If you’re a business owner, it’s essential to understand how your company is growing. Growth metrics are used to measure the performance of a business and can help you identify areas where more effort is required. If you’re unsure what growth metrics are or how they work, this guide will explain everything you need to know about them.
Use the correct metrics
Before you start measuring your business’s growth, it’s essential to understand the difference between valuable metrics and those which aren’t. Vanity metrics are not actionable, but they do give you an idea of how quickly your business is growing. An example of a vanity metric would be the number of followers on social media or page views on your website.
These numbers don’t show if these fans are actually converting into customers or even trying to follow through with any of the content offered by your company (or blog). Actionable metrics give insight into what’s happening within the company. For example, if someone purchases something from your e-commerce business in a certain period after being on one page versus another can help determine what pages are working best for conversions.
Don’t rely on vanity metrics
As you’re developing your growth strategy and measuring the impact of your initiatives, don’t get caught up in vanity metrics. Vanity metrics are numbers that seem to indicate a company is growing but really just show an increase in activity without any proof that those efforts are actually increasing revenue. A few examples include:
- The number of times users open an app each day
- The number of new website visitors each month
- The number of new user accounts created in a certain period
- The number of times users click on a button or link on your website
These kinds of figures can give you a false sense of security about what’s happening with your business. For example, if more users are opening your app every day, but they aren’t actually spending money on it or creating value for themselves or others by using it, then this is not a good use of time or resources.
Use data to track growth in your business
The next step is identifying what data will help you track growth. This will likely include numbers such as revenue and sales volume. It will also show other metrics like the number of customers and sign-ups for your product or service. Next, decide which tools are right for tracking the data. Finally, use the information gleaned from this process to make improvements in areas where they’re needed—like increasing sales or improving customer satisfaction rates.
Set up how you’ll report your metrics and stick to it
To determine the most critical and trackable metrics, you must honestly assess your business. What makes it tick? How do you measure success? Once you’ve done that, you can start thinking about how to set up a system for reporting your metrics. You’ll want something consistent and reliable so your reports will be accurate but flexible enough. This is so it doesn’t feel like too much work every time you want to report on progress.
If you want to avoid losing momentum mid-project or forgetting about the process altogether, it’s important to set aside 15 minutes at least once per week to update this data and keep track of what’s working well and what isn’t working as well as expected.
Reassess what you’re measuring as your company grows and changes
As your business grows and changes, it’s important to reassess what metrics you’re tracking. For example, when your manufacturing for fishing reels is just starting out, its focus is ensuring it can produce enough fishing reels to meet customer demand. As your company grows and adds more products, you’ll need to look at your metrics and decide which ones are most important for the new growth phase. For example, if you’re adding fly-fishing rods to your product line, then it may be more vital for you to track how many rods are produced each day than what percentage of those rods are defective.
As you track these new metrics, keep an eye out for any gaps in your reporting that could indicate areas where your business needs improvement. For example, if one of your current key performance indicators (KPI) doesn’t quite align with how you want customers to perceive your brand, perhaps it tracks sales instead of customer reviews. You may want to reevaluate whether this KPI still makes sense for measuring growth at this stage in the game.
If you want to measure growth for your business, there are some critical insights from others in the industry that we’ve learned from. You can apply these lessons to any company, no matter how big or small—even if it’s just one person!
Hopefully, this guide helps you stay on track with your goals and develop a sustainable system for measuring growth as part of your marketing efforts. If all else fails, remember that it takes time and patience, but keep at it. Good luck!