As a business coach who teaches other business owners how to systematize their businesses, I love a good spreadsheet. There is nothing better than a weekly or monthly KPI report that arrives in your inbox to give you a birds eye view of where your business is and where it is headed. But one thing I see all too often is information overload. A business owner gets several spreadsheets every week filled with stats and numbers, many of which may not be all that important. And overtime, you may find yourself skimming over or skipping the reports all together due to the sheer volume of information that is presented to you.
So today, I wanted to talk about three numbers that you should not ignore.
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If you want to get down to the most important numbers, this one should really be on your top three for a simple scoreboard as it is a good indicator of how successful a marketing tactic is for your business. It’s easy to calculate, simply measure the total cost of a particular marketing tactic (e.g. Pay-per-click advertising, direct mail, calling campaign, etc.) and divide that by the total number of leads that tactic generated over a specific period of time. So, for instance let’s say that you spent $5000 on a Google ad campaign and it generated 100 leads. Your CPL or cost per lead would be $50 per lead. We get that number by dividing 5000 by 100. Your cost per lead will vary depending on the marketing tactic that you use, but overall it’s a good idea to have a target CPL that you want to aim for. If a campaign CPL is less than your target, you should consider expanding the effort because it is successful. If it is more than your target, it might be worth paying attention to and possibly re-allocating those funds to another more fruitful project.
The next number you want to look at is your cost per sale. This number will tell you how well your sales team is doing on closing leads or could be an indicator of how good or bad the leads are coming in from a particular marketing endeavor. This is simply the total cost of a particular marketing tactic divided by the total number of sales you made from that tactic. So if our previous Google campaign brought in 100 leads and 10 of them became paying customers then we could calculate a CPS of $500. ($5000/10). As with the previous number, having a baseline target to aim for will simplify your reporting and indicate when a campaign is successful or not.
The last number that I want you to look at is the “dollar sold per dollar spent.” Which is an easy way to calculate your return on investment. If you are selling a $10 widget, the CPS of $500 in the example above wouldn’t be sustainable. But if you were selling a $10,000 product or service, then those 10 clients would yield $100,000 in sales and that is a campaign tactic that you would want to scale. And once you factor in your margins and future business from those clients, you may find this number even higher.
The key to any reporting is to keep it simple. These three numbers are powerful and can tell you a lot about your business. So keep it simple.
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