Keeping Track of Business Performance - Article Lincolnshire : Dexter & Sharpe

Keeping Track of Business Performance

James Kelsey, Director, Dexter & Sharpe

How well is your business performing? Is it on course to achieve your goals?

Do you know? Do you even have goals?

One way of starting to monitor this is set a few simple, measurable targets you can track on a monthly basis.

For most businesses improving turnover is a key target, so lets just concentrate on that, but how many businesses set themselves a target for growth each year, and many of those actually track how well they are doing throughout the year?

Turnover is:

Number of customers x the average number transactions/customer x the average £/sale. Viewed like this you can start to devise some targets to help you achieve growth.

If you have 500 customers each spending £50/transaction four times per year your turnover will be £100,000. If you wish to increase your turnover by 20%, and we concentrate purely on customer numbers, this would mean you need to add an additional 100 customers which equates to an average of 8.33 per month.

Knowing this is all very good but make this truly useful you also need to know what is your conversion rate of enquiries in to new customers? Out of every 10 enquiries you receive how many convert into new customers?

If you convert 50% of enquiries into new clients then on average you're going to need 17 new enquiries every month to achieve your target of an average 8-9 new customers per month and improve your turnover by 10%.

Tracking this on a monthly basis will give you a picture of whether you are on course to achieve your target or not. The earlier you can spot problems the earlier you can take action to remedy it, start to ask yourself why and how can you improve things;

Are you doing enough marketing? Are you targeting the right people, trying to reach them through the wrong type of media or is your message wrong?

If referrals are a big source of new customers make this another key monthly indicator to track, how can you improve the number received? If are they decreasing why, is there some major issue that needs addressing with customer satisfaction?

Of course, these factors are not mutually exclusive; if you can improve your conversion rate you do not need as many new enquiries to achieve you target and vice versa.

But what if you could improve both? What if you could also improve the average number of transactions per year and/or the average £/sale?

If you could monitor your businesses key indicators and work to continually improve them what could your business achieve?