| Know Your Customers |
|
Most businesses find that a small subset of customers is responsible for much of their profit. Do you know which customers are most profitable? How do you retain these key customers? It’s also important to look at which customers you should fire! While there may be additional factors to consider, it's not unusual to find that you have some customers who cost more to keep than they’re worth. |
You can’t manage what you can’t measure.
Every entrepreneur wants their business to be successful. But what does success look like? How do you measure it?
Remember that episode of I Love Lucy where Lucy and Ethel bottle and sell “Aunt Martha’s Old Fashioned Salad Dressing?” They were so happy that they received so many orders; however, Ricky did some quick math and found that they were losing money on each bottle of salad dressing! This applies to our businesses too. Growth at any cost isn’t sustainable.
The key is to identify a small number of really important measurements. It's important that the number of metrics be small and easy to understand. For example, look at your car's dashboard. What are the key metrics that you're interested in while driving? Probably just a few; most likely you're interested in your speed and amount of gas. Maybe you're interested in your coolant temperature and your oil pressure. You probably don't care much about anything else. You have easy to understand data that helps you drive.
Tekpals can help you identify 3 to 5 key metrics you need to monitor in order to manage your business. There's probably a volume component like sales volume. Sales aren’t everything though. You probably want to know your cost to make those sales because you're interested in how much profit you made. Again, profit isn't sustainable if your customers aren't happy, so you probably want some indicator of customer satisfaction. In this example, the key metrics could be sales volume, margin and customer turnover.
Of course, this is a simplification for a generic business. A business in an early phase may be more interested in attracting new customers so it would pay to look at marketing and leads. A business in a very competitive environment may be interested in how they compare to the competition in price and customer satisfaction. A retail business is interested in inventory turnover. A guest house would be interested in occupancy percentage. A spa would be looking at percentage of session hours booked. There are many possible metrics but the bottom line is they need to be easy to get and understand.
Tekpals will help you get the metrics into an easy to manage format so that you’re always on top of these important numbers. We can help you with setting up a system so that the data are produced automatically and presented to you in an easy to read dashboard. You’ll see how changes in your pricing , marketing, or changes in the marketplace impact your business.
You'll know your speed and how much gas is in your tank!