Co-founder of Lit Dealer and Kreative Hedgehog, partner at Polda Builders. Digital marketer, entrepreneur and author.
Former Business Analyst at UBS Investment Bank, 33 year-old admirer of the state of extreme exhaustion.
Back in the good ol’ days our fellow marketers or entrepreneurs had no real chance to analyze their efforts. Ok, they could always measure how many sales they’ve made and how much did it cost.
But that’s about it. It was much more art than science. Luckily, it’s still is to a certain degree. But today we have much more insight about our customers behavior and our prospects interests.
Facebook, Instagram, Pinterest and Google are all packed with data.
Honestly speaking, it’s a little bit overwhelming. On one hand you’ve got demographics like age, location, gender and maybe income level or education.
On other you’ve got stuff like link clicks, click-through rates, cost per click, ROAS, impressions, reach and relevance score. And that’s cool, but what the hell is that?
And most importantly what does it tell me?
I totally feel you. I was struggling myself to figure it all out and to finally understand what each factor represents and what kind of information it provides.
As an entrepreneur you are juggling a lot of things and the last thing you need is the bunch of numbers you have no clue what to do about. That’s why I decided to write this article.
To help you get along with your own “what gets measured, gets managed”.
Why Measuring Your Results is so Important
The above famous quote is by management guru Peter Drucker. Although it’s been massively overused it’s still pretty accurate. And this is the main reason why measuring your results is so important.
Otherwise you wouldn’t be able to tell whether you are reaching your goals or not. Whether you are on the right track to meet your KPIs or not. Just for the record KPI stands for Key Performance Indicator.
That’s pretty crucial for every big and small company, but also for solopreneurs and freelancers.
Once you know your KPIs and you track your results you can tell if your efforts are going to the right direction. If no you can try to rethink your strategy and adjust. If yes you can push harder to that direction.
Moreover you can tell if your resources are being used efficiently.
But that’s not the only reason. Or to put it differently that statement, despite its brilliancy, doesn’t explain it fully. It’s only part of the equation. To get the most out of it we have to go deeper.
Because what Peter Drucker also said is “…knowledge work cannot be measured the way manual work can, one cannot tell a knowledge worker in a few simple words whether he is doing the right job and how well he is doing it.”
And that’s pretty powerful, especially when you think of a wider picture.
Managers, small business owners, entrepreneurs and hustlers in all shapes and forms have to learn that. You have to know what metrics to take under your considerations.
What are the Most Important Metrics for Your Business
So we’ve come to the point where I would like to provide you with some of the most important metrics you can measure when it comes to your hustle. And it’s quite of a challenge, to be honest.
As I said at the beginning every platform is packed with data.
It is an advantage, but can also be a disadvantage if you don’t know what you are looking at. The only one thing I can recommend you is to don’t go crazy with analyzing everything.Don’t push yourself into a trap of measuring and analyzing every piece of data, focus only on the most important ones #hustle #smallBusiness Click To Tweet
You are running a business for crying out loud. And unless it’s marketing agency or data analytics company, it should take only a fraction of your time. Data is not everything. Especially in case of “knowledge worker”.
Let me explain that with anecdote with Henry Ford.
He once hired an expert in the field of work efficiency to assess his company. After a few weeks, the expert returned to Ford. His assessment was extremely flattering, except for one weak point.
– This is the man in the hall … – expert said – When I go through his office, I see that he lies stretched out with his feet on the desk and takes a nap. He’s wasting your money, Mr. Ford.
– Ah, this man! – Ford replied – He once came up with the idea that saved us millions of dollars. And his legs were exactly in the same position.
The only thing that should matter to you is the results, how much profit do you make.
From that point you can start to make some more sophisticated analysis. Starting with 80/20 everything. What 20% generates 80% of profits, and what 20% generates 80% of costs.
Some experts define it as “hot spots” and “cold spots”, but it’s pretty much the same. In essence you are trying to identify if your resources are being allocated efficiently. You might find for example that 90% of your team is working on something that generates only 20% of your profits.
Just to make clear, it doesn’t have to sum up to a hundred.
This approach will help you to maximize your profits and keep your costs at a reasonable level. On top of that you’ve got of course average lifetime value, P&L and cash flow, but profit is the king and cost is the queen.
In this article you will find explained the most important business metrics that every entrepreneur should track. On top of the above you will find explained also customer retention, churn rate and employees satisfaction.
When it comes to marketing it’s even worse. There are bazillions of measurements on each social media and marketing platforms. Some are more relevant than others.
And some are more important than others.
How can you tell which ones you should track and measure? Well, that’s another challenge, every platform is a little bit different. But in general there is a handful which ones you should keep an eye on.
- Click-Through Rate
- Cost Per Link Click
- Page views
- Website Traffic
- Cost Per Lead
Under this link you can find free and paid tools that will help you to analyze your business and marketing efforts. Definitely worth to check it out!
There is also a tool in excel spreadsheet that you can download and use.
How to Analyze Your Hustle Quickly and Efficiently
Now you are probably wondering how you can analyze your hustle in quick and efficient way. The problem is, every hustle or business is different, so it’s not that easy to apply one approach.
There are probably hundreds of indexes that can be helpful and it’s only a matter of what you would like to look at. What would you like to take under consideration.
You can take the financial approach and measure sales and customer average lifetime value.
On the other hand you can focus on marketing approach and keep an eye more on click-through rate or conversions. Which is also related to your financial results.
At the end of the day you are running marketing campaigns in order to reach more people, capture some leads and make few sales. You don’t do that purely on purpose of spending money.
Your marketing dollars have to bring in something you are after.
But to leave it aside for the moment, below you can find a link to a website that can be very helpful in understanding your hustle better. It’s filled with useful articles, but there’s more.
It has also two great free tools that will allow you to calculate your hustle’s profitability and probability. Two most important metrics for every hustle that will allow you to analyze it both quickly and efficiently.