There are a number of tools available to business owners to keep tabs on its status. These are generally known as Key Performance Indicators (KPI). Some of them track financial issues but others deal with marketing or customer service.
Net Promoter
This comes in a number of forms. For telephonic service, there is usually a message to please stay on the line for a quick survey after the completion of your transaction. Restaurants and department stores will provide a code at the bottom of your receipt that includes an inducement with the promise of a discount or chance to win cash. People are more likely to respond if it is quick and painless. If it is immediate, they will probably rely on gut feeling and you will have a more accurate response. Anything that comes in the mail or needs to be handled at home has less of a chance to be answered.
Then you need to review the responses. The easiest is a numeric (1 worst; 10 best). You can establish your own yardstick. For instance, a rating of 7 or below would involve some further research. Consistent low marks means you are heading for serious problems. Look at the low scores and see if there are any patterns, like an automated phone routing system that needs upgrading, or a particular employee that needs training. If warranted, you may want a personal phone call to the customer to get to the heart of the issue.
Lost Customers
This is a simple percentage of customers you no longer do business with compared with the total number of customers you have. Some attrition is expected, but keep tabs on this number. It is nice to have new shoppers, but you want a firm percentage of return clients to maintain a solid business.
If possible, follow up with lost customers to find out whether they are simply not a good fit for your product, or you have more serious issues afoot.
Conversions
For an online business, this is easy. Find the number of hits to your site as compared to the number of orders. Service industries have it a little tougher. If you have a sales force that works on commission, this should give you some idea. You might need to be creative to find out the numbers so you have solid information.
If you are concerned, check the standards in your field to see what your competitors are sensing. Then you can analyse what you are (or are not) doing to move inquiries into sales.
Customer Value
Often companies will rely on a key client to generate revenue. It is a good idea to examine your lesser clients, especially if they are the cash flow that keeps you going during lean times, sometimes referred to as bread and butter revenue. Check to see if these individuals or companies are still providing the same or increased revenue as they have in the past. If not, it may be time to do a little marketing.
If you want to be successful, it is critical that you monitor these key indicators along with all the financials recommended by your accounting firm.
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- The Capex Team