Every entrepreneur’s dream goal is to develop a revolutionary product and strong brand to attract and provide value to customers. However, in order to do so, you need to establish and follow the key ways to actually measure your business’s success.
How do you know whether your business is successful? What parameters should you measure to evaluate your company’s success? Is being profitable enough for a business to achieve success? All of these factors are key to keep in mind to measure whether (and the ways in which) your business is a success.
Know what success looks like
Before you go ahead with your measurements, you must understand what exactly it is you are measuring. Most business owners assume that hard profits are a clear indication of business success. But while financial health is integral to your company’s survival, it isn’t the only parameter to be concerned with.
At its core, a business is considered successful when it resolves an important pain point for its customer base. Also, it must be capable of evolving with growing and changing customer demands – all this on top of remaining profitable over time.
If you want to analyze whether your business is successful, you must evaluate it against different parameters, including sustainability and scalability. Develop a clear idea of the overall impact your products and services have on your customer base and society at large. By defining clear, realistic, and measurable goals that you want to achieve, you can choose the right metrics for business success evaluation.
1. Evaluate the company’s current financial state
It’s likely the first things that come to mind when wanting to measure business success are impressive profit margins and revenue markers. But unless you have a clear idea of your company’s financial health, you can’t determine how successful it has become.
There are various ways to analyze your company’s financial health. Make sure you keep an eye on the following metrics during evaluation:
- Gross profit margin: This measures the amount of money you’ve made, after deducting direct costs of sales.
- Operating margin: Your operating margin factors in account operational overheads as well.
- Net profit margin: This indicates how much money you’ve made after deducting sales costs and overheads, as well as interest and taxes.
- Return on investment (ROI): Your ROI is your net profit as a percentage of the initial investment.
Apart from tracking these metrics, you also need to keep a close eye on various financial statements, such as income statements, balance sheets, and cash flow statements. Up your financial record-keeping skills or hire a talented accountant to ensure you get instant access to your company’s financial data.
2. Measure customer satisfaction and retention rates
Sky-high profits and an outstanding ROI aren’t the only metrics for business success. If your company fails to retain customers and keep them happy, you’ll struggle to accomplish your goals.
It’s common knowledge that retaining existing customers is simpler and more cost-effective than acquiring new ones. Also, existing customers are more likely to become loyal brand advocates who also drive increased revenue through repeat purchases and referrals.
It is therefore essential to devise a strategy for building lasting relationships with existing customers. You must focus on continuing to address their pain points before, during, and after a purchase. But how do you measure customer satisfaction and retention for business success?
A simple way of evaluating customer satisfaction is to check out customer reviews and ratings on third-party websites. Alternatively, you can conduct customer satisfaction (CSat) surveys. Ask customers to rate their experience with a customer service interaction on a scale of one to five, or one to 10.
When trying to calculate an accurate assessment of customer retention rates, try the following formula:
CRR = ((E – N)/S) x 100
(E) is your number of customers at the end of the month, (S) is those at the start, and (N) is new customers acquired. Subtract the new customers from your end-of-month, then divide it by how many customers you started the month with. This will tell you how many old customers you retained. Multiply by 100 to get a percentage. Regularly measure CSat scores and CRR percentages to identify any changes in customer behavior and preferences.
3. Evaluate employee performance
Employee performance is another crucial indicator of how well your business is doing. Highly efficient and driven employees are a reflection of your company’s work culture and environment. The more productive your employees, the more likely they are to contribute to business success. But many business owners struggle to measure employee performance because of its subjective nature.
Overcome these challenges by helping your employees set individual goals. Establish clear communication channels to keep an eye on performance and understand the challenges they face. Also, it’s essential to use the right tools to monitor and quantify their performance. For instance, field sales apps such as Skynamo come in handy for sales managers, as it helps keep an eye on how various sales reps are performing.
Tools like Skynamo can help managers identify underperformers and communicate with them to learn more about the challenges they are facing. It even helps devise suitable strategies to boost the productivity of sales reps.
4. Efficiently measure KPIs with the right tools
So, you’ve got a fair idea of the key performance indicators (KPIs) that you need to track for measuring business success. But manually monitoring these metrics is time-consuming and inefficient, and leaves too much room for human error.
Instead, use a robust KPI management solution to automate the process of defining, tracking, and measuring relevant metrics. Make sure you choose a KPI management software that fits the needs of your business, ideally with feature-packed analytics tools that can provide you with actionable insights based on various metrics.
Track your business success with Skynamo
Evaluating your company’s financial performance and customer retention rates are key metrics when attempting to measure business success. You also need to measure employee performance and ensure that your workforce is motivated and productive.
Luckily, software exists to help optimize the process of tracking, measuring, and analyzing these various success metrics. Skynamo’s analytics tools and field sales app can help you assess all this information to establish an accurate understanding of where your business stands. If you’re ready to measure and level up your business, let’s chat!