This morning I filled in for a friend at his BNI meeting (Business Networking International) and the “Education Nugget” was about measuring. The point is, you don’t know how you’re doing, nor can you improve, until you can measure it. And you can’t make smart decisions about your business unless you measure what you’re doing.
Follow the money
First, you need to measure your money. Are your books up-to-date? Bookkeeping isn’t just for tax time. You need to keep them current so you can predict cash flow and see what products and services are profitable.
Cash flow is obvious, but looking at what areas are profitable is just as important. I knew one business owner who upon looking closer at his books, realized his best selling product was actually losing him money.
While the direct cost of the product was less than the selling price, the cost of servicing it meant he actually lost about $100 per unit. By eliminating that one product, although his total sales went down, his profits shot way up.
Do you know what products or services are most profitable? Look at your books. If you’re not sure how to determine profitability, ask your bookkeeper or accountant.
What’s your web traffic?
Measuring your web traffic is another important measurement to track. You need to know how many people are visiting your site, how many are subscribing to your RSS feed, how long people are staying, where those people are coming from (did they find you on Google, from Facebook, from someone else’s site), and what pages they’re looking at. You also need to track trends from month to month. Knowing whether traffic is increasing or decreasing is more important than total numbers.
Google Analytics can tell you what keywords people are using to find your site. This can help you figure out what type of blog posts to write, what kinds of headlines you should have, and even insight into new products.
Social Media stats
Social media stats are somewhat misleading and difficult to measure. Having a large number of connections, doesn’t necessarily mean your social media efforts are profitable. You can have a large number of followers but if they never engage with you or take action, they’ll do you no good.
Also, you can’t get a straight measurement of profitability. If you run a Google Adwords campaign, you know how much you paid per click and what percentage of people bought your product. You can tell right away whether this campaign is worth your time and money.
With social media, it’s occasionally very direct. For example, recently I made a post to LinkedIn. About 10 minutes later I got a message through LinkedIn from a colleague asking if I do training on marketing with Facebook. I was floored because I thought he knew what I do. After a brief meeting over coffee, I ended up with a $1,000 client.
However, most social media efforts are much less obvious. For example, I know before I do business with someone I check out their social media profiles. I always check out their LinkedIn profile and look closely at their testimonials. However, they may not be aware that I did this, nor how much of an impact that had on my decision.
Likewise, I often see people follow me on Twitter, then connect on Facebook, then sign up for my email newsletter. Later when they become a customer, how much of that business can be attributed to social media? I would never have made the sale if they weren’t on my email list, but they never would have been there in the first place if not for social media.
My challenge to you is to check your stats this week.
1. Get your books up-to-date if they aren’t already. Then notice which products are most profitable. Are there ways you can increase sales of these products?
2. Check out the traffic to your website. Has it increased or decreased from last month? Where is that traffic coming from? What keywords are people using to find you? If you’re getting a lot of traffic from one source, look for ways to get even more. For example, if Facebook is sending a lot of people to your website, vow to spend an extra hour this week on Facebook. If you don’t already have Google Analtyics set up on your website or blog, make that your first priority.
3. Notice whether any of your customers are connected with you on social media. If there’s one site that is working particularly well, spend an hour this week working on planning ways to be even more effective on this site and how to engage with your connections.
Finally, put a reminder in your calendar to do this check each month. You can set up a recurring appointment with yourself to monitor your progress. After all, if you don’t measure it, you can’t improve it.
Andrea J. Stenberg
Do you monitor your stats regularly? How has that helped your business? Or are you a seat-of-the-pants kind of person? Please leave a comment and share your story.