In the final part of our growth series we’re going to discuss how to measure business growth, a hugely important part of any growth strategy. Measuring business growth is essential if a company is to succeed in any long-term growth strategy. While the idea sounds simple, there are a fair few factors to consider in order to effectively measure business growth. It’s not just a case of tracking a single metric. Failure to do so could lead to a company going off on an undesired tangent which could cause bigger implications in the long run.
To really understand how a business is growing, and make reasonable predictions for the future, there are a few different metrics that should be taken into consideration. The metrics you choose to track depend on your overall objectives for the business. Typical growth indicators include customer satisfaction, customer numbers, employee retention and profitability. In this article, we’ll take you through some of the metrics that matter and give you a few tips on how best to keep track of these all-important figures.
First things first: What does success look like?
Before we dive into data and growth metrics, it’s best to think about what growth actually looks like for your company.
No two growth strategies are ever identical, and many organisations follow entirely different paths to reach an overall goal. Take a look at some of our other articles exploring growth to learn more about the growth journey. In this series, we’ve looked at what growth is and why it matters, what the main stages of growth in business are and some of the different growth strategies businesses use.
If you’ve caught up on our previous articles and you’re starting to think about how best to measure the growth of your company, you’re in the right place. Hopefully by now you should have identified what growth looks like for your company and therefore this should be conceptualised in the form of targets and key performance indicators.
Your targets might include, for example, customer numbers, profits, customer and employee satisfaction levels, employee numbers or even global expansion levels. Your KPIs should be quantitative, measurable and realistically indicative of your overall business growth. KPIs can be assigned to individual team members, and also serve as a target for the company as a whole.
Reaching the goal: The metrics you need to track
A growing army of loyal customers is a great indicator of a successful growth strategy, but if those customer numbers creep up more slowly it might not be so easy to spot the increase. That’s why it’s always worth recording customer data from day one.
When tracking customer numbers as part of your overall growth strategy, don’t just think about the number of customers that you have at any one time. Think about customer retention figures, and consider the ways in which new customers are finding you too. Similarly, it’s also worth considering customer satisfaction in the same bracket, and recording satisfaction data from reviews, surveys and other feedback to see how your company might be able to improve retention figures and appeal to new prospects.
With competition fiercer than ever, brand loyalty is something which must be nurtured now more than ever before. According to Marketing Metrics, the chance of an existing customer returning to buy a second product or service is 60-70%. Compare that to a new prospect and it sinks right down to 5% to 20%.
Customer retention metrics can be easily tracked via CRM software and Google Analytics. Analyse the information regularly, and track customer numbers and retention figures as part of your growth strategy.
When measuring business growth, there is a tendency for some companies to focus exclusively on revenue. This leaves a business open to making some costly mistakes, as revenue in isolation is never a good way to track real business growth. Looking at profit and more specifically the impact that growth has on your profits is crucial. As you grow your profit margin may not increase at the same rate as it used to before. As a result, it’s important to always bear this in mind because you might think your ‘growth’ is better than it actually is.
Tracking profitability on a monthly basis can provide detailed and regular insight on a company’s growth. The frequency of your reporting is also crucial so you can identify any potential issues as soon as possible and make any necessary adjustments to your strategy when required. a good insight into how the company is growing month by month.
Recording such information and comparing it to overall objectives in the same way every month also helps to build a powerhouse of important data, which can also be used to track seasonal changes in customer appetites and other factors which might affect purchasing decisions.
Market Share and Competition
There are so many different metrics which can be measured for marketing purposes, and many of these are hugely important in deciding the effectiveness of different strategies. They can also be used as a way of quantifying the growth of a business.
Typical marketing metrics which your business may well already keep track of reveal a whole world of new information about how well your business is growing over time. For example the types of metrics that can be measured include sales market share, website traffic and numbers of leads.
If your business doesn’t track such information already, it’s something that you should definitely be considering. Information on web traffic is often readily available via user-friendly tools such as Google Analytics and information on your sales leads can be easily gathered from your CRM system.
Your market share can also be easily calculated by dividing your total sales by the industry’s total sales over the same period. Take a look at this article for more information on how to do this. If your company is relatively small compared to the size of your industry try to compare your performance to those of your competitors as this will be more meaningful in terms of comparison.
In short, growth is a huge priority for many businesses. No matter the scale of a growth strategy, the processes that a company should use when measuring business growth remain broadly similar. When measuring growth, it’s essential that business leaders know what they’re looking for and understand what their goals look like in an analytical sense.
There should be concrete figures behind every target and every member of the business should have clear sight of the growth strategy so they know what they are working towards. Measure key performance indicators regularly and discuss how things are going with the whole team. Equally important, make sure factors like customer retention, employee and customer satisfaction and profitability are never far from your mind, and tailor new growth strategies around your existing KPIs.
Find out more
Want to learn more about growth in business? Don’t miss the other articles in our growth series. In part one we discussed what growth is, and why growth matters. Part two saw us consider the main stages of growth in business, looking at different paths to success. And the third article in the series was all about growth strategies. We looked into the varying strategies that companies might use to grow, from innovation and marketing to market development techniques.