Business Plan Key Metrics
Most businesses fail to take off without a proper plan for operations, marketing, sales and so on. Business plans provide an idea about how the company runs and how it should run in the future.
And to better understand that, people have to turn to different metrics that help them monitor the health of their businesses and, based on that, make further planning for future operations. Some of the most common metrics for business planning are:
Net Promoter Score
Net Promoter score represents how likely a person is to recommend your business to another person. It is a basic score of how satisfied your customers are.
People with high net promoter scores are loyal customers while the ones with low scores are dissatisfied customers that resort to negative promotion.
Identifying this score allows you to understand how you can improve your customer service in order to provide a better user experience for a better overall image.
There are three kinds of leads that you need to pursue: marketing-qualified, sales-accepted and sales-qualified leads.
Each of these kinds of leads needs to be handled by the marketing team and sales team separately and, based on their efficiency, the leads can turn into customers. So, this measure is important to figure out whether you’re getting enough leads from the channels you’re targeting and structure your marketing activities accordingly.
The conversion rate is the rate at which your leads turn into customers. This measure reflects the performance of your sales team as well as your product. A low conversion rate may be an indicator of your sales team performing poorly or your product not matching the needs of the market.
Customer Acquisition Cost
Customer Acquisition Cost measures the cost of acquiring a new customer. This can involve several kinds of marketing expenses. This, coupled with Customer Lifetime Value, can help you find the most profitable segment of customers.
So, instead of investing resources in leads that never turn into paying clients, you can direct your marketing efforts towards the most rewarding targets.
Customer retention is an indispensable metric of customer loyalty. Most business enthusiasts would know that it is much more profitable to seek out existing customers for repeat sales rather than investing in the acquisition of new customers. Hence, the customer retention rate is an essential tool for forming an idea about the number of loyal customers you have.
A low retention rate calls for a higher focus on providing the best customer care as well as the highest quality of products.
Net Profit Margin
Net Profit Margin is the sum of the revenue you collected from your business against the expenses that went into it.
This measure shows the efficiency of profit generation of a company, that is, how well the company is at turning its investments into earnings with great returns. You always want a high Net profit margin because you need your income to exceed your costs. A low-profit margin can be a reminder to raise your product prices or lower sales or production costs.
Businesses need to put a great deal of planning into every business-related decision. And the best way to do that is by tracking these business planning metrics that can allow them to determine the best actions to take for enabling continued growth.