If You Don’t Know Your Metrics, Can You Survive This Economy?
My unvarnished answer to the headline question: maybe, but if you were in trouble, you wouldn’t know it until it was too late. Metrics are key data that you need to monitor closely all the time, not just when the economy is shaky, but they take on even more significance now.
For instance, do you know what it costs your company to acquire a new customer? In lean times, it can be higher. If cash flow is negative, where is that money going to come from?
Smart marketing in a tight economy can help you to gain market share when things turn back around. Why? Because most of your competitors are cutting back. It’s the natural reaction. So where should you head? In the opposite direction. If your cash flow will allow it, stay the course. Continue or even increase the marketing you were doing before the economy went south.
I challenge you to know these metrics cold:
What are your REVENUE INCREASE needs?
Based on that revenue need, how many ADDITIONAL CUSTOMERS do you need?
What’s the AVERAGE REVENUE per customer?
What’s your CLOSE RATE per prospect?
For example, let’s say your company has gross revenues of $500,000, and you need to increase revenues by 100% (for whatever reason). So, you need $500,000 of additional revenue to make it to $1 million. Let’s say your average revenue per customer is $10,000. So, you need 50 new customers.
Now, using historic sales data, determine your close ratios:
Ex. 100 cold prospects = 10 warm prospects = 1 new client (100:10:1)
Using this example, you would need to find about 5000 qualified leads to end up with 50 clients.
Those who know these metrics well enough to rattle them off at lunch with a colleague are the ones who will win when the economy bounces back (and just about all other times, too). As my Mom likes to say, “You hide and watch.”
