can begin to compile a better plan for growing your business.
One essential component of data analytics is the concept of data matching. The definition of data matching refers to the process of identifying, comparing, and linking records from different data sources that correspond to the same entity, such as a customer or product. This technique can help small business owners gain a more comprehensive view of their operations and customer behavior, allowing them to make more informed decisions. By utilizing data matching, businesses can effectively merge their internal data with external sources, such as demographic information or market trends, to gain valuable insights and refine their strategies accordingly.
Here are eight metrics, in particular, to keep an eye on regardless of what kind of business you have:
In short, this is figuring out the proper metrics and time period within which they are to be achieved, setting them, and meeting them. It is often the simplest way to map and comprehend results and is considered the most basic metric.
ROMI/ROI – Return on Marketing Investment, Return on Investment
These are both fairly simple ways to use data analytics for your business. With the marketing investment metric “ROMI” being fairly more specific. ROMI is typically harder to completely grasp as it is calculated by the increase in revenue specifically attributed to increased efforts in marketing.
As such ROMI can be individually calculated for every individual channel adding even more specific grounds to where your business is succeeding with its marketing. This allows for more highly targeted, medium-specific ads.
Cost Per Lead, Customer Acquisition Cost, Customer Lifetime Value
In the context of business data analytics, this is the amount your company needs to spend to generate leads, the amount that it takes to acquire a customer overall (lead through purchase), and their return lifetime value to your company (what they will spend over the course of every total business dealing).
By weighing out and calculating these metrics, you can break down the highest value for each customer relative to your business. For instance, if a customer costs $10 dollars to acquire as a lead you may get 10 leads amounting to $100 total. If only 1 of those 10 pans out, you may spend another hypothetical $50 total getting them through the process, at this point, you have spent $150 total and netted 1 customer. Now the one-time purchase may only amount to $300, however, if they are a good customer and are consistent they may have a $3,000 CLV to you.
Net Income, Net Profit Margin, Gross Profit Margin
Net Income is the baseline. Generally, the biggest concern for a company is the metric that helps decide the business’s margins and the total earnings per share.
Net income = Total revenue – Cost of goods sold – Operating expenses – Other expenses – Interest – Taxes – Depreciation and Amortization
Net Profit Margin is a key indicator in the data analytics for your business of the business’s total prowess. In essence; the profit made on each dollar of revenue. This is key because revenue increases do not always translate into profit for a business.
Net profit margin = (Net income / Total revenue) x 100
Gross Profit Margin
The overall margin made before subtracting interest, taxes, and operating expenses is the Gross Profit Margin.
Gross profit margin = (Revenue – Cost of goods or services sold) / Revenue
Net Sales Revenue
Net sales revenue is the total sales revenue fewer discounts, refunds, and allowances. After deductions, it’s a company’s core business revenue.
Businesses utilize net sales revenue to assess their performance, profitability, and growth over time. It also calculates gross margin and net income.
Net Sales Revenue = Total Sales Revenue – Sales Returns and Allowances – Sales Discounts
Monthly Recurring Revenue
Monthly Recurring Revenue allows for a routine albeit modestly timed response for varied, yet averaged feedback on the capital influx. This is a good basis for any entrepreneur looking to keep an eye on their growth metrics. It also offers estimations for future planning and expansions.
Churn Rate, Bounce Rate, Conversion Rate
The Rate of current buyers lost is the Churn Rate. It is for any cancellations or non-renewals of a service.
Bounce Rate is the rate of loss of someone who hops off the sales funnel mid-process.
For businesses, the number of reported Leads that are converted into paying customers is the conversion rate.
Lastly, the growth rate is the year-by-year increase or – hopefully not, decrease of your business. It’s a simple number you can plug into a spreadsheet to get a quick snapshot of your company’s vitals.
Sales growth rate = (Current year revenue – Previous year revenue) / Previous year revenue x 100
In conclusion, by understanding data analytics for your business and the essential few equations to clue you into your rough business data; you can begin to shape your business understanding into the best frame possible. Make use of this knowledge to focus your efforts for the most long-term success. And if you play these metrics properly, that should be many.