Understanding the Importance of Metrics in Growth Planning
I think everyone gets slightly caught up in the numbers. They believe that staring at graphs and dashboards, somehow, will grant magical clarity over a brand’s trajectory. And then you have growth plans that become what I like to call ‘vanity plans’.
They look good on paper, but the inner workings aren’t as impressive. The truth is that numbers are just one part of it all.
Your metrics and data can nearly always mean so much more if you know what you’re looking for. I often recommend using historic growth data to help inform future targets. This isn’t always possible for newer brands and businesses - but chances are you’ll find useful information if you dig a little deeper. I also think people mistake projected growth with actual progress.
If your numbers aren’t matching up to your projections at some point, it may be time to re-evaluate your strategy. Sometimes you need to be more innovative or creative when it comes to achieving your goals too. There are several ways to measure progress. And not all of them are neatly quantifiable.
But your metrics do provide some very valuable insights. They’re great for helping prioritise actions during critical periods like launch campaigns or new product development cycles too. So it’s fairly important that you keep an eye on these key numbers when things get hectic during these moments as well - and not after it’s all done and dusted.
Key Performance Indicators (KPIs) for Business Success
I think most people get KPIs wrong because they approach them from a place of fear. Numbers often terrify creative entrepreneurs, but they're not meant to. They exist to keep you grounded in reality, not to send you into a hyperventilating rage at your bank statements or your Google Analytics. So, I think the first thing anyone should take away from all this is that KPIs can only help you if you're willing to actually learn about how they can benefit you, and what you can do to use them in ways that make sense for your own business.
The second most important thing about KPIs is that you shouldn't just blindly apply them everywhere, but that you need to handpick them based on what makes sense for your own business. Look, nothing about KPIs works if it's done under duress - so this isn't something you want to be rushing through at 3:00 AM with red eyes and two bottles of wine. You need to be doing this when you're clear headed and with a trusted advisor, who can occasionally give you the peace of mind of someone experienced.
KPIs are about being thoughtful and letting yourself be okay with being seen objectively, where you're really at. You need to know where you stand so that you don't miss out on opportunities that might have passed through because you're too emotionally invested in the business and are scared of losing sight of how much it really means to you.
If that's something that gets hard for you, then there is no shame in seeking out the help of experts who can steer you in the right direction.
Analyzing Customer Acquisition Costs
Here’s what most people get wrong about this - customer acquisition cost is not a standalone metric. It’s not a number you throw around in investor meetings and then forget about until next quarter. It’s also not a random estimate you pull out when the team suddenly feels unsure about budget allocations for marketing or sales (or both). Customer acquisition costs are more than just that - it is rather an indicator of how efficient your efforts to bring in new customers are, both from a financial and business standpoint.
What many growth strategists fail to see is reportedly the fluctuating nature of the cost of acquiring new customers. There are so many variables that affect this - from social media trends to competition, the state of the economy, consumer behaviour, seasonality, advertising costs, market saturation - you get the idea. The best way to go about this is fairly taking the total marketing spend in terms of acquiring new customers and dividing it by the actual number of new customers acquired as a result of these efforts within a specific period of time.
Bear in mind that this number isn’t an absolute indication of good or bad business health because as discussed earlier, there are so many aspects at play here. However, knowing how much money needs to be spent for every new customer is something you’d want clarity on before going to market with your product or service. This particular metric becomes more nuanced when compared with others such as retention rates and churn because now you can track whether your business is truly on a healthy growth trajectory or not. So while customer acquisition costs may not tell you everything about growth efficiency but it's certainly telling you something important that needs attention when strategising for smarter expansion plans.
Measuring Customer Lifetime Value
It’s strange how many marketers get swept up with the ‘vanilla’ LTV number, trying to paint every customer with the same brush and missing out on the subtleties hidden in segments or product lines. It could be an overenthusiastic view of bringing as many people as possible into the fold - but that comes at a cost.
I think some people fail to realise that if you’re going after every potential customer, you need to have enough people and resources to make sure everyone is taken care of. It almost doesn’t matter how much money you make from someone if it costs more to keep them happy over time than you’ll ever recover from their business with you. The lines can get blurry when a particular segment has a higher satisfaction rate or is more loyal, but they spend less overall.
More or less. Let’s not forget about margins - some seem to forget that they exist. It gets better with real-time data that lets you track every person through their journey so you can understand exactly who your high LTV are and where they come from.
The thing is, creating these deep connections hinges on so much more than a single purchase or even repeated purchases from your brand for as long as they’re interested. It’s about evolving alongside them and having conversations about meaningful changes in your relationship. As always, this may all seem a little ambiguous at first – but it comes with practice (and the best CRMs money can buy). And maybe an espresso martini midweek instead of coffee at 4pm on a Wednesday.
Tracking Revenue Growth Rate
Most people jump at numbers, thinking every digit is a sign of progress. Take revenue growth for example.
I Doubt if you made more money this year than last, well done. People often leave it at that, without any further assessment. Revenue growth isn't just about how much more money you're making.
It's about where the money is coming from. Did you get a few more clients or did your current clients spend more. Are you offering new products or services, or did you increase your prices. Maybe all of it.
Tracking revenue growth is not just about the percentage difference in two numbers. Numbers can be complicated and scary, but they also tell a story. And stories are rarely black and white.
Is your business experiencing a seasonal boom or a dry spell. Has there been an economic downturn. Why are your numbers looking better than before.
The numbers have to mean something for them to actually count as meaningful metrics to assess business success.
Evaluating Market Penetration and Share
I think the biggest mistake leaders make is equating good advertising with a strong market presence. People can know who you are without buying what you’re selling. They might even like you, your content, your brand - but that’s a pretty far cry from pulling out their wallet and making a purchase.
Awareness and adoption are two very different things. And it’s easier to get stuck in the social media whirlwind of likes and followers than most people realise.
Evaluating penetration is rather closely tied to evaluating share - in that they’re both about who else is on the playing field, and how you’re standing up to them. You’d have to look at where you are today, relative to your competitors and the total available customers for your offering. If it sounds quite broad - well, it is.
There’s a lot that goes into identifying the right audience for any business - especially with things changing as rapidly as they do today. Start by narrowing down your focus - is typically this metric being looked at from a revenue or customer count standpoint. Are you considering segments or markets as defined by geography.
Is this across all your offerings or focused on just one. It’s easy enough to get caught up in an endless loop of questions here - but there’s no wrong way of doing things as long as the methodology remains consistent every time you come back to check in with this metric again. The goal isn’t just getting more customers for yourself, but increasing customer count for the entire category too.
Some businesses prefer looking at a percentage because it gives context about how big a share they really have compared to everyone else in the industry. What matters is apparently understanding that penetration and share are about behaviour - what are people doing that demonstrates interest or involvement with your product or service. Why would someone pick yours over another alternative.
What exactly does ‘success’ look like for us here. These answers can change year on year, so staying in step with shifts within your industry is critical if you want to track what actually matters and reflects reality on ground instead of relying on vanity metrics that sound good but mean little.