What does it mean to run a successful company? Is it financial profitability or sustainability? Is it how well your service levels or products measure up against the competition? Or, is it something else entirely? While one thing often feeds into another, no single input or output defines a successful business. To measure the pieces and parts in statistical terms that key decision-makers can use, we use key performance indicators (KPIs) to tell us what areas we are doing well in and where our challenges lie.
When auditing your business, what KPIs should you be focusing on? And how do you make sense of the numbers? We use a set of goals and benchmarks to tell us if our numbers are good or bad. Our goals are what we hope to accomplish, and our benchmarks are a standard point of reference as determined by past performance and competitor performance. Or, in other words--what you hope to accomplish and the average of acceptable performance.
Customer Feedback and Complaints
Good or bad--what your customers are saying about your company provides some very clear information on your performance. After all, you can have the best product on the market, but if the support is lacking, you'll have a hard time drumming up business for it.
Customer Satisfaction Scores
Post-purchase or post-service customer feedback surveys can be a useful way to gather feedback. Also, aggregating feedback in customer reviews across popular platforms and open polling on social media channels can provide the input for determining your customer satisfaction scores. This number is a numerical representation of whether or not most people are happy with the service you are providing.
Net Promoter Scores
Find out how likely your customers are to refer someone else to your business. We all recognize that word-of-mouth advertising has more power than anything you can pay for. And today's consumer seems to be more reliant than ever before on these personal recommendations. Plus, unlike the customer satisfaction score, your NPS is unlikely to be affected by someone's mood. The typical effects of long-term satisfaction aren't as fickle as the in-the-moment responses on your customer satisfaction scores.
Customer Retention Rates
Your customer retention rate is another measure that will help you get past your customer's moodiness and measure their true intent. This tells you how many customers your business has over a set time compared to the number of new customers in the same period. This number is important because acquiring new customers is infinitely more expensive than retaining existing ones. If you're overspending on marketing and onboarding activities, your challenges likely lie in customer retention.
BraynCX delivers high-impact solutions for your customer experience. We aim to be your partner, making your challenges our challenges to solve together. Learn more today.
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Sales and Marketing Efforts
A lot of effort goes into casting your net and attracting customers. Understanding the breakdown of how much time and money is spent on marketing and sales is an important part of your business's product or service life cycle and overall profitability.
Companies are investing more and more into digital marketing. Understanding how much money goes into search engine optimization, content creation, and pay-per-click advertising versus how much traffic those activities bring is important for focusing your energy on the most lucrative avenues.
And out of all that traffic, how many leads become bonafide customers? After all, when you say you are looking for traffic, what you mean is that you are fishing for customers, and high traffic with no sales isn't going sustain your business. So, if this is the boat you are in, you need to focus on why you're having trouble converting.
Average Cost per Acquisition
And then, once you have the traffic coming and they are taking the bait, then it is time to shift your focus to trimming the fat. Dial in on how much the company spends on marketing efforts compared to how many new customers it converts and begin addressing inefficiencies that drive your average cost per acquisition up.
Money is where most people spend too much time focusing. Don't get us wrong, the financials are important, and you can't keep the doors open if you can't make payroll or keep the lights on. But money shouldn't be your only focus. Or, more specifically, you should be looking at all the different ways that money is spent in your company.
Net Profit and Loss
In business, we spend a lot of time looking at theoretical numbers. By contrast, a net profit and loss statement is the actual income and liabilities that a company faces over a specific accounting period. Or the real story of what happened versus what should happen given various predictive models. KPIs focused on tracking real numbers are important to balance out goals, benchmarks, and projections.
Operational Cash Flow
Tracking how much money your company has available at any given time will help you assess the performance of accounts receivable activities and let you know if the business you are measuring is being realized by actual, paying clientele.
Growth in Revenue
Possibly one of the most significant indicators of progress is actual revenue growth. There are many moving parts in the business, and as we tweak one area, we can hurt another. Growth in revenue KPIs lets us know if whole systems are working together efficiently.
The Takeaway on Quality Auditing
There are dozens of numbers you can measure to try and ascertain how well or not well a business is performing. And, unfortunately, not all numbers are equal. You can put a lot into tracking KPIs only to have the ship sink without warning because you weren't looking in the right spot. Generally speaking, if you track a few key metrics in service levels, customer acquisition, and financials, you should have a good view of overall performance.
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