Let’s face the fact, most business owners are pretty bad with numbers in their business.
Talk to any accountant or bookkeeper, and they’ll tell you upfront: people just don’t keep track of their numbers and don’t have an idea for the most important numbers in their business.
What numbers would they be?
Well, your accountant will tell you, your financials and they are right – to some degree.
The problem with your financials is that they show what happened in the past. It’s kind of like trying to drive down the road by looking in the rear view mirror. Although it tells you whether you made it, you are only finding out well after the event.
There are more important numbers for your business. They are numbers that show you what’s happening through the front wind screen, right now. And, the numbers we are talking about are: testing and measure results for your marketing, advertising and promotion efforts.
Knowing these numbers along with your sales conversion rates allows you to know today what will show in your profit and loss sheet at the end of the month.
Take my situation, you take the time, effort and money to build a website.
You get it up and running on the internet, and then you just leave it to do its thing.
After a while of checking the statistics you notice something interesting. Your statistics tell you that they are getting to the front page, even clicking through to a second page (where you want them to go to take action) and then, nothing.
You realize that there is something on that page that is stopping them dead from taking further action. Without looking at those numbers you wouldn’t even know its happening. Your time, and investment is wasted.
But the truth is, no one gets marketing right the first time. But, the only way you will know whether you’re getting it right or anyway near right, is if you’re actually recording your crucial numbers.
In a case of websites, how many people are visiting your page, how many are opting in for your offers or how many enquiries are generated.
But hang on, I’m not an online business I hear you say. “We get most of our business from word of mouth”.
Okay, so let’s look at that: You honestly generate 100% of your business from word of mouth. Now, if you tested and measured rigorously and got them telling you beyond “Oh, a friend told me about you” to actually give you a name (which you should be able to get), what could you do?
What if you found out that one of those friends/businesses was referring you 35% of all the business? Would you just leave it a chance that that will keep happening forever? And just let it go? Or, would you take a pro-active stand and send the person a bottle of wine or a thank you, something to encourage them to keep doing what they’re doing.
Or, what if you found that the number had dropped to 10% in the last quarter, would you try and find out if you had dropped the ball on something with them?
See, if you’re testing and measuring, you’re going to know who’s referring you business and how much they’re referring you. You will be able to respond accordingly, instead of waiting for the issue to turn up on your income line of your profit and loss sheet when you have already lost money.
The tale of telemarketers
Your figures can tell you valuable secrets. Many years ago, we had two telemarketers.
Telemarketer A who would manage to book one appointment every 14 calls.
Telemarketer B who created one appointment every 25.
Well, it’s just pretty obvious, who is the more successful, isn’t it? If one of them had to go, who would you get rid off? Clear decision isn’t? Or, is it?
Because, when you actually look at how many appointments went through to actually happening, Telemarketer A would have a dropout rate of 55%, Telemarketer B, 5%. (i.e. Per 100 Calls – Telemarketer A = 7 appointments booked – 4 drop outs = 3 held, Telemarketer B = 4 appointments booked – 0 dropouts = 4 held).
When you do the Math, you’d realize that you’d be firing the wrong person if you were going off your gut feel without looking at the numbers.
Knowing your numbers, you make smarter decisions and invest your marketing wisely. And, you pick it all up before it’s a problem with your bank account. So what numbers do you need to measure?
What to do now?
Get moving: Start recording and reviewing your testing and measuring numbers. If you are struggling to work out what they should be, just email me and I can help you out.
Steve Smit is a Business Coach with Reality Consulting. He works with business owners who want to increase their take home profits and work shorter hours. For a free copy of his “Business Accelerator Pack”
visit Reality Consulting. Or, email him: [email protected]