Marketing Metrics That Small Businesses Need
Marketing has existed for a long time, from the moment that humans knew how to trade up to now with the existence of the Internet. Marketing makes customers pay more attention to the company, products, or services by conducting research based on the market, statistics, etc. Marketing can be a bridge to connect the company to its consumers; it also plays an essential role in deciding the success or failure of a company, a product, or a service. Due to the characteristic of the job, many colleges and universities choose to make it become a major, not just in the US but also around the world. When people talk about marketing, there are a lot of topics that can be used to debate. One of those topics is the Metrics of Marketing that small businesses must pay attention to. Here are the top 5 metrics believed to be the most important.
1. Total Number of Conversions
Conversion rate is the total percentage of customers visiting your website and completing their desired goal out of the total visitors.
Calculating the conversion rate is easy. You need to divide the number of conversions you can get in a period by the total number of people visiting your website and multiply it by 100%.
Conversion rate = (conversions/ total visitors) * 100%
A high conversion rate depends on many factors, all of which must be satisfied to provide the desired results. The level of visitor interest, the attractiveness of the offer, and the ease of the process must be satisfied.
Customers' interest reaches the highest peak by matching the exemplary visitors in a proper place and at the perfect time.
The Appeal of the offer includes the value proposition and how it is presented to connect with the user.
Many examples include selling products to membership registration on both stores and websites.
The conversion rate might not represent how successful your business is. It is an excellent tool for tracking the performance of your small business website and your store. Following the rate is crucial for you to know how well the marketing of your business is going on, and from that, you can spend your money wiser on what you should and not.
Learning more about your customers is super helpful. Customer behavior is the habits of your customers, which include the trends, the frequency rate, and factors that affect their decision on buying something.
Customer behavior does not describe the type of person buying your products but how they purchase stuff. For example, you are a manager of a shoe store, a man comes and buys a pair of shoes for a girl who does not fit his size, he can be buying it for his wife, daughter, friend, etc. Those elements are not helpful for a business. What a manager should notice is how he approaches the product. How long has it taken for him to get his desired product? What color were those shoes? What was the size? Etc.
From those factors, now you have to conduct a survey on a larger scale of people, take note about what color is the most popular, which product has the lowest price that one can afford, which brings you the profit.
It would help if you noted how willing people would spend their money on your product. This will be a factor in the behaviors of your customers. If the price of products is too high, this might make them lose interest in your products and start looking for replacements.
Noticing your customers' behavior is essential as you can increase the interaction with your customers and set up the "loyalty" between you and them. By understanding the customers, you will have a higher chance of winning when you are in a competition with a new store and polish your name in their minds.
3. Cost per Sale
Cost per Sale is the total amount required for the whole process, from buying the materials to selling a product.
While the cost of goods sold is easy to understand, the calculation can be complicated depending on your product. The formula for calculating the cost of goods sold includes various direct and indirect costs, making the calculation more difficult.
Since the cost of goods sold is considered necessary to keep the business running efficiently, a company needs to list this expense on its income statement. The cost of goods sold can help enterprises calculate total profit and gross profit margin.
Some factors impact the Cost per Sale that a business must notice:
- Product expense: This is the cost that a company has to pay to create and consume a product, including the product cost and the selling price, but not all costs incurred in the period are included in the product cost.
- Workers: The labor force is one of the primary resources for creating a product. If your business uses human resources, it includes many kinds of payment that you must notice, like their salary, health insurance, the total payment of their working days, etc.
- Warehouse, store position: Finding a place to place your factory with a cheap labor force and transporting fees for distributing your products and gathering materials is a great option to minimize your cost.
- Materials: Materials are essential. You cannot create a product without materials. Managing the price of materials can help you reduce the cost of a product.
Managing the increasing and decreasing cost per sale rate will help the business take control of the finances. The less you have to pay for something, the more you will earn when your products are sold but do not reduce their quality.
4. Return profit of Investment
This is the last step of your creating and selling products process, you are here with a lot of money in your bank account, which is excellent, but you still have to notice more about it. The profit that you get after you have paid all the expenses for your business from the salary of workers, cost of materials, warehouses or stores, and so on, will decide on whether you will have to increase the price of a product, which will help you to earn more but might make you lose your customers, or stop making that products and switching to something else that cost less.
The formula for this problem is relatively easy.
It is Total Income — Total Cost = Profit.
While Total Income is the money, you earn after you sell your product, which is usually calculated after a month, six months, or a year. Profit is one of the many ways to determine if your business is valuable or not in the eyes of investors, who are essential to expanding your business.
Sometimes, a business can lose money if the total revenue does not cover the costs of maintaining the business. In this case, the profit is negative, meaning the business is not making a profit. However, a negative profit does not necessarily imply a bad thing. Some companies are losing money (negative profits) but are using the earnings they already have to pave the way for future growth. The idea is that some growing businesses will sacrifice current earnings in exchange for more significant future profits. To have a "nice" business profile, companies often do not let themselves fall into a situation of negative yields. Usually, they will try to make a low profit. Other times, adverse outcomes may indicate that the business is struggling and may not be sustainable in the long run.
5. Level of Information Acquisition on social media and real life.
Marketing is all about letting people know more about a product, a service, a brand name, etc. The easiest way to do that is through digital marketing and advertisements. Using influencers helps in this process too! For instance, sponsor a YouTuber to talk about your service or product. This method will help increase the rate of exposure.
It is essential to know how your customers would know about your business, and from that, you can increase or decrease the frequency of ads on social media or in real life that impacts the rate.
Advertising is not cheap to maintain. Many movies like "The Avenger" cost millions of dollars for advertisements, so you must analyze which social media is the best for you to spend your money on it. For example, Google is an excellent place to advertise your products. Based on the keywords that people type in the search bar of Google, it will show up your advertisement, which will help your business.
Tracking the statistics of how people can get to know more about you is necessary to understand which social media or signs are on the roads. With the impact of Covid-19, advertising on social media such as Instagram or Google is an excellent thing to do since people have to stay at home and participate in social distancing. This will increase the rate of people using the Internet more.
Small business means you have a limited budget of money that you can spend on marketing, considering how to do it effectively. Knowing more about what you must focus on will help you save money and time for marketing. There can be many difficulties during the process of these metrics. Yet, it will help you determine the plan for advertising to increase your business's income and popularity. Advertising plays an essential role in the success of a company. Letting more and more people know about how good you are will affect your income and your name in society.