In the GoToU article “Success in Business,” we informally define ‘success in business’ a few different:
- Starting, owning and/or doing a job that you love,
- Working independently with work/life balance and making a living at it,
- Making lots of money with the work you do and providing present and future security,
- Owning a market or inventing a new product or service that no one has ever heard of, and/or
- Simply being happy and content with what you do and/or are ‘good at.’
Success, like any goal or objective, needs to be constantly measured and monitored closely. How do we know when we achieve success? What’s necessary to get there? And, where are the benchmarks? …are questions that help drive our own definition. When it comes to really measuring success in business, it’s easy to simply look solely at the numbers. At often times throughout the year (heck throughout the week – yes, I’m obsessed with metrics), I use Quickbooks to view cash flow, revenues, expenses, and net profit and compare those number to the previous year’s. In essence I try to beat last year’s numbers and, in my mind, that is a true indication of success, at any given moment in the business’ present state.
Sure, the numbers are very telling of performance, productivity, efficiencies and other key indicators. However, there are other available metrics for business success that every business should consider. These could tell a different story of the present state and the future of your business, that your numbers don’t. Keep in mind, businesses change and what might have been important one year could be irrelevant the next.
Following are a few of additional business success metrics to consider, from various sources researched, to help you get a better handle on the meaning of, and progress towards, your business’ success:
- Customer Satisfaction Score: Mishra suggests a few metrics to support customer satisfaction including Voice of Customer (VOC) and Customer Satisfaction (CSAT) as well as Net Promoter Score (NPS). Customer satisfactions should not be limited to one function or service but rather across all functions and services within an organization for all customers and a specified amount of time. By doing this comprehensively, customer satisfaction scores help with identifying customer satisfaction levels and trends as well as helps identify functions within an organization that are outperforming and/or need improvement. It can also help expose areas of inefficiencies due to process and/or internal corporate bureaucracy.
- Employee Satisfaction Score: Mishra suggests to gauge the moods and levels of satisfaction of employees as turnover and employee attrition can severely impact your bottom line. Employee satisfaction polls like the ones Gallup does helps give management a better sense on overall levels and trends. This metric can also assist with improved productivity and performance that you might not have been previously aware of and in turn, relieve some demands and uncertainty on valuable resources.
- Productivity: This should be relatively simple in that a business decides on a numerator and denominator for the output per unit (productivity). Mishra gives the example of launching a new product offering with measured Return On Investment (ROI) by determining which accounts to focus on (with limited sales resources) and measuring sales productivity across accounts. If your new business exceeds your sales and marketing expenses, then you know that you’re on the path to success.
- Cost to Acquire Customers (CAC). Do you know how much it costs to land just one customer? If not, simply add up sales and marketing expenses, including overhead and salaries and divide it by the number of customers you close during a specific time frame. What’s acceptable varies dependent on industry and business model. Obviously, the leaner your organization runs the more you can afford to acquire a customer. Increasing CAC means you have to cut costs and/or raise prices to accommodate.
- Lifetime Value of a Customer (LTV). This takes into account repeat customers, the value of purchases and even referrals over the lifetime of that customer. To calculate determine what the average customer spends over a specific time period times the estimated lifetime of that customer less the initial CAC investment. A falling LTV indicates the same measures are necessary… and means you’re failing to leverage the most important and least expensive customers you have: current customers.
- Churn rate. Churn stands for customers lost and therefore, failed investments in those customers. Usually your existing customers cost the least as there is little additional sales cost (most of the investment is in acquiring). Increasing churn rates could be caused by a number of factors: Dissatisfaction with your products and services, new competition in your market, or even the coming end of a product or service cycle.
According to Jeff Haden, churn rate is a solid indicator of rising CAC and lower LTV. In fact, all three are great leading indicators of problems—or successes—to come, both in other metrics and for your business overall.
If you choose to use several business success metrics, be sure to prioritize the ones that you feel are most important. Set up a dashboard or a report that consolidates the findings and share that with employees and key stakeholders to show movement. Reward employees when progress is made and immediately address issues or lapses in momentum. Do this, and you’ll be more efficient and productive than ever before.
- From Jeff Haden, Inc. Magazine’s “4 Business Success Metrics You Can’t Afford to Ignore”
- From Suchitra Mishra in “Five Performance Metrics Key to Successful Business Operations – Business Management”:
About the Author
Angelo Biasi is General Manager of SMART Marketing Solutions, LLC, a leading full-service integrated marketing company in Florida and New York since 2001. He has helped create and execute marketing plans and integrated marketing solutions for companies such as Playtex, Bic, Rogaine, Tauck, and over 35 colleges and universities, to name a few. Angelo has an MBA in Marketing from the University of Connecticut and teaches Marketing at New York University where he has for over six years. He has been quoted and/or featured in USA Today, Mobile Marketer magazine, Mobile Commerce Daily, Luxury Marketing magazine, BNET TV and Business Currents magazine, to name a few. For more information or to learn more, email him at abiasismartmarketingllccom (abiasismartmarketingllccom) , visit www.smartmarketingllc.com, call him at 239.963.9396 and follow him on Twitter @angbiasi.