Intuition and experience are valuable assets when you’re running a business, but they aren’t enough to achieve impressive growth—you also need data. Examining your business’s numbers and measuring your performance is key to solving problems, making more informed decisions, and setting yourself up for steady growth.
Why does data matter?
When you regularly gather and evaluate company data, you gain greater insight into how your business functions on both a big-picture and granular level. More information at your fingertips means you can be more strategic and proactive as a business owner.
Reviewing data makes it easier to:
- Identify your business’s patterns and blind spots
- Figure out your company’s strengths and weaknesses
- Improve revenue/sales
- Engage with customers
- Develop more effective marketing strategies
- Maintain cash flow
- Set realistic goals
4 types of business data to pay attention to
There are countless metrics you can measure as a business owner, but most of them fall into four key areas: marketing, finances, customer experience, and sales.
1. Marketing data
Without consistent, strategic marketing, your business’s growth can stall. That’s why it’s crucial to regularly review your marketing metrics to see what you’re doing right—and what you can improve upon. Here are three areas to focus on:
Website analytics: Your business website is full of valuable information about your marketing tactics. When you look at the analytics, pay attention to the total number of visits per month, the amount of pages visited, and the website bounce rate, which indicates how quickly visitors leave your site. It’s also smart to analyze your website traffic sources—like email, organic search, and social channels—so you can see which distribution channels are bringing in the most traffic.
Social media analytics: Staying active on social media is a good way to brand your business and attract new customers. On each of your business accounts, make sure you record the number of followers you have, as well as the amount of likes, comments, clicks, and shares your content gets on each platform. The more engagement your content has, the better your visibility and post reach.
Email analytics: Creating tailored email marketing campaigns is one of the most effective ways to get in front of current and potential customers. Whether your business sends out email newsletters, promotions, or transactional messages (or all three), it’s important to track your email open rate. Knowing how often subscribers open your messages is the first step to figuring out how to tweak your emails for better engagement. You should also look at your email list growth rate and click-through rate, which show how often new people subscribe and click the links in your emails.
2. Financial data
Your finances are the foundation of your entire operation. Getting familiar with your financial data doesn’t just give you a better idea of your company’s overall profitability, it can also make it easier to budget properly, maintain healthy cash flow, and hit your sales and revenue targets.
You and your business accountant should carve out time each month to look at your income statement, balance sheet, and cash flow statement, but it’s also worth tracking the following:
Expenses: Your business expenses can reveal a lot about your company’s operational efficiency and cash flow. Fixed expenses, which include costs like rent, employee salaries, and insurance, stay the same from month to month, while variable expenses fluctuate. Examples of variable costs include inventory, utilities, and marketing and advertising. Tallying up your fixed and variable expenses will tell you how much it costs to run your business.
Net profit margin: Your net profit margin shows how much of your business’s revenue translates to profit. To calculate it, start by figuring out your net income using this formula: Net income = Sales/Revenue – Cost of goods sold – Expenses. From there, you can calculate your net profit margin percentage: Net profit margin = (Net income / Total sales) x 100. If your net profit margin is low, you may want to consider increasing your revenue by selling more, raising your prices, or cutting expenses.
Revenue growth: Revenue growth is a good indicator of how steadily your business is growing. Looking at how your revenue changes from month to month or quarter to quarter can help you make more accurate sales forecasts. To calculate your revenue growth, use this formula: Revenue growth percentage = (Current period’s revenue – Last period’s revenue) / (Last period’s revenue x 100).
3. Customer experience data
Staying competitive comes down to improving your business’s customer experience. Analyzing customer experience data is key to drawing new customers in and satisfying the ones you already have. Here are a few metrics to consider:
Customer retention rates: Retention rates show you how many customers you’re maintaining, while churn rates show you how many customers you’re losing. Rather than looking at your retention and churn rates in isolation, consider what’s normal for your industry, then look at how your rates change over a period of time. If you’re consistently losing customers, you may need to examine your products, adjust your pricing, or evaluate your customer service.
Customer reviews: Customer reviews on sites like Google and Yelp provide valuable qualitative data about your customers’ likes and dislikes. Pay attention to your total customer reviews, your average rating, and the amount of positive, negative, and neutral sentiment in the feedback you get.
Net promoter scores: A net promoter score (NPS) is a simple, effective way to measure your customers’ satisfaction with your business. You can send out email surveys to figure out your company’s NPS or install a website pop-up asking customers to rank their experience on a scale of one to 10.
4. Sales data
You need to understand your sales metrics and results in order to refine your sales strategies and reach your quotas. Start by looking at the following:
Qualified leads: Qualified leads are the people most likely to become your customers. Tracking the number of qualified leads your business has is a good way to determine whether or not you’re targeting the right markets. You can assess qualified leads by counting the number of people who visited your website, added a product to their cart, or clicked a link in one of your emails.
Lead to conversion rate: Lead to conversion rate, which shows how often qualified leads turn into paying customers, can tell you how effective your sales strategies are. You can calculate the conversion rate using this formula: Conversion rate = (Total number of new customers / Total number of leads) x 100. From there, you can work on improving conversion by retraining your sales team or adjusting your sales funnel.
Yearly sales growth rate: Looking at your annual sales growth rate gives you a better idea of how your business is progressing from year to year—and what you can do to improve. The formula is: Yearly sales growth rate = (Current year’s sales – Last year’s sales) / (Last year’s sales x 100).
Get ahead with data
Evaluating data is a powerful way to see into your business’s future, but you need the right tools to do it. Website analytics platforms, customer relationship management software, and accounting software make it easy to track tons of different business metrics. Plus, certain platforms and tools generate weekly and monthly data reports.
No matter which method you choose, though, it’s important to track a variety of metrics over a significant period of time. One data point doesn’t tell much of a story, but data from a handful of different areas can paint a more complete picture of your business’s health and growth potential.
