You've proven your business model. Congratulations! The development of a viable idea is the first important milestone of entrepreneurship.
Once you've achieved step one, how do you travel the path to step 10 and grow your business? Tracking key performance indicators (KPIs) can help you stay on course and align your small steps into a bigger picture. Here are the five business KPIs you need to prioritize:
1. Customer Retention
You've attracted customers. What comes next?
If your customers like your business and find value in what you do, they'll stick around. They'll probably send referrals your way, too. Help your customers achieve a positive return on investment, and they'll stick with you. This pattern is the sign of a healthy business, so make a point to regularly track customer retention and use this metric to think of ways to improve those numbers.
2. Customer Satisfaction
Your company is growing quickly, but is it positioned to evolve sustainably?
Keep a health check on your customer satisfaction levels by surveying and speaking with them regularly. It's important to know, as your company grows, whether quality levels are slipping through the cracks. Ask your customers what they like and don't like about your services and products. Have them rate their satisfaction on a scale from one to 10, and monitor the composite score.
3. Monthly Recurring Revenue
Is your revenue model stable?
This metric is crucial if you want to build a strong business. Make sure you're hitting consistent month-over-month milestones, such as a certain amount of products sold by a particular date. Eventually, when you feel comfortable with your revenue levels, track growth to ensure your business is on an upward trajectory. Monitor the proportion of business that comes from recurring revenue and check its growth over time.
4. Learning Milestones
Are you making progress?
Uncertainty is part of any young business. In addition to making money and keeping your costs streamlined, make sure you're continuously learning. Sit down every week to analyze what you and your team have learned. You can quantify these KPIs by creating a list of learning milestones and assigning weights to each of them, on a scale of one to 10. Track your learning progress by monitoring week-over-week changes to this metric.
Are your customers and prospects as invested in your company as you are?
Track engagement levels as a function of product usage, content consumption and social media activity. Focusing on these metrics helps you determine areas where you may need to change your approach so customers and prospects stay interested. Create an engagement score that encompasses the variables important to your business. Rate each on a scale of one to 10 and then calculate the average for a composite score. Look for changes over time.
Tailor these business KPIs to meet your goals. This process may require some trial and error, but focusing on the metrics that best position you to evolve will help your business do just that.
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