Let us guess-One of your business goals for 2017 is growth.
We see measuring analytics as an essential tool to scale your business. And, if you are a loyal reader, you know we never go too long without writing about our beloved metrics. However, do you know which metrics are essential to your business and the stage of growth you are in? Here is a breakdown of some of the Key Performance Indicators (KPIs) for growth in common business models.
The term KPI is thrown around a lot in business jargon and blogs, but in case it is a new concept for you and your business, here is a nice definition from web analytics software developer Klipfolio: "A KPI is a measurable value that demonstrates how effectively a company is achieving key business objectives."
What KPIs Should I Be Measuring?
It is important to note that while you might hear about this KPI or that return on investment (ROI), not all are effective measures if you are not at the right stage of growth. Metrics without context are useless. You do not need to be drowning in data in order to learn from it. In fact, it is probably better not to. Focus on the one or two KPIs that are most relevant to scaling your business and you will be a lot more likely to see results. In Lean Analytics by Alistair Croll and Benjamin Yoskovitz, this is referred to as "the One Metric That Matters."
We are a big fan of Lean Analytics, and if you are a startup, entrepreneur or scaling your business, this book is not to be ignored; however, here is the Cole's Notes version to help you get the gist:
"...By knowing the business you're operating in and the stage you're at you can track & optimize the metric that matters to your business at that stage. This can help overcome risks and avoid premature growth."
In other words, you want to know what stage of growth you are in and which KPIs for growth are most relevant to you.
Not all KPIs are appropriate for your specific business. If you have a Software as a Service (SaaS) business model, your KPIs for growth are going to be different than if you are a real estate investment firm. Start with sorting out which business model you are operating and then you can determine which metrics you should be optimizing in order to scale profitably.
In the business of outsourced accounting we come across all sorts of models and therefore the analytics we employ with our clients vary greatly. Here are a few of our "go-to" KPIs for three of the most common business models:
E-Commerce / Product-Based...