In the digital age if your business isn’t going forward, it’s actually going backwards. Put another way, serial entrepreneur Creel Price says, “In business you are either green and growing or you’re ripe and rotting”. So how do you measure your business progress?
Firstly you need to measure and monitor your financial and marketing key performance indicators. Typically you can start by comparing some key numbers in your business and here are several methodologies to consider.
This Month Vs. Last Month
This is a very simple starting point and the objective is to maintain constant improvement in your website traffic, online leads and sales conversions. In fact, this objective of continuous improvement in your key performance indicators will have a compounding effect.
Most importantly, the upward trend in online traffic and leads is a sign of a healthy business and if your marketing is working it should flow through to your top line revenue. Comparing your month to month statistics on website traffic is very easy thanks to the dashboard provided by Google Analytics and you can then measure online leads while your sales data is readily available through your accounting software.
You might also schedule a mid-month review of the indicators and make changes if you aren’t on budget to beat last month’s figures.
This Month Vs. Rolling Three Months
One of the challenges when comparing month to month figures is you might have a ‘blow out’ month which might be difficult to top next month. Your activity might peak in a particular month leading up to Christmas, Easter or EOFY. To get a better picture of your performance you might look at the figures over a rolling three month period to balance out the abnormal month. Using a rolling average you smooth out the irregularities and the main thing to look for is the positive trend line.
This Month Vs. The Same Month Last Year
Almost every business has seasonal trends. For example, retail sales crank up around Christmas then fall away in January. Some cater for summer activities (surf and golf shops) while others peak in winter (ski shops and AFL Stores). For these seasonal businesses comparing this month’s data to last month’s data or even a three month rolling average can be misleading. Instead, compare this month to the same month last year.
Trend data is very important with marketing and sales. Ideally you want to see positive trends over a longer period of time. Sometimes, month-on-month data or even three months of data isn’t a big enough statistical sample. Analysing longer periods may give you a ‘bigger picture’ and how far you’ve come. Reviewing 13 months of rolling data lets you compare figures for the same month last year, last month and the trend for the previous 12 months.
Set Your Budget
Of course all these comparisons are useful and might highlight the fact that you are green and growing but could you be growing faster? Think about setting growth goals with your website traffic, online leads and sales conversions. Your budget will certainly be tied to historical performance and they need to be realistic. If you have set aggressive sales goals then you need to review your website to make sure you have a plan to drive more traffic. Don’t forget to track the conversion metrics as well because you don’t have to increase visitors dramatically if you’re increasing the sales conversion rate.
Don’t budget on increasing your website traffic by 50% this month compared to last month if you’ve averaged 10% growth historically. You might need an aggressive blogging schedule, daily off-site SEO tactics, solid social media plans, email campaigns, a highly responsive website and a very active content publication plan. These need to be in place for at least three or four months prior to the month you’re looking for the 50% increase in visitors.
You can see that this level of results takes solid planning and a well-thought-out, tightly integrated inbound marketing strategy. These types of results don’t fall into your lap. Make sure that your expectations are realistic and that they're backed up with the necessary plans.
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