Making Sense of Business Metrics: How to Interpret Your Numbers
As a business owner, it is so easy to get lost in all of your data. The amount of information available to us now (thanks to the internet) is incredible. But it also can make it more difficult to choose the most relevant and valuable business metrics for you!
To enjoy the benefits understanding your metrics can have on your business, you need to choose the right numbers and track them consistently. Keep reading below to start making sense of your business numbers.
Why track your business metrics?
Tracking and analyzing your numbers regularly can help you monitor the health of your business and make better decisions. There are other benefits, too!
For one thing, you’ll feel more confident in your skills as a business owner. It’s amazing how much confusion and worry can affect us when we’re making decisions based on our gut or assumptions. Use your business metrics, and you know you’re making choices based on facts.
Our data helps us make those informed decisions more quickly, too. When time is of the essence — during a launch, for example — you need to know what’s going on and what to do next fast. Your business metrics can tell you.
Finally, our numbers help us track our progress toward success. Are those changes you last implemented in your business working? Are you meeting your goals? Your data will tell you!
Different types of business metrics to track
There are so many more numbers at your disposal than revenue, site traffic, or number of email subscribers. Those three examples are still important, but they don’t give you all the information you need!
Let’s talk about types of business metrics you should track, plus a few examples of each.
Financial metrics
People often think of finances first when they hear the term “business metrics.” Your financial numbers are some of the most important metrics, of course, because you want to know how much your business is making.
Revenue, expenses, and profit are some of the most common financial metrics.
Your expenses will tell you how much it costs to create, manage, and deliver your products or services. Your profit is the amount of income you brought in after expenses. And your revenue will tell you how much you’ve made (including expenses) in a given time period; say, last month.
But don’t stop there with your financial metrics! You can drill down into your data even further and discover more about your business. You can even learn ways to increase your revenue without simply increasing your prices.
Sales metrics
You may get sales numbers confused with financial numbers, and that’s okay. Your sales metrics inform your finances, so it’s an easy mistake to make.
Common sales metrics include number of sales, conversion rates, and sales by product.
Think of your number of sales as how many times your sales funnel successfully converted someone into buying your offer. And your conversion rate is the ratio of leads at the top of your sales funnel to those who became customers at the end of your sales funnel.
You can even calculate conversion rates for each stage of your sales funnel to see what’s working, what isn’t, and where!
Marketing metrics
What’s performing better, your organic traffic or paid ads? Are people clicking through from your podcast, YouTube videos, social media, or emails?
Your marketing metrics will tell you. Unique site visitors, traffic sources, and email click-through rates are just a few examples of what you can learn about your target audience.
You can glean who’s visiting your site for the first time vs. how many repeat visitors you’re getting — and then optimize your site to encourage people to stay longer (and convert). Plus, you see your top sources for site traffic and pinpoint which sources can do better.
Operational metrics
Operational business metrics help you understand how your business is running on the back end. These numbers can confirm whether you’re charging for your services appropriately, for example, or estimating your timelines and planning your projects accurately.
You can learn whether your workload or client roster is over capacity or under capacity. You can see if your tasks or projects are finished on time, or how many hours you typically spend on each project.
You may even find ways to implement systems or automate some of your processes to improve your operational metrics.
Customer service metrics
On the opposite side of your business, you have customer service metrics. Metrics like satisfaction or NPS, aka net promoter score, will tell you how your business is performing with your audience.
If you have a customer service ticket system, numbers like volume and time to resolution will show you if your customers’ needs are being met.
Overall business metrics
Last but not least, we have your overall business metrics, which will give you a glimpse of how your company is doing as a whole.
Is your team growing as you take on more clients or sell more products? Or is it shrinking to reduce expenses and streamline your systems? Are your current and past team members happy with your company?
These back-end numbers are just as important as the metrics generated by your clients and customers!
Which business metrics should you track, and how often?
Now that you’ve learned what types of business metrics are available to you, let’s talk about which ones are best for your business and how often you should track them.
Choose your business metrics with these 4 questions
The types of business metrics you should track all depend on what you want to learn. Unfortunately, there’s no one-size-fits-all answer like “track X, Y, and Z.” I wish it were that easy!
Every business is unique: its goals, offers, audience, processes, and so on. What one business owner decides to track for their business may not work for you at all.
You have to decide what you want to know about your business and what to do with the information you gain. To figure out which business metrics to track, ask yourself:
- What question do you need the answer to?
- What information do you need to find that answer?
- Where can you find that information? How can you track it?
- Once you have that information in hand, what are your next steps?
For example, if you want to know which marketing platform is converting the best, your questions would look like this:
- I want to know which marketing platform is responsible for bringing in the traffic that leads to the most number of leads and sales.
- To find that answer, I need to know where my leads and sales are coming from.
- To find that information, I can look through Traffic Acquisition Numbers in Google Analytics.
- Now that I know that Instagram is responsible for the most leads and sales, I can dig deeper into Instagram’s numbers to see what’s working for my audience, whether it’s stories, posts, Reels, or links to other content.
Track your business metrics based on these 2 factors
Now, how often should you track the numbers you chose? Well…it depends. (Remember, every business is different!)
How often you track your metrics depends on:
- The type of numbers you’re reviewing, and…
- The overall goals of your company.
For example, if you’re in the middle of a launch, you’d probably want to track your marketing and sales metrics on a daily basis. Daily data can help you make immediate, real-time tweaks to your launch strategy if needed.
On the other hand, your customer service numbers like total ticket volume might be reviewed monthly or quarterly. That cadence would give you a better picture of how customer satisfaction is over time, and whether you have busy or slow seasons in customer service.
Whatever schedule or regularity you choose, remember one thing: be consistent.
On its own, data is pretty meaningless without consistency, context, and structure. If you only look at your data as a snapshot in time, you’ll get confusing and/or misleading information about your business since you’re not comparing it to anything!
Data you’ve gathered over time, or historical data, also helps you understand seasonality in your business. Which, in turn, can help you make decisions like:
- When to launch new products OR highlight past products
- When to ramp up your marketing efforts
- When you can hire and onboard new team members
- When to add an additional revenue stream
- Projecting revenue
- Forecasting your upcoming workload
- And so much more.
Track your numbers however often you’d like for your business — and stick to it.
Make better business decisions with your numbers
Tracking your business metrics leads to better decision-making, clarity around your progress and success, and more confidence in your skills as a business owner. Because there is so much data available, it helps to break down your business metrics by type.
To choose the types of business metrics you want to track, think about what you want to learn about your business. How often you track those numbers depends on the numbers themselves and your overall business goals.
What’s next after you decide what to track and when? Reviewing your numbers. This blog post can walk you through the process. Or, watch the video version!
