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Do you want to know what the top sales and marketing KPIs small businesses need to measure? Keeping track of your business’ performance is key and measure KPIs will help you to quickly be able to see how your business is performing in relation to certain, business-critical, areas. Keep on reading to find out what the top sales and marketing KPIs small businesses need to measure are.
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Before sharing what the top sales and marketing KPIs are, you might be wondering what a KPI actually is.
What is a KPI and why so small businesses need them?
KPI is short for Key Performance Indicator and are regularly used in the world of business. KPIs help a business to be able to see how it is performing in relation to critical business areas. Whilst KPIs are commonly used by big businesses, many small business owners don’t set KPIs for their business and this can be highly detrimental.
As a small business owner, it is your responsibility to understand how your business is performing. If you have a growth target, then you’ll need to monitor key areas to ensure that growth is happening. And even if you aren’t looking to grow if you don’t have, and monitor, your KPIs then your business might start to decline without you even being aware.
Personally, I think having KPIs even if just a few is essential as a business owner. Now you might be reading this and think ‘I hate numbers’ or ‘I’m not a numbers person’ so I’m going to give you some tough love here. If you are serious about running a successful business then someone in your business needs to understand the numbers. So you have two choices: you either decide to turn the ‘I’m not a numbers person’ story around and get to grips with the numbers in your business or you hire someone who loves numbers (like me).
Now that you understand what a KPI is and why it is important to have them here are the top sales and marketing KPIs for small businesses to measure. This is aimed primarily at service-based and online businesses (as that is who I mainly work with).
KPI 1: Sales Revenue
It might seem obvious that one of your sales and marketing KPIs should be sales revenue. However, it amazes me how many small business owners and solopreneurs who aren’t up-to-date with their sales revenue. At all times you should have a financial target for your company. The financial target should originally be set at an annual level as part of your business plan. (If you don’t already have a business plan you can find out how to create a simple business plan for your coaching, consulting or service-based business here. ) Then that annual financial goal should be broken down further to help ensure you are on track throughout the year. As a minimum, you should know what you need to generate on a monthly basis in order to reach the ultimate annual target.
KPI 2: Conversion Rate
Keeping an eye on your conversion rate is key for a number of reasons. Firstly, you need to know what your conversion rate is to understand how many people you need to send proposals to, have discovery calls with or view your sales page. Secondly, monitoring your conversion rate is key because it plays an essential role in you securing new clients or customers and generating revenue. Depending on your business you might have to measure your conversion rate in multiple ways. The conversion rate for online products is super easy to measure and monitor since it is just the number of people who viewed the sales page or checkout divided by the number of people who purchased. However, if you sign clients through non-website methods such as sending an individual email with a proposal or having a call with them then you’ll need to be responsible for pulling that data together.
KPI 3: Lifetime Customer Value
If you offer a number of services or products, run a membership or have an offering that can be bought repeatedly then you need to be monitoring your lifetime customer value. Your lifetime customer value allows you to understand on average how much a customer is worth to your business. Understand this figure helps you to understand how much you can budget for marketing and advertising and still be profitable.
KPI 4: Churn Rate
If you run a membership of any form, then monitoring your churn rate is essential. Churn rate allows you to understand what percentage of members have leftover a current time. This is really important KPI if you run a membership because it is easier to maintain a customer than acquire a new one. When you look at overall membership numbers it is easy to miss that you have a problem. Say every month 30 members cancel their membership, but 35 members sign up. By only focusing on the total number of members you’ll see growth and be happy with your performance. However, by looking at churn you may notice you are losing a larger percentage of members than you should and as a result, you should do further investigation to work out why those customers are leaving and see if there are any changes you can make.
KPI 5: Website – Acquisition via Channels
Thanks to Google Analytics there is so much information you can monitor in relation to your website. I love Google Analytics and have a Google Analytics Individual Qualification. There is endless information you can find in Google Analytics and whilst it is all useful, it isn’t all business-critical. I’ve previously written about the 7 Google Analytics metrics every website owner should review. However, when setting KPIs I think one of the key metrics to monitor is acquisition via channels. At a top-level you’ll be able to see the percentage of visits to your website by each channel (Direct, Organic Search, Social, Email, Affiliates, Referral, Paid Search, Other Advertising and Display). The reason why monitoring this metric is so important is that as you add more channels into your marketing it is vital that you understand how each channel is performing. This metric allows you to quickly understand how visitors are coming to your website. You’ll be able to compare this data with information about the resources (time and money) allocated to each channel and see if your return on investment is worthwhile.
KPI 6: Email – Open Rate
When it comes to email marketing there are lots of different metrics you can monitor. In fact, I share the 8 email metrics you need to monitor here. However, some are more business-critical than others. Email open rate is a business-critical KPI. Often people will focus on the overall size of their list. It is easy to get caught up in the vanity of having thousands, tens of thousands or even hundreds of thousands on your list. However, what really matters is how many people are actually opening your email list.
Would you prefer a list of 100,000 with an open rate of 30% or a list of 400,000 with an open rate of 80%?
Personally, I would prefer the latter as more people are actually opening my email.
As your list grows it is natural for your email open rate to decline. However, this should be steady, not drastic. Monitoring your email open rate will enable you to see the health of your email list and highlight when it is time to change your email marketing tactics (such as change your subject lines) or give your database a clean.
KPI 7: Email – Click-Through Rate
The other important email marketing KPI is the click-through rate. In most cases, if you are including links in your email it is for a reason. You may be asking your readers to check out your latest piece of content (blog post, YouTube video, podcast episode etc) or visit some type of sales page. In either situation having people follow your instruction and clicking on the link is important.
Your click-through rate is likely to perform similar to open rate in the sense that as your list grows you click-through rate declines. Again, this shouldn’t be drastic. Monitoring your email click-through rate will enable you to understand how successful you are at driving readers to take action. This is key to know because if you have valuable information on a website, but you aren’t able to get your subscribers to click through to your site then you’ll need to include that information in your emails.
KPI 8: Customer Acquisition Cost
Earlier I spoke about how when you know what your customer lifetime value is you can set your marketing and advertising budget appropriately. For example, you may be using a value ladder in your business (Find out more about value ladders here), which means although many customers first buy a £49.99 digital course from you ultimately your lifetime customer value is £273 because customers will often by numerous other things from you. Having this insight will allow you to confidently set yourself the target of having a customer acquisition cost of £90. On the surface, this would seem crazy because based on their first purchase being £49.99 you’d be making a loss, however, because you truly understand the value of a customer you can make that loss knowing on average you make more sales from that customer in the long run.
As your business grows and you invest more financially in marketing and advertising setting, and monitoring, a KPI for customer acquisition cost is key.
There you have it! You now know the top sales and marketing KPIs small businesses need to measure.
Hopefully having read this blog post you’ll have a better idea of what sales and marketing KPIs you need to measure in your small business.
Once you’ve decided what KPIs you are going to measure you’ll need to create a system to regularly monitor them and be able to quickly review them when making decisions etc. This is commonly done by creating a KPI dashboard. This makes it easy for you to quickly be able to review all of your KPIs in one go and understand at a top-level how your business is performing.
There are so many different ways to create a dashboard from using excel to a wide range of online tools. If you would like to know more about creating your own dashboard send me a message and I’ll do a follow-up blog post.
In the comments, I would love to know what KPIs you are going to monitor going forward.
Have you finished that blog post and thought I need some help? Whether you want someone to decide what your KPIs should be, to create your KPIs dashboard or to do all the monitoring for you then I can help.
You can drop me a message here or if you would prefer to discuss your situation (I love a good chat) then you can book a call here
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