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You may have this question in your mind that, What are business metrics? It is a qualifiable measure, businesses use to track, monitor and assess the success or failure of any business. These are also known as conversion rate metrics, in the business world.
What is Conversion Metrics and KPI?
These two indicators are important parameters to judge the progress of your business. Conversion Rate is the number of conversions that is divided by the number of visitors to your website. The Conversion rate indicates that actually how many visitors to your website are purchasing your product or service that you have to offer to your customers.
The Conversion Metrics are the parameters on which your conversion rate must be judged.
A great tool that can help businesses is a dashboard template that will allow you to manage, monitor, and track your business processes. This dashboard sample will allow you to view all your metrics and visit them whenever you like. Additionally, you will also be able to custom design your dashboard according to your needs and benefits.
KPI or Key Performance Indicator is a measurable value. It shows that how effectively a business organization is achieving its Key Business Objectives. This KPI is used in multiple levels by organizations. It evaluates their success at reaching their business success. High Level KPIs focus on the overall performance of the company, where as Low Level KPIs focus on the performance of individual departments within the company.
The most important Key Performance Indicators or Conversion KPIs to track are:-
Revenue
It is the most important factor to run a business. Revenue is the money brought in by your business. You calculate your Gross and Net revenue by calculating business money before and after expenses.
Revenue holds every department of the business together, especially the sales and marketing departments. It is the alignment of these two departments that really benefits the business.
You can take the help of Google Analytics and set up e commerce tracking in it, to track your business revenue.
Rate of Conversion
Conversion rate is the number of visitors to your website, who completed an objective on your website. The success rate of your marketing campaigns can be measured by your conversion rates. These two factors are directly proportional to each other.
CRO audits is important for achieving a higher conversion rate. You can measure your conversion rate by adopting this formula-
Conversion Rate = (Conversion / Total visitors) * 100%
Generated Lead
The process of attracting and converting potential users, who are interested in your company, is lead generation. A Lead is where a buyer begins his journey.
The rate of lead generation is very important to success of your business. It brings traffic to your website.
You can track the rate of your lead generation by setting up goals in the Google Analytics.
Cost Per Acquisition
It is the price you need to pay to acquire a new customer. It is a type of conversion rate only. It allows you to directly measure the impact of your marketing strategy on your revenue generation.
Cost per Acquisition allows you to determine the directions of your business campaigns. You can track your rate of cost per acquision by using this formula-
Total Marketing Cost/Total customers acquired=Cost per Acquisition.
Average Value of orders
It is actually Average Order Value, which calculates the average amount of money spent by you, every time a customer places an order to you. It is sales per order, not per customer.
It is easier to increase your average order value than increasing your conversion rate, because it is easy for you to convince your current customer to business with you, than to have a new customer.
You can track your Average Order Value, with this formula-
Revenue/Number of orders=Average Order Value.
Rate of Retention of Customers or Customer’s Loyalty
Rate of customer retention is the time your business keeps your paying customers with you. To create a customer, marketing and innovation is important. Your loyal customers pay you more money in your regular business with them and convert.
You can track Customer retention rate by measuring customer churn rate. If the customer churn rate is high then your customers are not happy with your products or service. You can track customer churn rate by this formula-
Lost quantity /Number of X at the beginning of time = Churn.
LTV or Life Time Value
Life Time value is the revenue your business makes from a customer, for the period he stays with you. You can track the Life Time Value by using this formula-
Average Revenue per User x 1/Churn= Life Time Value.
Return on Investment
Return on Investment is the process for the marketers to prove that marketing does not impact the bottom line of the company. It also helps you to determine as to what you can spend your marketing budgets on.
There are challenges to calculate Return on Investment in marketing because, the amount you spend in marketing may not bring any return in a long period of time.
You can track your ROI; you can use this formula-
(Gross Profit-Marketing Investment)/Marketing Investment=ROI.
Return on Advertisements Spend
It gives you the idea as to how much revenue you can gain by spending a certain amount of money on your advertisements. If the return revenue is higher than the expenses on your advertisements, it is known as Positive ROAS.
You can track your Return on Ad Spend by using this formula-
(Revenue-Cost)/Cost=ROAS.
Media Mention
Media reviews, whether it is good or not so good, keep the reputation of your product and brand alive. Media mention is the valuable feedback for your company, brand, product or service.
You should track your media reviews every month. You can do this by automating a report by using a tool, such as BuzzSumo, Hootsuite or Tweetdeck. You can also have Google Alerts to work for you.
Total Traffic
It gives you a bird’s eye view of the current health of your business website. You can also track pattern of the traffic to your website.
You can track the traffic by- logging in to Google Analytics>Acquisition>All Traffic>Channels.
E mail Subscribers
E mail subscribers play very important role for the business of your company. They are the engaged users.
It has a ROI of 122 per cent. Increasing E mail subscribers lead to higher sales.
You can track your E mail subscribers by creating submissions in Google Analytics. It is Behavior>Events>Overview. Click on Form in the Event Category column. It will show you number of impressions and conversions. You then click on the Event Action.
Branded Searches
These are keywords that include your brand name or any other variation of your brand name. Branded Searches are famous for its high conversion rate.
You can track Brand searches with Google Search Console. If you are getting impressions that means the search is positive. You can also tack direct traffic in Google Analytics.
Reviews
Reviews are the social proofs of your business. The consumers trust is built by reviews. Negative reviews result in loss of revenue. You can track your reviews by using this formula-
% Loss Revenue= (5-star rating)*07.
Net Promoter Score
Net Promoter Score gives recommendations to your company.
If the score is 9-10, you are in category of Promoters.
If the score is 7-8, you are in category of Passives.
If the score is 6 or less, you are in category of Detractors.
You can track your Nett Promoter Score by using this formula-
(% of Promoters) – (% of Detractors) = Net Promoter Score.
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