Syed Balkhi is the founder of WPBeginner, the largest free WordPress resource site.
No matter how big or small your business is, you need to have certain metrics that tell you how much growth it has achieved. There was a time when marketers would measure their success in terms of the number of tickets the customer service representatives are closing.
But today, that is not the only way you measure your success. With the massive growth of the digital marketing culture, a lot has changed in the marketing field. Now there are a lot of other things you need to measure to know how well your business is doing.
So, here are 5 of the most important metrics that can help you measure how successful your business is.
This is one of the major metrics to measure if you want to know how successful your business is. Customer churn is the number of customers who stop buying from you or cancel their subscription over a set period of time.
If your customer churn is high, you need to do something to reduce it right away. But for that, you also need to know how to calculate your customer churn. You can do that simply by dividing the total number of cancellations over a specific period of time by the total number of customers in that period.
If the result is too high, make sure you change your marketing strategy so you can make it powerful enough to retain your customers. Although you'll get new customers over time, you need to understand that acquiring new customers can cost you 5 times more than retaining your existing customers.
There are an estimated 12 million - 24 million eCommerce websites across the entire world. Many of these marketers are doing the exact same business as you are. This means that to be able to compete with your competitors and be on the top of your game, you need to do things that make you stand out from your competitors. The best way to do that is to keep your customers happy.
Otherwise, instead of getting more customers, you'll only lose them one after the other. So make sure you offer everything you can to present a happy experience to your users.
The first thing that customers need from you is quality. If you sell a product of low quality, your customers will definitely not want to buy it from you the next time they make a purchase. By offering quality products and services, you can encourage them to come back to your website again in the future.
Another way of making them happy is by offering great customer service. Imagine a situation in which you buy a product but can't use it because of a difficult setup process. So you try reaching out to the support specialist only to find that your call is not being responded to, even after calling multiple times.
After facing such a situation, would you want to buy from them again? No right? The same can happen to your customers too if you can't offer good customer service.
Other than that, you also need to focus on making your website easily navigable, offering an easy checkout process, optimizing your site for speed and mobile devices. Once you do all of these, start monitoring how satisfied your customers are. You can do that by conducting customer satisfaction surveys, asking your customers to rate you on how satisfied their experience is, etc. You'll definitely have a better response now.
Customer acquisition cost is the amount of money you're spending on acquiring new customers for your business. This includes the amount you spend on advertisements, marketing, etc.
Knowing how much you're spending on this process is super important for your business. Sometimes you may spend a lot of money on acquiring new customers. And the process works for you, too, because you suddenly see a rise in your customer base. But for some reason, you can't earn as much profit as you think you should.
This means that although your marketing efforts are becoming successful, something in this process is missing. That's why it's failing to bring you the profit it should have bought. One major reason behind this problem could be that you're spending too much money on marketing your business. So try lowering your budget for a while to see how it affects your customer growth.
Generally, your customer acquisition cost should show that your marketing and advertising cost are paying for themselves. If it isn't, then you're definitely doing something wrong.
This point is important if your business sells subscription-based services. In such a form of business, you can easily measure your success by checking your customers' renewal rate. If you have a high renewal rate, it means you've been driving customer success for your business. Your customers are so satisfied with your products and services that they want to continue receiving them in the future too.
If your renewal rate is low, you should understand that your customers aren't very happy with your products and services. So figure out what's missing and try to fix it. For example, 88% of customers think detailed product pages are crucial for making a purchase decision. So if your product page is not as extensive as it should be, you must update it if you want to retain your customers on your site.
Similarly, research shows that the cart abandonment rate on the mobile phone is 77.8%. Most of this happens because your website isn't optimized for mobile devices. So if you don't want your customers to abandon their cart without completing the payment, make sure that it's mobile optimized. These are just a few examples. Find out what is wrong with your business and fix it as soon as possible.
Instead of randomly working towards attracting new customers, you should work on measuring how successful your customer retention efforts are. For that, you first need to keep track of the amount of money you're spending on retaining your existing customers.
This amount is called CRC or Customer Retention Cost. By measuring this amount, you'll know how much money you're spending on each of your customers to retain them on your site. Once you know that, you need to find out if your CRC is justifying the returns you are getting. If it's not, make sure that you spend it cost-effectively. It has to be done in such a way that it brings in a certain amount of revenue for your business. Decide this amount beforehand so that it's easier to measure it later.
To find your CRC, you need to add up all the expenses related to your customer success efforts. For example, you need to add your customer service team's payroll, marketing, promotion costs, professional services and training cost, etc. Now divide the total by the number of customers you have. The result is your CRC.
Measuring the success of your business is extremely important if you want further growth. Without that, you won't know if you're working in the right direction to achieve the success you want. So if you haven't started measuring your success yet, start doing it now.
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